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Minnesota Legislature

Office of the Revisor of Statutes

Key: (1) language to be deleted (2) new language

  

                         Laws of Minnesota 1987 

                        CHAPTER 154-H.F.No. 487 
           An act relating to commerce; regulating membership 
          camping practices; prohibiting certain advertising 
          practices; establishing escrow requirements; 
          regulating subdivided land sales practices; 
          prohibiting certain advertising practices; amending 
          Minnesota Statutes 1986, sections 82A.02, subdivisions 
          2, 10, and 19; 82A.04, subdivision 2; 82A.09, by 
          adding a subdivision; 82A.11, subdivision 3; and 
          82A.24, subdivisions 3 and 6; proposing coding for new 
          law in Minnesota Statutes, chapters 82A and 83. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1986, section 82A.02, 
subdivision 2, is amended to read:  
    Subd. 2.  [AMENITY.] "Amenity" means any major recreational 
building, swimming pool, utility serviced camping sites, or 
similar facility which is represented as available for use by 
purchasers now or in the future.  "Amenity" does not include a 
sportscourt or other minor facility.  
    Sec. 2.  Minnesota Statutes 1986, section 82A.02, 
subdivision 10, is amended to read:  
    Subd. 10.  [MEMBERSHIP CAMPING CONTRACT.] "Membership 
camping contract" means an agreement offered or sold within this 
state evidencing a purchaser's right or license to use for more 
than three years one year a campground owned or operated by a 
membership camping operator and includes a membership which 
provides for this use.  
    Sec. 3.  Minnesota Statutes 1986, section 82A.02, 
subdivision 19, is amended to read:  
    Subd. 19.  [SALESPERSON.] "Salesperson" means an 
individual, other than a membership camping operator or broker, 
who offers or sells membership camping contracts, but does not 
include individuals who refer persons, provided that the 
referring party is a current member of the campground or does 
not directly or indirectly receive compensation of more than 
$150 per referral, does not make more than 15 referrals per 
year, and has entered into a referral agreement with a 
membership camping operator that prohibits the discussion of 
terms or prices of camping memberships.  The practice of 
subcontracting referral services where referral fees are split 
or shared with another person is prohibited without receiving 
compensation of more than $150 per referral.  The limitation of 
$150 per referral imposed in this subdivision herein shall 
increase each year by an amount equal to the increase in the 
United States city average consumer price index for all urban 
consumers issued by the United States Bureau of Labor Statistics 
or comparable index, should that be discontinued.  
    Sec. 4.  Minnesota Statutes 1986, section 82A.04, 
subdivision 2, is amended to read:  
    Subd. 2.  [APPLICATION CONTENTS.] The application for 
registration shall include: 
    (1) an irrevocable appointment of the commissioner to 
receive service of any lawful process as required by section 
82A.22, subdivision 1; 
    (2) the name of the campground, the membership camping 
operator's name and the address of its principal place of 
business, the form, date of organization, and jurisdiction of 
its organization; and the name and address of each of its 
offices in this state; 
    (3) a copy of the membership camping operator's articles of 
incorporation, partnership agreement, or joint venture agreement 
as contemplated or currently in effect; 
    (4) the name, address, and principal occupation for the 
past five years of the membership camping operator and of each 
controlling person of the membership camping operator, and the 
extent and nature of each such person's interest in the 
membership camping operator as of a specified date within 30 
days prior to the filing of the application; 
    (5) a statement indicating whether or not the membership 
camping operator, or any of the persons identified in clause 
(4), within the past ten years has been: 
    (i) convicted of a felony; or 
    (ii) enjoined or received any adverse administrative order 
relating to the sale of securities, land, or campgrounds or 
based on violations of any consumer protection statutes.  If any 
of the above has occurred, the name of the person involved, the 
jurisdiction, offense, and date of the offense shall be listed; 
    (6) a legal description of each campground owned or 
operated in this state by the membership camping operator which 
is represented to be available for use by purchasers, and a map 
or maps showing the location of all campgrounds, wherever 
located, which are owned or operated by the membership camping 
operator and represented to be available for use by purchasers, 
