Island Ordinance of (date) pertaining to the amendment of the License Federal Ordinance in connection with the inclusion of provisions for the operation of immovable property for use in timeshare.

DRAFT

Nr. 2.

THE ISLAND COUNCIL OF THE ISLAND TERRITORY SINT MAARTEN

Considering that it is advisable to supplement the License Federal Ordinance¹ with regulations pertaining to the operation of immovable property for timeshare use;

In view of article 24 of the Island Regulation Netherlands Antilles;

RESOLVES

To establish the following Island Ordinance:

Article 1

The License Federal Ordinance shall be amended as follows: A. In article 1, after the definition of hotel is added for “ premises”:

Timeshare resort: a hotel, in which a person by virtue of a real or a personal right is granted the enjoyment of an immovable property or a part thereof, for a definite or an indefinite period of time, with a restriction of that right in the sense that the use of the immovable property is only allowed periodically to the person in question for a part of the year or more than one year as described;

Time share right: a right as described in the previous definition;

B. After article 44, four articles are added, as follows:

¹) Ordinance of February 7th 1963 (PS 1963, 28)

2. The license holder meant in the first paragraph shall submit the by-laws to the Executive Council.
3. The license holder meant in the first paragraph shall adhere to the by-laws on a continuous basis.
4. Amendments to the by-laws shall be submitted to the Executive Council in advance.

2. As proof of that mentioned in the first paragraph the license holder shall submit written documentation to the Executive Council, which will serve to establish his authority.

2. In the event the timeshare right is not linked to a certain immovable property and to a certain time of the year, the license holder, as proof of that mentioned in the first paragraph, shall submit an auditors' certificate, stating that the number of persons enjoying that right of use and who have a right to the use of a certain immovable property within the timeshare resort does not exceed the number of immovable properties available within the timeshare resort in a calendar year.

2. The license holder meant in article 44a, first paragraph, shall ensure that the timeshare rights for which he has made commitments, are transferred to the person who takes over the timeshare resort.

C. Article 57 shall be amended as follows:
1. In the first paragraph, after “ 44” is added: 44a, 44b, article 44c, article 44d.
2. In the first paragraph, “ one thousand guilders” is replaced by: five thousand guilders.
3. In the third paragraph “ one thousand guilders” is replaced by: five thousand guilders.

Article II ( transitional provision)
In existing agreements between a holder of a hotel licence, who at the same time operates a timeshare resort and a person enjoying the use of an immovable property, the regulation meant in article 44a, first paragraph, shall be applicable at the latest a year after the date of promulgation of this ordinance.

Article III ( date of commencement)
This ordinance shall become effective starting on the third month after that of its promulgation.

Thus established during the public meeting of

The Island Secretary The Chairman,

This island ordinance was decreed by me on this date,
The Lt. Governor
Addendum to article 44a of the license Federal Ordinance

The regulation meant in art. 44a must in any event comprise the following provisions:

The agreement
the agreement must be entered into in writing;
the buyer must have a proper command of the language in which the agreement has been drafted;
in the purchase agreement the legal form of the entity which is in possession of or owns the immovable property which is being offered for sale must be clearly mentioned;
the timeshare right must be clearly defined;
the duration of the timeshare agreement must be set forth in writing;
the period during which the timeshare right can be enjoyed must be laid down in writing;
it must be agreed upon that the Laws of the Netherlands Antilles shall be applicable to the timeshare agreement.

Payment of the purchase price
The purchase price must be agreed upon in writing between parties;
Advance payments made within 7 days shall be deemed as paid, but not due;
Resolutive clause
The buyer shall have the possibility of dissolution within 7 days after entering the timeshare agreement in writing, without having to offer reasons for such.

The term of dissolution shall be extended legally by at the most three months if all requirements of the by-laws in question have not been complied with.

The dissolution must be effectuated in writing with mention being made of the name of the seller and/or the company with which the timeshare agreement has been entered into and the person who signed on behalf of aforementioned legal entity.

In the event of dissolution within the term established, no compensation whatsoever shall be due.

