P.R. Laws tit. 31, § 1251b
As used in this chapter, the following terms shall have the following meanings:
(1) Accommodation.— Means any apartment, lodge, hotel or motel room, or other private or commercial structure containing toilet facilities therein which is affixed to immovable property and which has direct or indirect access to the public street, and designed and available, pursuant to applicable law, for independent use and occupancy as a vacation residence by one or more individuals as part of a timeshare plan or vacation club.
Unless otherwise indicated in the specific provisions of this chapter, it also includes commercial unit, as hereafter defined.
(2) Advertisement.— Means any written, oral, or electronic communication which either contains or describes a solicitation or inducement of prospective purchasers of timeshares, vacation club rights or accommodations, including but not limited to brochures, pamphlets, radio and television scripts, telephone and direct mail solicitations, and other means of promotion.
(3) Affiliate.— Means any person who controls, is controlled by, or is under common control with another person.
A person shall be presumed to “control” a developer if the person:
(a) Is a general partner, officer, director, or employer of the developer;
(b) either directly or indirectly, through one or more intermediaries or acting in concert with one or more other persons, owns, controls, or has the power to vote (including by proxy) more than twenty percent (20%) of any class of voting or beneficial rights in the developer;
(c) determines in any manner the election or appointment of a majority of the directors of the developer, or
(d) has contributed more than twenty percent (20%) of the capital of the developer.
A person “is controlled by” a developer if the developer:
(a) Is a general partner, officer, director, or employer of the person;
(b) either directly or indirectly, through one or more intermediaries or acting in concert with one or more other persons, or through one or more subsidiaries, owns, controls, or has the power to vote (including by proxy) more than twenty percent (20%) of any class of voting or beneficial rights in the person;
(c) determines in any manner the election or appointment of a majority of the directors of the person, or
(d) has contributed more than twenty percent (20%) of the capital of the person.
(4) Company.— Means the Puerto Rico Tourism Company or any successor entity thereto.
(5) Assessment.— Means a common expense assessment or a special assessment.
(6) Association.— Means the owners’ association referred to in § 1256 of this title, which shall include all of the owners of the regime.
(6A) Bylaws.— Means the bylaws of the timeshare or vacation club regime referred to in § 1267 of this title.
(6B) Bylaws of the association.— Means the bylaws which may be adopted by any association of owners which may be constituted for the administration of the timeshare or vacation club regime, or a portion thereof, as opposed to the bylaws of the timeshare or vacation club regime referred to in § 1267 of this title.
(7) Blanket encumbrance.— Means any mortgage, deed of trust, option to purchase, mechanics’ lien, vendor’s lien or right under a contract or agreement of sale, judgment lien, federal or state tax lien, lease, or any other lien or encumbrance which:
(a) Affects two (2) or more timeshares or vacation club rights or accommodations owned by different owners, either directly or by reason of affecting all or any portion of the timeshare or vacation club property, including any accommodations or facilities thereof, in which such timeshares or vacation club rights or accommodations are owned, and
(b) secures or evidences the obligation to pay money or to sell or convey the timeshare or vacation club property or any portion thereof, including, but not limited to, its accommodations or facilities, and which authorizes, permits, or requires the foreclosure or other disposition of the timeshares, vacation club rights, accommodations, facilities, or other assets affected.
For purposes of this chapter, the following shall not be considered blanket encumbrances:
(a) An obligation for taxes and assessments levied by any governmental authority which are not yet due and payable;
(b) an obligation for common expenses and assessments not yet due and payable in favor of a homeowners’ or community association;
(c) a lien for costs or trustee’s fees not yet due and payable charged by a trustee pursuant to a trust created under § 1254 of this title.
(8) Commercial unit.— Means any apartment or other room or series of rooms forming an integrated unit located in a property dedicated to the timeshare or vacation club regime, with direct or indirect access to the public street, dedicated to commercial purposes restricted to the offering of products or services reasonably of interest to the occupants of the other accommodations in the property.
(9) Common expense assessment.— Means an amount levied from time to time by the developer, the managing entity, or a component site managing entity upon each owner of an accommodation, timeshare or vacation club right for such owner’s proportionate share of the timeshare plan’s or vacation club’s common expenses.