and a statement identifying the existing amenities at each such 
campground and the planned amenities represented as to be 
available for use by purchasers in the future at each such 
campground; 
    (7) the states or jurisdictions in which an application for 
registration or similar document has been filed by the 
membership camping operator pursuant to any statute similar to 
this chapter regulating membership camping contracts and any 
adverse order, judgment, or decree entered against the operator 
in connection with membership camping contracts by any 
regulatory authority in any jurisdiction or by any court; 
    (8) a statement of the condition of the title to the 
campground owned or operated in this state by the membership 
camping operator and represented to be available for use by 
purchasers, including all encumbrances, deed restrictions, and 
covenants applicable thereto with data as to recording, as of a 
specified date within 30 days prior to the date of application, 
by a title opinion of a licensed attorney, or by a title 
insurance policy, naming the operator or lender as beneficiaries 
and issued by an insurance company authorized to do business in 
this state, or by any evidence of title acceptable to the 
commissioner; 
    (9) copies of the instruments by which the membership 
camping operator's interest in the campgrounds in this state was 
acquired; 
    (10) copies of all recorded or unrecorded instruments, 
known to the membership campground operator, that evidence 
blanket encumbrances that materially adversely affect the 
campgrounds in this state; 
    (11) if there is a blanket encumbrance which materially 
adversely affects the campgrounds located in this state, a legal 
description of the encumbrance, and a description of the steps 
taken to protect purchasers, in accordance with section 82A.14, 
clause (1), in case of failure to discharge the lien or 
encumbrance; 
    (12) evidence showing compliance with the zoning and other 
applicable environmental or land use laws, ordinances, and rules 
affecting the use of the campgrounds located in this state; 
    (13) a statement of the existing and planned provisions for 
the following with respect to campgrounds located in this state: 
    (i) purchasers' access to the campgrounds; 
    (ii) the availability of sewage disposal facilities and 
other public utilities, including but not limited to water, 
electricity, gas, and telephone facilities in the campgrounds; 
    (iii) the proximity of community fire and police protection;
    (iv) a statement of the amenities which will be represented 
to purchasers as guaranteed to be constructed or installed, 
whether the operator will be responsible for their cost, 
installation and maintenance and an estimated cost of and 
schedule for completion of the same; provided that the estimated 
completion dates need not be more precise than the year in which 
completion is estimated to occur, and may be extended for the 
period of any delays caused by or deferred due to the occurrence 
of events such as acts of God, strikes, and other causes outside 
the reasonable control of the membership camping operator; and 
assurance that such amenities will be completed by filing a bond 
or irrevocable letter of credit, depositing funds in an escrow 
account, or such other provision as the commissioner may by 
order allow.  The amount of the bond or escrow account shall be 
reduced monthly in proportion to the amount paid for completion 
of the amenities during such period.  The bond, letter of 
credit, or escrow account shall be issued or held by a bank or 
insurance or surety company authorized to do business in this 
state; 
    (v) a statement of the amenities to be represented to 
purchasers as planned for construction and installation, but not 
guaranteed, whether the operator will be responsible for their 
costs, installation, and maintenance, and an estimated cost of 
and schedule for completion of the same; provided that the 
estimated completion dates need not be more precise than the 
year in which completion is estimated to occur and may be 
extended for the period of any delays caused by or deferred due 
to the occurrence of events such as acts of God, strikes, and 
other causes outside the reasonable control of the membership 
camping operator; 
    (14) a copy of each item of advertising materials which has 
been prepared for public distribution in this state after 
January 1, 1986.  Advertising material for off-site distribution 
which is pictorial in nature, other than site and conceptual 
plans which are labeled as such, shall be limited to a depiction 
of the actual on-site condition of the campgrounds or other 
areas that are material to the offer or sale of membership 
camping contracts pursuant to this registration; site and 
conceptual plans shall disclose which facilities are and are not 
currently in existence; 