Maintenance costs / General provisions
The buyer is obliged to pay a fixed amount, as agreed upon in the timeshare agreement, in maintenance fees for the upkeep and maintenance of the immovable property;

The seller shall be obliged to indicate an informed estimate of the amount to be paid by the buyer for the use of the communal services and facilities;

A separate bank account must be opened for the maintenance fees;
The buyer shall be able to peruse the aforementioned bank account;
Reasons must be given with regard to any change in the amount of the maintenance fee;
The communal facilities such as swimming pool, golf course, garden etc. must be mentioned in writing; The communal services such as lighting, water, maintaining garbage pick-up, cleaning of rooms etc. must be mentioned in writing;
The regulations in effect for the maintenance and upkeep of the immovable property;
The regulations in effect for the administration and management of the immovable property;
A description of the relevant taxes.

The immovable property
The seller shall be obliged to provide information about the immovable property or properties offered for sale by him to the buyer in the event the buyer requests such, a.o.
Written deed of purchase of the immovable property;
Perusal of the immovable property ( which shows the mortgages and attachments on the immovable property;
Written notification of the manner in which further information with regard to the immovable property can be obtained;
The advertisement condition of the immovable property.
The seller is only authorised to make essential changes upon mutual approval of the buyer;
With regard to essential changes such as reconstruction, renovation, expansion, etc. the seller must deposit monies to an Escrow account to ensure coverage of the aforementioned expenses;
The information at issue must be requested in writing by the buyer;
The seller is obliged to provide to the buyer with written information with regard to what was requested, within fourteen (14) days after receipt of mentioned request.

Transfer of the immovable property
The buyer must be informed on a timely basis if the owner intends to transfer the immovable property;
In the transfer- or as the case may be, the deed of purchase of the immovable property, the rights and obligations of the buyer must be maintained, fully applicable which must be laid down in writing in aforementioned deed.
All rights and obligations of the buyer are transferred along with the sale.

Bankruptcy / suspension of payment
All buyers must be informed on an annual basis of the financial status of the immovable property;
In the event of a request for suspension of payment, all buyers must be informed in writing.

Remark
Taking into consideration the fact that the seller is acting within the scope of the operation of a business or practising a profession and the buyer accordingly must be noted as a non- professional buyer, the following provisions shall be applicable in full.

AB 2001

PROMULGATION PAPER ISLAND TERRITORY SINT MAARTEN

Island resolution, containing general measures of…….. for the execution of article 2, fifth paragraph of the Island Ordinance Public street vending ( Resolution …..).

THE EXECUTIVE COUNCIL OF THE ISLAND TERRITORY SINT MAARTEN,

Considering that it is advisable to establish a regulation with regard to conditions for a vending license granted to a legal entity;

In view of article 2, fifth paragraph of the island ordinance Public street vending (P.S. 1995, 31) and 59, first paragraph of the Island Regulation Netherlands Antilles ( P.S. 1951, 39);

In this island resolution, containing general measures, is understood by:

a. island ordinance: the island ordinance Public street vending;
b. timeshare resort: a hotel as meant in article 1 of the License Federal Ordinance
c. timeshare right: a right described in section b;
d. license holder: a timeshare resort which has at its disposal a license as meant in article 5 of the island ordinance
e. license: a license by virtue of article 5 of the island ordinance

A person requesting a license has at his disposal:
a. corporate rights;
b. registration at the Chamber of Trade and Commerce on Sint Maarten;
c. a business license by virtue of the business regulation for companies having as objective the acquisition of and trade in timeshare;

1. The petition for requesting a license is submitted to the Executive Council.
2. The petition contains the following information:
a. name of the timeshare resort;
b. description of the activities;
c. desired location for the activities.

1. The license holder is bound to provide a person having legal residence, who is in his employ in connection with the acquisition of timeshare, with a uniform and a plastic identification card from which it is evident to the public that the person is in the employ of the license holder.
2. The uniform and the identification card meant in the first paragraph shall contain the emblem of the license holder.
3. The license holder is bound to provide proper training in timeshare acquisition to the person meant in the first paragraph upon his employment.
4. The costs for training shall be borne partly by the license holder and partly by the person taking the training.
5. The license holder may deviate from the fourth paragraph, provided that a more favourable arrangement has been agreed upon for the person who is taking the training, as meant in the third paragraph.

