Haw. Code R. § 16-106-40 - Plan manager's bond
(a) A plan manager
shall at all times maintain a bond, naming the time share owners association
and all time share owners as obligees, covering all of its directors, officers,
employees, agents, and volunteers having control of or access to moneys of the
plan manager or moneys which are collected, held, managed, or disbursed by the
plan manager in the performance of its duties as plan manager for a time share
plan. The bond shall cover any loss of money or other property the plan
manager, time share owners association and time share owners may sustain as a
result of any fraud, dishonesty, forgery or alteration, larceny, theft,
embezzlement, unlawful obstruction, misapplication, misplacement, destruction
or misappropriation, or any other dishonest or criminal act or omission, or
infidelity to duty of or by any director, officer, employee, agent, or
volunteer of the plan manager, and may contain at least the following
provisions:
(1) That the surety shall provide,
not less frequently than annually, written assurances to the director and to
the time share owners association that the bond is in full force and
effect;
(2) That the surety may not
cancel the bond without giving at least thirty days prior written notice to the
director and to the time share owners association of the cancellation of the
bond;
(3) That the prosecution or
conviction or both of a director, officer, employee, agent, or volunteer of the
plan manager shall not be a condition precedent to recovery on the
bond;
(4) That knowledge of
defalcations shall not be imputed to the plan manager where a director,
officer, employee, agent, or volunteer other than the offending party has
knowledge of the defalcations;
(5)
That the identification of a specific offending party shall not be a condition
precedent to recovery on the bond; provided that it is conclusively shown that
loss has occurred as a result of the actions of a director, officer, employee,
agent, or volunteer of the plan manager;
(6) That the surety expressly acknowledges
the plan manager's status (if such be the case) as an independent contractor or
agent of the time share owners association, and that coverage under the bond
shall not be affected thereby;
(7)
That the bond may not be changed or amended without the prior written consent
of the director; and
(8) That the
surety waives any defense based upon the exclusion of volunteers or other
persons who serve without pay from coverage under the bond.
(b) The amount and form of the
above-described bond and the identity of the surety thereon shall be approved
by the director; provided that the amount of the bond shall be not less than
the following:
(1) If payments are collected
or received by the plan manager or due from the time share owners at intervals
of forty-five days or less, an amount equal to three times the total amount due
at each such interval from the owners of all time share units in the time share
plan; or
(2) If payments are
collected or received by the plan manager or due from the time share owners at
intervals longer than forty-five days, an amount equal to two times the total
amount due at each such interval from the owners of all time share units in the
time share plan.
(3)
Notwithstanding subsections (1) and (2), the amount of the bond shall not be
less than $10,000 nor more than $200,000, unless said amount is increased or
decreased by the director pursuant to subsection (d).
(c) In lieu of the above-described bond, a
plan manager may file a cash bond or irrevocable letter of credit with the
director in the applicable amount specified in subsection (b)(1) or subsection
(b)(2) above.
(d) The director
shall have the discretion to accept a bond or other equivalent, the form and
amount of which are not in conformance with this section if, in the judgment of
the director, that bond or equivalent would give time share owners the benefits
and protections designed to be afforded by this section. In the exercise of
that discretion, the director may take into consideration the following
factors:
(1) The background and experience of
the plan manager;
(2) The length of
operation of the time share program;
(3) The financial history and strength of the
plan manager;
(4) The history of
complaints or non-complaints against the plan manager;
(5) The plan manager is a real estate broker,
licensed pursuant to chapter 467, HRS;
(6) The existence of other types of insurance
covering the plan manager;
(7) The
method of collection and procedures in place to protect time share owners;
and
(8) Such other factors upon
which the benefits and protections to be afforded the time share owners by this
section can best be met without undue burden to the plan manager.
(e) A plan manager shall annually
provide evidence that a bond which satisfies the requirements of this section
has been secured for each time share plan under the management of the plan on a
form prescribed by the director.
Notes
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