    (15) the proposed disclosure statement as required by 
section 82A.05, subdivision 1, and the proposed separate 
disclosure, if applicable, as required by section 82A.05, 
subdivision 6; 
    (16) a financial statement of the membership camping 
operator as of the end of the membership camping operator's most 
recent fiscal year, audited by an independent certified public 
accountant; and, if the fiscal year end of the membership 
camping operator is in excess of 120 days prior to the date of 
filing the application, a financial statement, which may be 
unaudited, as of a date within 120 days of the date of 
application; 
    (17) a statement of the applicable material permits, other 
than building permits, not yet obtained but required to be 
obtained from various federal, state, and local agencies to 
operate the campground in this state, stating which have been 
applied for.  If any permit has been refused, the reasons for 
the refusal and the effect the refusal will have on subsequent 
development of the campgrounds must be disclosed; 
    (18) a copy of each type of membership camping contract to 
be sold in this state, the purchase price of each type and, if 
the price varies, the reason for the variance; 
    (19) the number of membership camping contracts proposed to 
be sold at each campground located in this state and a statement 
describing the method used to determine the number; 
    (20) rules of general applicability governing use and 
occupancy of the campgrounds; but not including any temporary or 
emergency rules, or any rules adopted in response to unique 
local or immediate needs; 
    (21) copies of applications for and contracts with any 
reciprocal program entity in which the membership camping 
operator is to participate and represents as available for use 
by purchasers; 
    (22) information concerning purchase or lease costs, rules, 
forms, and any fees, other than the initial membership fee and 
annual dues, which are required for purchaser usage of in-park 
trailers, recreational vehicles, tents, or other overnight 
accommodations, provided by or through the membership camping 
operator, for purchasers as an alternative to using the 
purchaser's own mobile accommodations; 
    (23) any additional information the commissioner reasonably 
deems appropriate to administer the provisions of this chapter. 
    Sec. 5.  Minnesota Statutes 1986, section 82A.09, is 
amended by adding a subdivision to read: 
    Subd. 3.  [SPECIFIC PROHIBITIONS.] The following devices or 
sales presentations, and the use of those devices or 
presentations, are deceptive or misleading practices: 
    (1) An advertisement that offers travel, accommodations, 
gifts, meals, or entertainment published to induce prospective 
purchasers to visit a campground or attend a sales presentation 
and that: 
    (i) does not prominently set forth all eligibility 
requirements; 
    (ii) describes offers of travel, accommodations, gifts, 
meals, or entertainment as "prizes," "awards," or by words of 
similar import or describes prospective purchasers as "winners" 
or by words of similar import; 
    (iii) contains the words "free" or "no obligation" or 
similar terms unless the offer is unequivocally without 
conditions; 
    (iv) states or implies that prospective purchasers have 
been specially selected; 
    (v) does not specifically state that gifts will be provided 
at the time the prospective purchaser visits the campground or 
attends the sales presentation; 
    (vi) does not disclose on its face page the retail market 
value of the travel, accommodations, gifts, meals, or 
entertainment provided.  For purposes of this subclause, "retail 
market value" means:  the retail price the item sells for in 
Minnesota; or if the item is not sold in Minnesota, the retail 
price the item sells for in states contiguous to Minnesota; or 
if the item is not sold in Minnesota or in a state contiguous to 
this state, the retail price the item sells for anywhere in the 
United States; 
    (vii) does not specifically and prominently disclose that 
the purpose of the offer of travel, accommodations, gifts, 
meals, or entertainment is to induce prospective purchasers to 
visit a campground or attend a sales presentation where they 
will be encouraged to purchase a membership camping contract; 
    (viii) does not completely disclose rules and procedures if 
travel, accommodations, gifts, meals, or entertainment are 
offered through a "sweepstakes," "giveaway," or similar contest; 
    (ix) does not specifically disclose the odds, as a 
fraction, using a common denominator, of a prospective 
purchaser's receiving each gift if the gift is offered through a 
"sweepstakes," "giveaway," or similar contest; or 
    (x) does not clearly and prominently state that gifts may 
be given to persons outside the state if the advertisement is 
part of a national advertising campaign. 
