ARDA and ARDA-ROC Support Proposals to Ensure Timeshare Buyers’ Rights on Short-Term Projects


Issue Brief

 The Hawaii State Legislature has introduced companion bills—HB 271 and SB 754—relating to buyers’ rights on short-term timeshare products in Hawaii. The legislation would provide cancellation rights (seven days) to the purchasers of short-term products as well as allow for better protection to recoup buyers’ funds should the developer default on the construction loan or fail to complete the construction project.

Currently, both the Hawaii Condominium Property Act and the Hawaii Time Share Act require that buyers’ funds be placed in escrow and permits these funds to be disbursed to help the developer pay the costs of construction and development. In the event the developer defaults on the construction loan, regardless of whether the buyers’ funds were used to pay for construction and development costs, the lender may foreclose and acquire rights to the title on the project.

Under the new proposal, the disbursement of the purchasers’ funds (held in escrow) to a developer require the developer first post a bond or letter of credit thus assuring that the buyers’ deposits will be fully refunded if construction of the project is not completed or the developer defaults on the construction loan.


 The new proposals in HB 271 and SB 754 provide better protections to buyers in the event the developer fails to complete construction or defaults under its construction loan.

Position/Call to Action

 ARDA, ARDA-ROC and ARDA-Hawaii support the companion bills HB 271 and SB 754 as they will ensure enhanced protections for buyers purchasing timeshare in Hawaii.

Issue Updates

 HB 271 and SB 754 passed out of the Tourism Committee and is a hearing in the Committee on Economic Development and Business on 3/24/15.

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