(10) Common expenses.— Means those expenses incurred for the maintenance, operation, repair, improvement, and redecoration of a timeshare’s or vacation club’s accommodations, facilities, and reservation system, including real estate and personal property taxes, utility charges, insurance premiums, management fees, expenses relating to service or other contracts entered into from time to time by the managing entity or a component site managing entity, the amount of any reserves established for the replacement of any components of the timeshare’s or vacation club’s accommodations, facilities, or reservation system, debt service for capital expenditures (excluding debt service for construction of any accommodations or facilities represented to purchasers to be installed by the developer), any other expense reasonably designated as a common expense in the timeshare documents or vacation club documents, and all other costs of operating and administering the timeshare, or vacation club property.
(11) Component site.— Means a specific geographic site at which certain accommodations and facilities, if any, are located. If permitted under applicable law, separate phases that are operated as a single development in a particular geographic location and under common management shall be deemed a single component site.
(12) Component site managing entity.— Means the person responsible for operating and maintaining a component site of a vacation club.
(13) Conspicuous type.— Means:
(a) Type in upper and lower case letters no smaller than two (2) point sizes larger than the largest type, exclusive of headings, on the page on which it appears, but in all cases at least 10-point type, or
(b) where the use of 10-point type would be impractical or impossible with respect to a particular written material, then such different style of type or print as the Company specifically approves, so long as the print remains conspicuous under the circumstances.
(14) Developer.— Means and includes:
(a) A “creating developer,” which means any person who creates the timeshare plan or vacation club;
(b) a “successor developer,” which means any person who succeeds to the rights of a creating developer or a concurrent developer by sale, lease, assignment, mortgage, or other transfer, but the term includes only those persons who offer timeshares or vacation club rights or accommodations for disposition in the ordinary course of business and does not include the owner of an accommodation, timeshare or vacation club right who has acquired such accommodation, timeshare or vacation club right for his own personal use, or
(c) a “concurrent developer,” which means any person acting concurrently with a creating developer or a successor developer for the purpose of creating or disposing of accommodations, timeshares or vacation club rights in the ordinary course of business, but the term does not include any person who has acquired an accommodation, timeshare or vacation club right for his own personal use.
However, the term “developer” does not include a managing entity that is not otherwise a developer of a timeshare plan or vacation club in its own right and that offers or disposes of timeshares or vacation club rights or accommodations for its own account to existing owners of that timeshare plan or vacation club. The term also does not include a person to whom is conveyed, assigned, or transferred any number of timeshares or vacation club rights or accommodations from a developer in a single voluntary or involuntary transaction, including but not limited to a purchase money lender that acquires one or more timeshares or vacation club rights or accommodations by foreclosure or other legal means, and who subsequently conveys, assigns, or transfers all of such timeshares or vacation club rights or accommodations to a single owner in a single transaction or a series of contemporaneous transactions other than in the ordinary course of such person’s business.
(15) Dispose or Disposition.— Means a voluntary transfer or assignment, however evidenced or documented, of any legal right with respect to a timeshare, vacation club right or an accommodation, other than the transfer, assignment, or release of a security right.
(16) Exchange company.— Means any person owning and/or operating an exchange.
(17) Exchange program.— Means any method, arrangement or procedure for the voluntary exchange of the right to use and occupy accommodations and facilities among owners of timeshares, vacation club rights or other real or personal property rights. The term does not include the assignment of the right to use and occupy accommodations and facilities to owners of vacation club rights pursuant to a particular vacation club’s reservation system. Any method, arrangement, or procedure that otherwise meets this definition, wherein the owner’s total contractual financial obligation exceeds three thousand dollars ($3,000) for any individual, recurring use period, shall be regulated as a vacation club under this chapter.
(18) Facility.— Means any amenity, structure, furniture, furnishing, fixture, equipment, service, contractual right or benefit, or other real or personal property (not constituting an accommodation), whether improved or unimproved, other than an exchange program or the reservation system of a vacation club, which is made available for the use and enjoyment of each owner of an accommodation, timeshare or vacation club right in consideration for the payment by such owner of the purchase price of his accommodation, timeshare or vacation club right and any assessments levied from time to time upon such owner by the developer, the managing entity, or a component site managing entity, but excluding such routine services as a managing entity typically provides or arranges such as housekeeping, maintenance, repair, and replacement services as well as services provided by government entities or instrumentalities.