    (2) An advertisement that does not prominently disclose the 
name, address, and phone number of the membership camping 
operator on whose behalf the advertisement is distributed. 
    (3) An advertisement prepared on the stationery of a person 
other than the membership camping operator that creates a 
likelihood of confusion, misunderstanding, or deception. 
    Sec. 6.  Minnesota Statutes 1986, section 82A.11, 
subdivision 3, is amended to read:  
    Subd. 3.  [RIGHT OF RESCISSION.] A purchaser has an 
unconditional right to rescind any membership camping contract, 
or revoke any offer, at any time prior to or within three 
business days after the date the purchaser actually receives a 
legible copy of the binding contract.  Predating of a document 
does not affect the time in which the right to rescind may be 
exercised. 
    Sec. 7.  [82A.111] [ESCROW REQUIREMENT.] 
    Subdivision 1.  [GENERALLY.] All funds received by a 
broker, membership camping operator, or salesperson in 
connection with the offer or sale of a membership camping 
contract must be deposited immediately upon receipt in an escrow 
account maintained by the broker or membership camping operator 
for that purpose in a bank or an industrial loan and thrift 
company with deposit liabilities designated by the broker or 
membership camping operator.  The funds must remain in the 
escrow account, for the benefit of the purchaser, until the 
expiration of the purchaser's right of rescission as set forth 
in section 82A.11, subdivision 3.  The depository bank must be a 
Minnesota bank, trust company, or savings and loan association, 
or a foreign bank which authorizes the commissioner to examine 
its records of these deposits upon demand by the commissioner.  
The industrial loan and thrift company must be organized under 
chapter 53. 
    Subd. 2.  [MEMBERSHIP CAMPING DUES.] A membership camping 
operator or the operator's salesperson shall deposit all 
membership dues received in an escrow account in a Minnesota 
bank, trust company, or savings and loan association, a foreign 
bank which authorizes the commissioner to examine its records of 
these deposits upon demand by the commissioner, or an industrial 
loan and thrift company organized under chapter 53 with deposit 
liabilities.  In any calendar year, total dues to be deposited 
in the escrow may not exceed an amount approved by the 
commissioner as reasonably needed for that calendar year's 
maintenance budget submitted by the operator.  The operator may 
draw funds from the escrow as needed provided that funds are 
expended for purposes identified by the budget. 
     Subd. 3.  [COMMINGLING FUNDS.] A broker, membership camping 
operator, or salesperson shall deposit only funds specified in 
subdivisions 1 and 2 in an escrow account and shall not 
commingle personal funds or other funds in an escrow account; 
except that a broker, membership camping operator, or 
salesperson may deposit and maintain a sum not to exceed $100 in 
an escrow account from personal funds, which sum must be 
specifically identified and used to pay service charges relating 
to the escrow account. 
     Subd. 4.  [TRUST ACCOUNT RECORDS.] Each broker and 
membership camping operator shall maintain and retain records of 
all escrowed funds and escrow accounts. 
     Subd. 5.  [NOTICE OF TRUST ACCOUNT STATUS.] The names of 
the banks and industrial loan and thrift companies and the 
escrow account numbers used by a broker must be provided to the 
commissioner at the time of application for the broker's 
license, and those used by the membership camping operator must 
be provided to the commissioner at the time of application for 
registration of the membership camping contract.  Every broker 
or membership camping operator shall immediately report to the 
commissioner any change of escrow account status including 
changes in banks and industrial loan and thrift companies, 
account numbers, or additional accounts in the same or other 
banks and industrial loan and thrift companies.  A broker or 
membership camping operator shall not close an existing escrow 
account without giving ten days written notice to the 
commissioner. 