1. A stall intended for the soliciting of timeshare shall be manned by two persons.
2. The license holder is obliged to ensure that the persons mentioned in article 5, first paragraph, effectuate the soliciting of timeshare from within the stall.
3. A stall for the soliciting of timeshare must be accessible to the public, is at least ….centimetres wide and at the most …….centimetres wide, at least ….. centimetres and at the most … centimetres in length and at least …. centimetres and at the most ……in height.

This resolution shall become effective on the date after that of its promulgation.

The Executive Council of the Island Territory of Sint Maarten,

The Island Secretary, The Lt. Governor,

This island resolution was decreed by me on this day,

---------------------------------------------------------------------------------------- Island Ordinance of (date)
for the amendment of the License Federal Ordinance
in connection with the inclusion of provisions
for the operation of immovable property
for use in timeshare.

---------------------------------------------------------------------------------------- EXPLANATORY MEMORANDUM

----------------------------------------------------------------------------------------

No. 3

GENERAL

Timeshare Concept
During the past decades the phenomenon “ timeshare” has escalated all over the world, including Sint Maarten, in particular in the areas of tourism. Timeshare can be found in many forms, but the nucleus of this phenomenon is that a certain immovable property or part thereof (vacation villa,- apartment) is shared by more than one user during the year, meaning that each user has the right to the exclusive use of 1 week (or a different) period, per year. The above mentioned description recurs in the definition of timeshare(-resort) in the ordinance at issue. Because of this description one may speak of timeshare use of one immovable property by 50-52 users per year. It is an international phenomenon known under the name timeshare, which concept shall therefore also be used for the purpose of clarity in this ordinance and not a Dutch term. The reasons for the emergence and increase of the institution timeshare are that because of the shared use of a fixed vacation destination, this has become affordable for a large group.

Advisability of legal regulation
Legal regulations pertaining to the timeshare phenomenon however have lagged behind the development of the phenomenon itself, many (judicial) forms of which are in evidence involving many players (developer, seller, administrator, users/co-owners) and which because of this may lead to judicial complications. The most important areas of attention: what exactly is the judicial form of timeshare ( co-ownership, rent or only use), what protection does the user have, in particular, in not yet completed projects and bankruptcy, supervision of the proper spending of maintenance fees and other general contributions of the user. The sometimes aggressive sales techniques used with tourists contribute to the advisability of regulating mentioned problem areas legally, or to regulate consumer protection.

Situation on Sint Maarten
Sint Maarten too has had its share of problems with timeshare ( name examples: Pelican ……..).
Previous attempts to regulate timeshare have not been concluded. A users' fee has however been included in the Visitor tax.

The Executive Council has therefore instituted a Timeshare Advisory Council (TAC) comprising representatives from the timeshare industry, the hotel sector and the Government, which has been assigned to look into the manner in which timeshare may be regulated on Sint Maarten, leading to better consumer protection. The fact of the matter is that legislature on the Netherlands Antilles (contrary to in the Netherlands, more on this at a later point) does not exist. In view of this, one must consider whether self-regulation within the sector would be possible. Within the TAC it has been considered whether, even though the majority of the timeshare resorts understands that better consumer protection is certainly good for the sector, self-regulation is not attainable, because it is expected that a single resort will not voluntarily subject itself to a more severe regulation. One rotten apple is enough to spoil it for others. Consequently, as the point of departure has been used that legislature( on Sint Maarten), must be put in place.

Legislature Netherlands Antilles and Holland
In the Netherlands a special section for timeshare has been included in the Civil Code (CC) since 1997: Book 7, title 1, section 10A: Purchase of rights for use in timeshare of immovable property”, articles 48a through 48g, published in the Law Gazette 1997, 287. The Dutch law is a version of a European guideline to this effect. In the Netherlands Antilles, such provisions have not been included in the Civil Code of the N.A.

