(1) A lien payment trust may be established with a trust company as defined in ORS 706.008 that is authorized to transact trust business in this state, for the conveyance of timeshare property to the trustee under ORS 94.876 if the trust instrument provides for at least the following:
(a) Title to the timeshare property must be transferred to the trustee before the purchaser’s funds, negotiable instruments, purchase money agreements or credit card authorizations or proceeds are disbursed by the escrow agent.
(b) The trustee shall not convey or transfer all or any portion of the timeshare property except for an accommodation in which no owner has any further right of occupancy or as permitted at termination of the trust.
(c) The trustee shall not encumber the timeshare property without the consent of the Real Estate Commissioner.
(d) The association, if any, and all timeshare owners are made third party beneficiaries of the trust.
(e) Notice of the trustee’s intention to resign must be given to the commissioner at least 90 days before the resignation takes effect.
(f) The trust instrument may not be amended to adversely affect the interests or rights of a timeshare owner without the written approval of the association or, if no association, a majority of the timeshare owners.
(g) Require the deposit into trust of a lien payment deposit, as required by subsection (3) of this section, before the closing of the first timeshare sale.
(h) Require the deposit into trust before closing the first timeshare sale, and the intention to maintain for the duration of the trust, an installment payment reserve consisting of funds in an amount sufficient at all times:
(A) To pay the total of three successive monthly installments of debt service on each blanket encumbrance or, if installments of debt services are not payable monthly or in equal installments, such funds as the commissioner determines reasonably necessary to assure that the trustee will have sufficient cash to make any payment under the blanket encumbrances when due; and
(B) To create a sinking fund to extinguish the debt at its maturity if the blanket encumbrance against the trust property is an interest only loan, contains a balloon payment provision or is otherwise not fully amortized under the terms for repayment.
(i) Authorize the trustee to sell, transfer, hypothecate, encumber, or otherwise dispose of the purchase money agreement or any other asset composing the lien payment deposit or any portion thereof if, in the trustee’s judgment, such action is necessary to enable the trustee to make all payments required under the blanket encumbrances to prevent foreclosure of the blanket encumbrance.
(j) Require the developer to replenish the funds and assets in the trust whenever the lien payment deposit or the funds in the installment payment reserve fail to meet the requirements set forth in this subsection.
(k) Provide that the trustee periodically shall disburse funds in the trust as follows: First, to pay real property taxes, governmental assessments, and lease rent, if any; second, to pay current payments due on the blanket encumbrances, in their order of priority; third, to any sinking fund established for the payment of blanket encumbrances, including any prepayment penalties and release prices; fourth, to pay any service charge and cost payable to the trustee and its collection agent, if any, under the trust instrument; and fifth, to the developer or as directed by the developer.
(L) Contain any other provisions required by the commissioner under rules adopted under ORS 94.915 (2) and (3).
(2) Every purchase money agreement delivered to the trustee of a lien payment trust must contain a notice to the holder that the trustee may make demand of the holder to deliver to the trustee all payments made by the owner after the trustee mails notice that the funds and other assets in the trust are inadequate to meet the lien payment deposit requirements. Following such demand, the holder must immediately deliver all subsequent payments of the owner to the trustee and continue to deliver the payments until the lien payment deposit is replenished.
(3)(a) The lien payment deposit shall consist of either nondelinquent purchase money agreements from timeshare owners in the timeshare plan or other assets deposited into the trust by the developer and approved by the commissioner. The purchase money agreements must have an aggregate remaining principal balance of not less than, and any other assets deposited must have a liquidated value of not less than, 110 percent of the difference between the aggregate remaining balance owing under blanket encumbrances against the timeshare property, including any prepayment penalties, release prices or similar charges, and the amount of money or its equivalent in the trust and available at any time to be applied to the reduction of the principal balance of the blanket encumbrance. The developer shall have the burden of establishing the liquidated value of assets other than purchase money agreements from timeshare owners in the timeshare plan.
(b) If the blanket encumbrance payment deposit consists of purchase money agreements, the payments required to be made by owners under the agreements shall:
(A) Be due on or before the date payments become due on the blanket encumbrances;
(B) If paid when due as provided in subsection (4) of this section, be equal to at least 110 percent of the amount required to be paid on the blanket encumbrances on such date; and
(C) Be sufficient to pay, in full, during the term of the purchase money agreements all amounts secured by the blanket encumbrances, including prepayment penalties and release prices, if any, and all service charges payable to the trustee, any collection agent, and any other servicing agent under the trust agreement.
(c) If the developer proposes to deposit into trust assets other than purchase money agreements, the assets must be sufficient to pay debt service installments on the blanket encumbrance as they become due and to create a sinking fund or other arrangement adequate to extinguish the debt secured by the blanket encumbrance at its maturity.
(4) For the purposes of this section, “purchase money agreement” means and includes a purchase money mortgage, a purchase money trust deed and a purchase contract.
(5) For the purpose of this section, a purchase money agreement is considered delinquent when an installment payment is more than 59 days past due. [1983 c.530 §32; 1997 c.631 §394]
Section: Previous 94.869 94.871 94.873 94.876 94.878 94.881 94.885 94.890 94.895 94.900 94.905 94.915 94.920 94.925 94.930 NextLast modified: August 7, 2008