    Sec. 8.  Minnesota Statutes 1986, section 82A.24, 
subdivision 3, is amended to read:  
    Subd. 3.  [PUBLIC DOCUMENTS.] All applications and other 
documents filed with the commissioner under this chapter, except 
for loan or real estate agreements and building plans and 
specifications which have not otherwise been made public by the 
membership camping operator, shall be open to public inspection 
in accordance with rules prescribed by the commissioner.  Loan 
or real estate agreements and building plans and specifications 
which have not otherwise been made public by the operator shall 
be classified as protected nonpublic data or private data on 
individuals.  The commissioner may publish information filed 
with the commissioner or obtained by the commissioner if, in the 
judgment of the commissioner, such the action is in the public 
interest.  
    Sec. 9.  Minnesota Statutes 1986, section 82A.24, 
subdivision 6, is amended to read:  
    Subd. 6.  [COPIES.] The commissioner upon request shall 
furnish to any person at a reasonable charge photostatic or 
other copies, certified under the seal of office if 
certification is requested, of any entry in the register or any 
order or other document on file in the commissioner's 
office except for documents not available to the public pursuant 
to subdivision 3.  Any copy so certified is admissible in 
evidence under section 600.13.  
     Sec. 10.  [83.45] [ADVERTISING; SPECIFIC PROHIBITIONS.] 
     The following devices or sales presentations, and the use 
of those devices or presentations are deceptive or misleading 
practices: 
    (1) An advertisement that offers travel, accommodations, 
gifts, meals, or entertainment published to induce prospective 
purchasers to visit a subdivision or attend a sales presentation 
and that: 
    (i) does not prominently set forth all eligibility 
requirements; 
    (ii) describes offers of travel, accommodations, gifts, 
meals, or entertainment as "prizes," "awards," or by words of 
similar import or describes prospective purchasers as "winners" 
or by words of similar import; 
    (iii) contains the words "free" or "no obligation" or 
similar terms unless the offer contained in the advertisement is 
unequivocally without conditions; 
    (iv) states or implies that prospective purchasers have 
been specially selected; 
    (v) does not specifically state that gifts will be provided 
at the time the prospective purchaser visits the subdivision or 
attends the sales presentation; 
    (vi) does not disclose on its face page the retail market 
value of the travel, accommodations, gifts, meals, or 
entertainment provided.  For purposes of this paragraph, "retail 
market value" means:  the retail price the item sells for in 
Minnesota; or if the item is not sold in Minnesota, the retail 
price the item sells for in states contiguous to Minnesota; or 
if the item is not sold in Minnesota or in any state contiguous 
to this state, the retail price the item sells for anywhere in 
the United States; 
    (vii) does not specifically and prominently disclose that 
the purpose of the offer of travel, accommodations, gifts, 
meals, or entertainment is to induce prospective purchasers to 
visit a subdivision or attend a sales presentation where they 
will be encouraged to purchase subdivided land; 
    (viii) does not completely disclose rules and procedures if 
travel, accommodations, gifts, meals, or entertainment are 
offered through a "sweepstakes," "giveaway," or similar contest; 
    (ix) does not specifically disclose the odds, as a 
fraction, using a common denominator, of a prospective 
purchaser's receiving each gift if the gift is offered through a 
"sweepstakes," "giveaway," or similar contest; or 
    (x) does not clearly and prominently state that gifts may 
be given to persons outside the state if the advertisement is 
part of a national advertising campaign. 
    (2) An advertisement that does not prominently disclose the 
name, address, and phone number of the subdivider on whose 
behalf the advertisement is distributed. 
    (3) An advertisement prepared on the stationery of a person 
other than the subdivider which creates a likelihood of 
confusion, misunderstanding, or deception. 
    Approved May 15, 1987