Chapter 25 : Time-shares

• Library: Standards for Examination of Real Estate Titles in Arkansas (2021 Ed.)

CHAPTER 25: TIME-SHARES

Standard 25.1 The Time-Share Act

Arkansas adopted the Arkansas Time-Share Act in 1983 (the "Time-Share Act"),³⁷⁵ but the Time-Share Act has its origins in an earlier 1947 act. The Time-Share Act was heavily overhauled by Act 710 of 2013.

Time-share plans established before February 26, 1983, are not subject to the Time-Share Act.³⁷⁶

Standard 25.2 Accommodation

The Time-Share Act applies to any "accommodation," which is defined as a unit that is (1) affixed to real property; (2) designed for occupancy or use by one or more individuals, and (3) part of a time-share plan (as defined below).³⁷⁷

Any accommodation may be subjected to a time-share plan unless expressly prohibited by the applicable private covenants.³⁷⁸

The Time-Share Act also applies to camping sites.³⁷⁹

Standard 25.3 Time-Share Plan

The term "time-share plan" is defined as an arrangement in which a purchaser, in exchange for consideration, receives ownership or use of the accommodations for a period of time less than a year during a given year, but not necessarily consecutive years.³⁸⁰ The definition excludes exchange programs but includes membership agreements, sales, leases, deeds, licenses, or right-to-use agreements.³⁸¹ The time period need not be determined in advance.³⁸²

The statute categorizes time-share plans as either "single site time-share plans," restricting the owner to use of a single property, or a "multisite time-share plans," allowing use of properties within a network, such as the Disney Vacation Club.³⁸³

Standard 25.4 The Estate

The Time-Share Act defines a "time-share estate" as "an arrangement by which the purchaser receives a right to occupy a time-share property, together with a real estate interest in the time-share property."³⁸⁴ The time-share estate may be held in a trust where the owners, or an owners' association, is the express beneficiary of the trust and the trustee is independent of the developer.³⁸⁵ If a trust holds the estate, then the conveyance of the real property to the trust must be free of financial liens and encumbrances or include a recorded non-disturbance agreement.³⁸⁶

A time-share constitutes a separate estate in property except for real property tax purpos-es.³⁸⁷ The Time-Share Act clarifies that "[a] time-share is an estate in real property and has the character and incidents of an estate in fee simple at common law, including an estate for years with a remainder over in fee simple or an estate of years with no remainder if a leasehold."³⁸⁸ As the Arkansas Court of Appeals observed, "a time-share owner technically 'owns' property."³⁸⁹ Therefore, a time-share owner is entitled to any notice that would otherwise go to a property owner.³⁹⁰

Standard 25.5 Formation Requirements

All instruments creating a time-share must comply with Ark. Code Ann. §§ 18-14-303 and 306, which set out a lengthy list of required elements.

The Arkansas Real Estate Commission ("AREC") regulates time-shares and is empowered to adopt rules and impose civil penalties of up to $5,000 for violations.³⁹¹ A developer who offers or sells time-share interests without complying with the Time-Share Act is guilty of a misdemeanor,³⁹² and any persons adversely affected by a violator may pursue civil remedies including rescission, damages, punitive damages and attorney's fees.³⁹³

All time-share plans must be registered with AREC prior to offering or selling time-shares.³⁹⁴

Out-of-state time-share plans are governed by the laws of the state where the property is located.³⁹⁵

Standard 25.6 Transfer

If the developer transfers its interest in the time-share project to a third party, the third party must acquire not only the developer's interest in the property but all other obligations of the developer with respect to the time-share regime.³⁹⁶ The 8th Circuit observed, "The time-share regime is meaningless unless the time-share...