§514E-19  Protection of purchasers from
blanket liens.  (a)  An escrow for the sale of a time share interest in a
time share ownership plan may close only if the requirements of any one of the
following alternatives for protecting the purchaser have been satisfied:



(1)  The time share interest is conveyed to the
purchaser free and clear of any blanket liens.



(2)  The time share unit is conveyed to a trustee:



(A)  Free and clear of any blanket liens under
a trust meeting the requirements of sections 514E-22 and 23; or



(B)  Under a lien payment trust meeting the
requirements of sections 514E-22, 23, 24, and 25.



(3)  (A)  The time share interest is conveyed to
the purchaser subject only to blanket liens:



(i)  Where every person holding an interest in the
blanket lien has executed and recorded a nondisturbance agreement; or



(ii)  For which the director's acceptance of a
surety bond or an irrevocable letter of credit meeting the requirements of
section 514E-28 has been recorded with respect to that time share unit; and



(B)  If legal or equitable title will be held
by anyone other than the purchaser, a notice of time share plan is recorded.



(4)  The requirements of any alternative arrangements
accepted by the director have been met.



(b)  An escrow for the sale of a time share
interest in a time share use plan may close only if the requirements of any one
of the following alternatives for protecting purchasers have been satisfied:



(1)  The time share unit is conveyed to a trustee:



(A)  Free and clear of any blanket liens under
a trust meeting the requirements of sections 514E-22 and 23; or



(B)  Under a lien payment trust meeting the
requirements of sections 514E-22, 23, 24, and 25.



(2)  A notice of time share plan is recorded and
either:



(A)  Every person holding an interest in a
recorded blanket lien against any time share interests in that time share unit
executes and records a nondisturbance agreement; or



(B)  The director's acceptance of a surety bond
or an irrevocable letter of credit meeting the requirements of section 514E-28
is recorded.



(3)  The requirements of any alternative arrangements
accepted by the director have been met.



(c)  [Subsection effective until June 30,
2008.  For subsection effective July 1, 2008, see below.]  A time share
interest in any time share plan which satisfies the escrow and blanket lien
protection requirements of this chapter shall not be deemed a risk capital
security under chapter 485, and the offer or sale of a time share interest
therein shall not be deemed the offer or sale of a security.



(c)  A time share interest in any time share
plan which satisfies the escrow and blanket lien protection requirements of
this chapter shall not be deemed a risk capital security under chapter 485A,
and the offer or sale of a time share interest therein shall not be deemed the
offer or sale of a security. [L 1982, c 186, §7; am L 2006, c 229, §15]