Newly in­tro­duced leg­is­la­tion in the Florida House of Rep­re­sen­ta­tives, cur­rently known as “HB 5005,” pro­poses to sig­nif­i­cantly dereg­u­late var­i­ous in­dus­tries, pro­fes­sions and oc­cu­pa­tions. The 281-page cost-cut­ting ef­fort would, among other things, elim­i­nate nearly all of the Florida li­cens­ing and reg­is­tra­tion re­quire­ments re­lat­ing to the sale of time­share and frac­tional in­ter­ests.

Sweep­ing Reg­u­la­tory Change

Un­der HB 5005, ex­ist­ing con­do­minium, co­op­er­a­tive and time­share fil­ing re­quire­ments (in­clud­ing com­po­nent site and mul­ti­site time­share plans), ex­change com­pany of­fer­ings, reser­va­tion pro­grams, in­ci­den­tal ben­e­fit fil­ings, and gift and pro­mo­tional of­fer­ings are elim­i­nated. The bill also pro­poses to elim­i­nate the re­quire­ment for the man­ag­ing en­tity of a con­do­minium or time­share as­so­ci­a­tion be a li­censed Com­mu­nity As­so­ci­a­tion Man­ager un­der Chap­ter 468, Florida Statutes. Per­haps most dra­matic, the bill would elim­i­nate the Di­vi­sion of Florida Con­do­mini­ums, Time­shares, and Mo­bile Homes, the arm of the Florida De­part­ment of Busi­ness and Pro­fes­sional Reg­u­la­tion re­spon­si­ble for re­view­ing reg­is­tra­tions and en­forc­ing of Florida’s con­do­minium and time­share laws.

It ap­pears that HB 5005 hap­haz­ardly slashes pro­vi­sions of Florida law in an ef­fort to re­duce costs and to ef­fec­tu­ate sweep­ing dereg­u­la­tion. A close read­ing of the bill leads the reader to the con­clu­sion that the draft­ing is not pre­cise and that mis­takes, omis­sions and the fail­ure to un­der­stand the nu­ances of the af­fected laws would cre­ate un­cer­tainty and dif­fi­culty for those seek­ing to com­ply. For ex­am­ple, the com­plete dele­tion of §721.07, Florida Statutes, not only re­moves the re­quire­ment to file pub­lic of­fer­ing state­ments with the Di­vi­sion, but also re­moves the de­tailed list of items that are re­quired to be in­cluded in the pub­lic of­fer­ing state­ment that de­vel­op­ers are still re­quired to pro­vide to all prospec­tive pur­chasers of time­share and frac­tional in­ter­ests. Con­fus­ingly, the com­pan­ion pro­vi­sions for mul­ti­site pub­lic of­fer­ing state­ments con­tinue to in­clude an item­iza­tion of the spe­cific dis­clo­sures and con­tent re­quired to be in­cluded in a mul­ti­site pub­lic of­fer­ing state­ment.

In ad­di­tion to the sig­nif­i­cant re­vi­sions to Florida’s con­do­minium, co­op­er­a­tive and time­share acts, HB 5005 also re­peals Florida’s Seller of Travel Act. Un­der the ex­ist­ing Seller of Travel Act, sell­ers of travel (such as va­ca­tion cer­tifi­cates and travel ser­vices) are re­quired to pro­vide for a can­cel­la­tion pe­riod and dis­clo­sures, as well as post a surety bond of up to $50,000. If HB 5005 were to be adopted, con­sumers of short-term va­ca­tion prod­ucts would lose these spe­cific pro­tec­tions and the num­ber of in­ci­dents of fraud and com­plaints would po­ten­tially ex­pand sig­nif­i­cantly. Ac­cord­ing to Ja­son Gar­cia at the Or­lando Sen­tinel, Florida has re­ceived more than 13,000 com­plaints about sell­ers of travel dur­ing the past five years. To the ex­tent Florida does re­peal its Seller of Travel Act, it would be fol­low­ing in the foot­steps of Nevada, which on July 1, 2009, dis­banded the Con­sumer Af­fairs Di­vi­sion of the Nevada De­part­ment of Busi­ness and In­dus­try.

Help or Harm?

No one with de­vel­op­ment ex­pe­ri­ence in Florida would ar­gue that the ex­ist­ing time­share/frac­tional reg­u­la­tory regime couldn’t be amended to im­prove over­sight and elim­i­nate cost in­ef­fi­cien­cies. How­ever, does a sledge-ham­mer ap­proach ac­tu­ally im­prove the sit­u­a­tion for de­vel­op­ers? Should HB 5005 be­come law, there is se­ri­ous con­cern that it would lead to con­fu­sion and un­cer­tainty among de­vel­op­ers of con­do­minium, co­op­er­a­tive and time­share prod­ucts, man­age­ment com­pa­nies and those sell­ing le­git­i­mate travel prod­ucts. Pub­licly-traded de­vel­op­ment com­pa­nies would be par­tic­u­larly af­fected since they would no longer be able to rely on Di­vi­sion ap­proval let­ters to show com­pli­ance with the ap­plic­a­ble laws.

In ad­di­tion, the re­moval of reg­u­la­tion and an agency with specif­i­cally des­ig­nated en­force­ment pow­ers will po­ten­tially pro­vide un­scrupu­lous groups with a greater abil­ity to evade com­pli­ance, leav­ing con­sumers to strug­gle for re­dress through un­even en­force­ment, pre­sum­ably avail­able by pri­vate rights of ac­tion or by an al­ready over­whelmed at­tor­neys gen­eral of­fice. The re­sult­ing dam­age to the rep­u­ta­tion of the va­ca­tion own­er­ship and travel in­dus­tries could set those in­dus­tries back to the po­si­tion that they were in dur­ing the 1970’s and early 1980’s, be­fore newly-adopted reg­u­la­tion pro­vided a healthy en­vi­ron­ment for growth and re­spectabil­ity. One de­vel­oper rep­re­sen­ta­tive was quoted in the Or­lando Sen­tinel as say­ing:

"Florida has what some peo­ple would call a col­or­ful his­tory of land fraud that goes back 100 years. Oth­ers would call it a lurid his­tory of land fraud. The di­vi­sion [of con­do­mini­ums, time shares and mo­bile homes] was put to­gether to force the bad ac­tors out of these ar­eas of ac­tiv­ity. We think it'd be a ter­ri­ble mis­take for you all to dereg­u­late those ar­eas of the di­vi­sion. We strongly op­pose it.