On the basis of the principle of concordance, the Netherlands, The Netherlands Antilles and Aruba shall, to the extent possible, have an equivalent Civil Code. The Netherlands Antilles and Aruba are currently involved with the copying of the New Civil Code (NCC) of the Netherlands. The special timeshare section dates from after the implementation of the New Civil Code in the Netherlands. At the earliest, implementation of such a section in the CCNA is conceivable at the same time as the implementation of the NCC. Inclusion of a special timeshare law in the civil law of the Netherlands Antilles is therefore not expected during the coming years. Regulation in the CCNA is however the most advisable solution, because regulation of the Civil law – included in which is the timeshare regulation - pursuant to article 2 of the Island Regulation Netherlands Antilles (ERNA) is a Federal matter. At the same time however, there may be no uncertainty lasting for years on end and some form of regulation is advisable.

Regulation on Sint Maarten
Not being able to directly regulate civil rights and obligations per island territory, as indicated previously, involves restrictions with regard to a regulation on Sint Maarten. Legislature, which directly regulates the relationship between parties (operator timeshare resort and user) and subsequently directly creates rights and obligations for parties, is not possible.

That is why, the direction being looked at is that of specific supervision by the government of timeshare resorts relative to the manner in which they deal with their clients (users and prospective users). This is possible in the form of a license system, in which there are special regulations in effect for the license holder, which he must take into consideration with regard to the users. The nucleus of the proposed regulation consists of the obligation of the license holder to establish and adhere to regulations in effect between himself and the users. Another important element of the proposed regulation is the obligation to provide proper information to prospective-buyers/users of a timeshare right.

In the event a license holder/operator does not apply the provisions of the agreed upon regulation to the relationship with his users, this is not directly or statutorily enforceable by the users, but is a reason for statutory sanctions such as fines, imprisonment or revoking of the license. When setting up the provisions to be included in the regulation, the Dutch legislature has been used as starting point, supplemented by provisions from the legislature in effect in the United States. The extensive legislature from Bermuda has also been studied.

The option of a separate license ordinance for timeshare is not being considered.
It has been linked to the License Federal Ordinance and the obligatory license for hotels. Deliberations on this matter have led to the conclusion that the implementing of (another) license fee will be damaging and shall lead to duplication. Moreover, most of the timeshare resorts are hotels to begin with and are therefore in possession of a hotel license. In the event the regulations specifically in effect for timeshare are violated, the general supervision and sanction system of the ordinance may be used.

ARTICLE BY ARTICLE Article 1A Inclusion in the License Federal Ordinance under the hotel license has been opted for. Timeshare resort has been defined separately as being a special form of hotel. In the definition use is made of the definition from the CC, albeit that the provision has been formulated in a broader and more flexible manner, in order to encompass all forms of timeshare. The definition of timeshare-law has been added, in order to be able to simply refer back to this further on in the text of the ordinance and the appendix. Article 1B In the License Federal Ordinance articles 41 and following, (special) provisions have been included, which license holders must take into consideration. Article 44 contains a (special) provision for the hotel license holder. The provisions in effect for the hotel license holder, who at the same time has a timeshare resort, have been included in the new articles 44a through 44d. Article 44a Nucleus of the new regulation: the license holder must establish and adhere to a regulation. This regulation has been elaborated upon in the appendix. Force of law: not directly binding between parties, but is enforceable by the government. Regulation shall be elaborated upon subsequently. Article 44b Additional protection: operator must have authority. So if he only has the authority for 3 years, he cannot sell timeshare for 10 years. Provide information to E.C. Article 44c 1 to 1 sale is typical of timeshare, as opposed to hotels where overbookings can be made. In common cases provide information to E.C. Article 1C Articles 44a-d now also fall under criminal sanctions. In general the fine has been increased to Naf 5000.00. Article II It is not feasible to adjust all the contracts at once. It is however advisable within a certain period. We have opted for a period of one year, because usually within that period, all users have visited the resort, so that the new regulation can, in any event, be also explained verbally. Article III The date of effect also offers a transition to new situations as it were, so that license holders have three months in which to set up a new regulation. APPENDIX: PM Especially as example, the Netherlands, supplemented by those taken from the American-Caribbean experience. THE EXECUTIVE COUNCIL OF THE ISLAND TERRITORY SINT MAARTEN, The Island Secretary, The Lieutenant Governor

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