(19) Financial assurance.— Means cash, a surety bond, irrevocable letter of credit, escrow, trust, or other means, or any combination thereof, found acceptable by the Company to assure that a protected accommodation or protected facility will, subject to the provisions of this chapter, actually be available to an owner upon such conditions and during the period of time so represented and/or as set forth in the timeshare or vacation club documents.
(20) Incidental benefit.— Means a facility which is not a protected facility.
(21) Lienholder.— Means and includes:
(a) A developer, and
(b) an owner or holder of any real property right which affects two (2) or more accommodations, timeshares or vacation club rights owned by different owners, either directly or by reason of affecting all or any portion of the timeshare plan or vacation club, including any accommodations or facilities thereof, including a mortgagee, the beneficiary of a deed of trust, a judgment creditor, a mechanics’ lienor, or a lessor.
(22) Managing entity.— Means the person responsible for the operation, maintenance and administration of a timeshare plan, a component site, or a vacation club and their respective properties, including but not limited to, responsibility for the operation and maintenance of the reservation system.
(23) Offer.— Means any inducement, solicitation, or other attempt, whether by advertisement, oral or written presentation, or other means, to encourage a person to acquire any legal right with respect to a timeshare, vacation club right or accommodation or to upgrade an already acquired timeshare, vacation club right or accommodation in a manner which entitles the owner thereof to any additional use or occupancy rights or benefits, other than as security for an obligation. However, neither an advertisement nor a promotion in any broadcast medium to the general public shall be deemed an offer if such advertisement or promotion clearly states that it is not an offer in any jurisdiction in which any applicable registration requirements or other legal prerequisites to the making of such offer have not been fully satisfied.
(24) One-to-one purchaser to accommodation ratio requirement.— Means the requirement that at any given time during the term of a timeshare plan or vacation club, the timeshare plan or vacation club includes a sufficient number of protected accommodations such that the right and practical ability of a particular owner who complies fully with the reservation system’s rules and regulations to reserve, use, and occupy a protected accommodation for the maximum number of use periods to which such owner is entitled, pursuant to the timeshare or vacation club documents, is completely independent of any other owner’s failure for any reason to reserve, use, or occupy a protected accommodation of the timeshare plan or vacation club.
(25) Owner.— Means any person who owns or co-owns a timeshare, vacation club right or accommodation other than as security for an obligation, and any person denominated or identified as a “member” of a vacation club. Unless from the context of the specific provision a different intent arises, the developer shall be deemed as the owner of the unsold timeshares, vacation club rights or accommodations for purposes of the exercise of the right to vote corresponding to the same, except with respect to the vote for removal of the managing entity, when the same is the developer or a person under its control.
(26) Person.— Means a natural person, corporation, partnership, joint venture, government, governmental subdivision or agency, any other form of legal entity, or any combination thereof.
(27) Project.— Means real property containing more than one accommodation. A project may include accommodations that are not timeshare or vacation club accommodations.
(28) Promotion.— Means a plan or device, including one involving the possibility of a prospective purchaser’s receiving a gift or prize, used by a developer in connection with the offering and disposition of timeshares, vacation club rights or accommodations.
(29) Protected accommodation.— Means an accommodation of a timeshare plan or vacation club:
(a) Which is owned, free and clear of the claims of any lienholder, by one or more owners of accommodations, timeshares or vacation club rights, or
(b) with respect to which the developer has executed or procured a subordination agreement, release or provided or established a financial assurance in compliance with §§ 1254—1254b of this title in order to guarantee the continuing availability of such accommodation for use and occupancy by the owners of timeshares or vacation club rights or by the corresponding owners of accommodations.
Subject to § 1255a(4) of this title, only a protected accommodation that is available for use and occupancy by owners for the entire term of their ownership of timeshares or vacation club rights may be included when calculating whether the one-to-one purchaser to accommodation ratio requirement has been satisfied.
(30) Protected facility.— Means a facility of a timeshare land or vacation club:
(a) Which is owned, free and clear of the claims of any lienholder, by one or more owners of accommodations, timeshares or vacation club rights, or
(b) with respect to which the developer has executed or procured a subordination agreement, release or provided or established a financial assurance in compliance with §§ 1254—1254b of this title in order to guarantee the continuing availability of such facility for the use and enjoyment of the owners of accommodations, timeshares or vacation club rights.
