Minnesota Session Laws - 1988, Regular Session

  

                         Laws of Minnesota 1988 

                        CHAPTER 493-H.F.No. 2546 
           An act relating to commerce; regulating preparation of 
          certain information for membership camping contract 
          applications and subdivider qualification statements; 
          prohibiting certain misleading and deceptive practices;
          prohibiting advance payments relating to resale of 
          time share property interests; amending Minnesota 
          Statutes 1986, sections 83.29, subdivisions 2 and 5; 
          and 83.44; Minnesota Statutes 1987 Supplement, 
          sections 82A.04, subdivision 2; 82A.09, subdivision 3; 
          and 83.23, subdivision 3; repealing Minnesota Statutes 
          1986, section 82A.09, subdivision 1. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1987 Supplement, 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) (15) a financial statement of the membership camping 
operator as of the end of the membership camping operator's most 
recent fiscal year, audited prepared by an independent certified 
public accountant and certified by the camping operator; and, if 
the fiscal year end of the membership camping operator is in 
excess of 120 180 days prior to the date of filing the 
application, a financial statement, which may be unaudited, as 
of a date within 120 180 days of the date of application; 
    (17) (16) 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 membership 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) (17) 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) (18) 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) (19) 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) (20) 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) (21) 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; and 
    (23) (22) any additional information the commissioner 
reasonably deems appropriate to administer the provisions of 
this chapter. 
    Sec. 2.  Minnesota Statutes 1987 Supplement, section 
82A.09, subdivision 3, is amended 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. 
    (4) Site and conceptual plans which do not disclose which 
facilities are and are not currently in existence. 
    (5) Pictorial advertising material for off-site 
distribution, other than site and conceptual plans which are 
labeled as such, which depicts more than the actual on-site 
condition of the campgrounds or other areas that are material to 
the offer or sale of membership camping contracts. 
    Sec. 3.  Minnesota Statutes 1987 Supplement, section 83.23, 
subdivision 3, is amended to read:  
    Subd. 3.  [QUALIFICATION.] Subdivided lands may be 
registered by qualification provided all of the following 
requirements have been met:  
    (a) an application for registration has been filed with the 
commissioner in a format which the commissioner may by rule 
prescribe;  
    (b) the commissioner has been furnished a proposed public 
offering statement complying with section 83.24;  
    (c) a filing fee of $400 plus an additional registration 
fee of $1 for each lot, unit, parcel, or interest included in 
the offering accompanies the application.  The maximum combined 
filing and registration fees shall in no event be more than 
$3,500;  
    (d) the subdivider is in compliance with service of process 
provisions of section 83.39;  
    (e) the commissioner has been furnished a financial 
statement of the subdivider's most recent fiscal year, audited 
prepared by an independent certified public accountant and 
certified by the subdivider; and, if the fiscal year of the 
subdivider is more than 90 180 days prior to the date of filing 
the application, a financial statement, which may be unaudited, 
as of a date within 90 180 days of the date of application.  
    Subdivisions in which all the improvements are complete and 
paid for by the developer, and for which clear title can be 
given the purchaser at the closing, are exempt from providing 
independently certified financial statements prepared by an 
independent accountant.  
    An application for registration under this section becomes 
effective when the commissioner so orders.  
    The rulemaking authority in this subdivision does not 
include emergency rulemaking authority pursuant to chapter 14.  
    Sec. 4.  Minnesota Statutes 1986, section 83.29, 
subdivision 2, is amended to read: 
    Subd. 2.  If the commissioner determines upon inquiry and 
examination: 
    (1) That any of the requirements of sections 83.20 to 83.42 
or the rules promulgated pursuant to sections 83.20 to 83.42 
have not been met; 
    (2) That the proposed promotional plan or advertising is or 
tends to be fraudulent, deceptive or misleading; 
    (3) That the sales of the lands would work or tend to work 
a fraud or deception on the purchasers thereof; 
    (4) That the sales of the lands would be unfair or 
inequitable to the purchasers thereof; 
    (5) That the subdivider has violated any of the provisions 
of sections 83.20 to 83.42 or any order or rule of the 
commissioner; 
    (6) That the subdivider is not in compliance with federal, 
state or local environmental quality standards; 
    the commissioner may issue an order denying the application 
for registration; provided, however, that nothing in this 
section shall authorize the commissioner to deny an application 
based solely on the proposed sale price of the lands.  The order 
shall state the reasons for denial.  Every person whose 
application for registration has been denied shall have the 
right to a hearing provided a request for such hearing is filed 
with the commissioner within 30 days of the receipt of the order 
of denial.  The order of denial shall inform the applicant of 
the right to this hearing.  
    Sec. 5.  Minnesota Statutes 1986, section 83.29, 
subdivision 5, is amended to read: 
    Subd. 5.  No person shall publish or cause to be published 
in this state any advertisement offering subdivided lands 
subject to the registration requirements of section 83.23 which 
is false, misleading, or deceptive.  The commissioner has 15 
days in which to deny the advertising. 
    Sec. 6.  Minnesota Statutes 1986, section 83.44, is amended 
to read:  
    83.44 [PROHIBITED PRACTICES.] 
    It is unlawful for any person, in connection with the offer 
or sale of any subdivided land or interests therein, directly or 
indirectly:  
    (a) to employ any device, scheme, or artifice to defraud;  
    (b) to make any untrue statement of a material fact or to 
omit to state material facts necessary in order to make the 
statements made, in the light of the circumstances under which 
they are made, not misleading; or 
    (c) to engage in any act, practice, or course of business 
which operates or would operate as a fraud or deceit upon any 
person; or 
    (d) to accept an advance payment for services rendered by 
an agent in connection with the resale of a time share interest. 
    Sec. 7.  [REPEALER.] 
    Minnesota Statutes 1986, section 82A.09, subdivision 1, is 
repealed. 
    Sec. 8.  [EFFECTIVE DATE.] 
    This act is effective the day following final enactment. 
    Approved April 12, 1988