P.R. Laws tit. 31, § 1256c
(1) A managing entity and a component site managing entity shall owe a fiduciary duty to each owner of an accommodation, timeshare or vacation club right with regard to the collection of assessments and the disbursement of timeshare plan or vacation club funds to pay the common expenses.
(2) The vacation club managing entity shall establish an escrow or trust account with an escrow agent or a trustee that is not an affiliate of the developer, the vacation club managing entity, or any component site managing entity, and shall deposit or cause to be deposited into such escrow or trust account all payments received from time to time by the vacation club managing entity from the developer and the other owners of accommodations or vacation club rights that relate to common expenses incurred in connection with any component site or portion thereof. The vacation club managing entity shall not be required to escrow or deposit into the trust account payments received from the developer or owners that relate to other common expenses of the vacation club, including those allocable to the vacation club managing entity’s management fee and to the operation of the reservation system.
(a) Funds may only be disbursed from the escrow or trust account by the escrow agent or trustee upon receipt of an affidavit or declaration under affirmation, subject to the penalties for perjury under the Penal Code, from the vacation club managing entity specifying the purpose for which the disbursement is requested and making reference to the budgetary source of authority for such disbursement, if any. The escrow agent or trustee shall only disburse monies from the escrow or trust account relating to a particular component site directly to the managing entity of that component site, except for real estate tax payments which may [be] disbursed from the escrow account directly to the appropriate tax collection authority pursuant to applicable law.
(b) The escrow agent or trustee shall be entitled to rely upon the affidavit of the vacation club managing entity and shall have no obligation independently to ascertain the propriety of any requested disbursement, so long as the escrow agent or trustee has no actual knowledge that the affidavit is false in any material respect.
(c) The escrow agent or trustee shall maintain the escrow or trust account only in such a manner as to be under the direct supervision and control of the escrow agent or trustee. The escrow agent or trustee shall owe a fiduciary duty to the vacation club managing entity and to each owner of an accommodation or vacation club right to maintain the escrow or trust account in accordance with generally accepted accounting principles and to disburse funds from the escrow or trust account only in accordance with subsection (c)(2) of this section. The escrow agent or trustee shall retain all affidavits received pursuant to subsection (c)(2) of this section for a period of five (5) years. Should the escrow agent or trustee receive any conflicting demands for the escrowed or trust funds, the escrow agent or trustee shall immediately notify the Company of the dispute and promptly either submit the matter to arbitration or, by interpleader or other means, seek an adjudication of the matter by a court of competent jurisdiction.
(d) Any vacation club managing entity that intentionally fails to comply with the provisions of subsection (c)(2) of this section concerning the establishment of an escrow or trust account, the deposit of funds into the escrow or trust account, and the disbursement of such funds is guilty of unlawful appropriation, as defined in § 4271 of Title 33, or aggravated unlawful appropriation, as defined in § 4272 of Title 33, as may be applicable. A vacation club managing entity’s failure to establish such an escrow or trust account or to deposit funds therein as required by this subsection shall constitute prima facie evidence of an intentional and purposeful violation of this section.
(3) In lieu of satisfying the escrow or trust requirements of subsection (c)(2) of this section, and in recognition of the impossibility or impracticability of a vacation club managing entity’s satisfying some of such requirements, the Company shall have discretion to accept other financial assurances that funds will be available to pay the common expenses of each component site of a vacation club, including but not limited to a surety bond or an irrevocable letter of credit issued in such minimum amount as the Company deems reasonably necessary in order to accomplish such goal.
(4) The provisions of this section shall not apply to any payments made directly to a component site managing entity by the owner of an accommodation or vacation club right.
(5) The managing entity of a timeshare plan or a vacation club may deny the use of the accommodations and facilities of the timeshare plan or vacation club to any owner who is delinquent in the payment of any assessments for common expenses. A managing entity desiring to deny the use of accommodations and facilities of a timeshare plan or vacation club to third parties receiving use rights in the delinquent owner’s timeshare or vacation club period through an affiliated exchange program shall notify the affiliated exchange company in writing of the denial of use. The receipt of such written notice by the affiliated exchange company shall be effective to bar the use of all third parties claiming through the affiliated exchange program and shall be binding upon all third parties claiming through the affiliated exchange program until such time as the affiliated exchange company receives notice from the managing entity that the owner is no longer delinquent. However, any third party claiming through the affiliated exchange program who has received a confirmed assignment of the delinquent owner’s use rights from the affiliated exchange company prior to the expiration of forty-eight (48) hours after the receipt by the affiliated exchange company of such written notice from the managing entity shall be permitted by the managing entity to use the accommodations and facilities of the timeshare plan or vacation club to the same extent that he would be allowed to use such accommodations and facilities if the delinquent owner were not delinquent.
History —Dec. 26, 1995, No. 252, § 6-104; July 5, 1996, No. 66, § 24.