(31) Purchaser.— Means any person, other than a developer, who by means of the execution of a purchase contract has become legally obligated to acquire any legal right with respect to an accommodation, a timeshare or vacation club right from a seller, but who has not yet closed on said transaction. A “prospective purchaser” is a person who receives advertising or a sales pitch in connection with an accommodation, a timeshare or a vacation club right, and who has not yet executed a purchase contract.
(32) Purchase contract.— Means that certain document, pursuant to which, a developer or seller becomes legally obligated to sell and/or transfer, and a purchaser becomes legally obligated to purchase and/or acquire, any legal right with respect to, a timeshare or vacation club right or an accommodation.
(33) Reservation system.— Means the method, arrangement, or procedure by which the owners of vacation club rights, or nonspecific timeshare rights, respectively, are required to compete with other owners of vacation club rights or nonspecific timeshare rights in the same vacation club or timeshare plan in order to reserve the use and occupancy of an accommodation of the vacation club or timeshare plan for one or more use periods, regardless of whether such reservation system is operated and maintained by the managing entity, an exchange company, or any other person. In the event that an owner is required to use an exchange program as the owner’s principal means of obtaining the right to use and occupy a vacation club’s accommodations and facilities, such arrangement shall be deemed a reservation system for purposes of this chapter.
(34) Seller.— Means the developer or any other person, or an employee or independent contractor thereof, who offers timeshares, vacation club rights or accommodations for disposition to the public in the ordinary course of business. The term “seller” does not include a person who has acquired a timeshare or vacation club right or accommodation for his own personal use and later offers it for resale, or a person to whom is conveyed, assigned, or transferred any number of timeshares or vacation club rights or accommodations from a developer in a single voluntary or involuntary transaction, including but not limited to a purchase money lender that acquires one or more timeshares or vacation club rights or accommodations by foreclosure or other legal means and who subsequently conveys, assigns, or transfers all of such timeshares or vacation club rights or accommodations to a single person in a single transaction or a series of contemporaneous transactions other than in the ordinary course of such person’s business.
(35) Special assessment.— Means an amount levied from time to time by the developer, the managing entity, or a component site managing entity upon each owner of an accommodation, timeshare or vacation club right in the event that the total of all common expense assessments collected from such owners and the amount of any reserves on hand is inadequate to meet the common expenses or to satisfy any extraordinary or unbudgeted expenses.
(36) State.— Means a state of the United States of America, its territories and possessions and the District of Columbia.
(37) Subordination agreement.— Means a document or instrument pursuant to which the rights or claims of a lienholder with respect to a particular accommodation, facility, or two (2) or more timeshares or vacation club rights owned by different owners are irrevocably subordinated to the timeshare or vacation club documents and the use and occupancy rights of owners granted therein.
Each such subordination agreement shall expressly and effectively provide that:
(a) The lienholder’s right, lien or encumbrance upon the applicable accommodation, facility, timeshares or vacation club rights shall not adversely affect, and shall be subordinate to, the rights of any owners of timeshares, vacation club rights or accommodations, regardless of their respective dates of purchase, from and after the effective date of such document or instrument, whether through recordation or otherwise, and
(b) such lienholder, together with its successors and assigns, and any person who acquires such accommodation, facility, timeshares or vacation club rights through foreclosure, by deed in lieu of foreclosure, or other legal means:
(i) Shall hold title to such property subject to the rights of the owners of accommodations, timeshares or vacation club rights therein, and
(ii) shall not use, cause, or permit such property to be used in a manner which prevents or materially impedes the owners of accommodations, timeshares or vacation club rights from using and occupying the subject accommodations and facilities in the manner represented to them by or on behalf of the developer and/or as set forth and described in the timeshare or vacation club documents.
(38) Timeshare.— Means the right, real (coupled with the special property right described in § 1251a of this title) or personal, however evidenced or documented, to use and occupy one or more accommodations on a periodic basis over a period of more than three (3) years according to an arrangement allocating such use and occupancy rights among similar users. Timeshare includes:
(a) A “specific timeshare right”, which is the right to use (standing alone or coupled with the special property right described in § 1251a of this title, as applicable) a specific accommodation or a specific type of accommodation, and the facilities, if any, at a timeshare property during a specific use period.
(b) A “nonspecific timeshare right”, which is the right to use (standing alone or coupled with the special property right described in § 1251a of this title, as applicable) all or any, or any specific type, of the accommodations and the facilities, if any, at a timeshare property created by or acquired through a reservation system; but shall not include any specific timeshare right.
(39) Timeshare documents.— Means all of the documents, by whatever names denominated, and any amendments thereto, which establish the timeshare plan, create and govern the rights and relationships of owners, and govern the use and operation of the timeshare property. Such documents include, but are not limited to, the deed of dedication, the bylaws referred to in § 1267 of this title, the articles of incorporation and bylaws of the association, and the rules and regulations for the timeshare plan.
(40) Timeshare plan.— Means the rights, obligations and program created by the timeshare documents for a timeshare property. [No] developer may offer timeshares in any manner that would cause the total number of timeshares offered to exceed the one-to-one purchaser to accommodation ratio.
(41) Timeshare property.— Means one or more accommodations subject to the same timeshare documents, together with any common areas or any other real estate, or rights therein, appurtenant to those accommodations and together with any facilities of the timeshare plan.
(42) Use period.— Means the shortest period of time in consecutive hours during which an owner of a timeshare or vacation club right may use and occupy an accommodation of a timeshare plan or vacation club.
(43) Vacation club.— Means any system or program with respect to which an owner obtains, by any means, a recurring right to use and occupy accommodations and facilities in more than one component site only through the use of a reservation system, whether or not the owner’s use and occupancy right is coupled with a special property right; Provided, however, That the term “vacation club” shall not include any system or program, rights or benefits with respect to which are obtained:
(a) A contractually specified maximum total financial obligation on the owner’s part of one thousand five hundred dollars ($1,500) or less, excluding the aggregate amount of any common expense assessments and special assessments levied by an owners’ association or other person who is not an affiliate of the seller or the developer, provided that any such assessment obligations are fully described as accurately as possible in the owner’s purchase contract, but including all other amounts paid by such owner for any purpose whatsoever, regardless of the term of such use and occupancy rights, or
(b) a contract term of three (3) years or less, regardless of the owner’s contractually specified maximum total financial obligation, if any. For purposes of determining the term of such use and occupancy rights, the period of any optional renewal(s) which an owner, in his sole discretion, may elect to exercise, whether or not for additional consideration, shall be included. [No] developer may offer vacation club rights in any manner that would cause the total number of vacation club rights offered to exceed the one-to-one purchaser to accommodation ratio.
(44) Vacation club documents.— Means and includes the one or more documents or instruments, by whatever name denominated, creating or governing a vacation club and the disposition of vacation club rights therein. The term “vacation club documents” is intended to be broadly construed to incorporate all terms and conditions of the purchase of a vacation club right, the incorporation of accommodations and facilities located at component sites into the vacation club (including but not limited to any documents which govern the creation and administration of a trust formed pursuant to § 1254c of this title), the management and operation of the vacation club’s component sites, and the management and operation of the reservation system, including but not limited to the reservation system’s rules and regulations.
(45) Vacation club right.— Means and includes the following rights with respect to a vacation club:
(a) A “specific vacation club-right,” which is a right to use (standing alone or coupled with the special property right described in § 1251a of this title, as applicable) a specific accommodation or accommodations, and facilities, if any, at one component site of a vacation club, for the remaining term of the vacation club in the event that the reservation system is terminated for any reason prior to the expiration of the term of the vacation club, together with use rights with respect to the other accommodations and facilities of the vacation club created by or acquired through the reservation system, and
(b) a “nonspecific vacation club right,” which is a right to use all of the accommodations and facilities, if any, of a vacation club created by or acquired through the reservation system, but including no specific right to use any particular accommodations or facilities for the remaining term of the vacation club in the event that the reservation system is terminated for any reason prior to the expiration of the term of the vacation club.
History —Dec. 26, 1995, No. 252, § 1-104; July 5, 1996, No. 66, § 22; Jan. 5, 1999, No. 3, § 24.