(a) Campgrounds subject to this section include any campground which is offered or made available by an operator for the first time after January 1, 1991, or any campground which becomes subject to a new or refinanced blanket encumbrance after January 1, 1991. A membership camping operator shall not offer or represent that any campground subject to this section is available for use by the purchasers of its camping contracts unless one of the following conditions has been satisfied:

(1) The membership camping operator obtains and records a nondisturbance agreement from each holder of a blanket encumbrance. The nondisturbance agreement is executed by the membership camping operator and each holder of the blanket encumbrance and includes the provisions set forth in subdivision (j) of Section 1812. 300 and each of the following:

(A) The instrument may be enforced by purchasers of membership camping contracts. If the membership camping operator is not in default under its obligations to the holder of the blanket encumbrance, the agreement may be enforced by both the membership camping operator and the purchasers.

(B) The nondisturbance agreement is effective as between each purchaser and the holder of the blanket encumbrance despite any rejection or cancellation of the purchaser’s contract during any bankruptcy proceedings of the membership camping operator.

(C) The agreement is binding upon the successors in the interest of both the membership camping operator and the holder of the blanket encumbrance.

(D) A holder of the blanket encumbrance who obtains title or possession, or who causes a change in title or possession in a campground by foreclosure or otherwise, and who does not continue to operate the campground upon conditions no less favorable to members than existed prior to the change of title or possession shall either:

(i) Offer the title or possession of the campground to an association of members to operate the campground.

(ii) Obtain a commitment from another entity which obtains title or possession to undertake the responsibility of operating the campground.

(2) The membership camping operator posts a surety bond or irrevocable letter of credit with a trustee in favor of purchasers and which guarantees that the payments on the blanket encumbrance are made as they become due. A trustee shall be either a corporate trustee or an attorney licensed to practice law in this state.

(3) The membership camping operator delivers to a trustee an encumbrance trust agreement which contains each of the following provisions:

(A) The membership camping operator shall collaterally assign to the trustee all of its membership camping contracts receivable or other receivables of the membership camping operator in an amount calculated in accordance with subparagraph (B). The membership camping operator shall provide the trustee with a security interest in the receivables and all proceeds therefrom. For purposes of this section, the membership camping operator shall be credited with 100 percent of the outstanding principal balance of each receivable assigned to the trustee. All proceeds of the receivables shall be held in a trust account by the trustee subject to this section for the use and benefit of the purchasers to make the payments of principal and interest due under the blanket encumbrance. However, if the proceeds of the receivables during any calendar year exceed the amount due under the blanket encumbrance in the following calendar quarter, these excess funds shall be returned by the trustee to the membership camping operator.

(B) The amount of membership camping contracts receivable or other receivables to be collaterally assigned as described in subparagraph (A) shall be calculated based upon the maximum number of contracts per camping site to be offered on or after January 1, 1991, in connection with the campground in question, which number of contracts per camping site shall not exceed 15 multiplied by the total number of camping sites available at the campground thereby yielding the anticipated total number of contracts to be sold in connection with the campground. The outstanding balance due under the blanket encumbrance shall then be divided by the anticipated total number of contracts to arrive at the amount per contract sold to be paid over to the trustee in the form of collaterally assigned receivables as described in subparagraph (A). The membership camping operator shall make the required collateral assignments to the trustee on a quarterly basis based upon the actual sales of contracts at the campground in question during the previous calendar quarter. However, the membership camping operator’s obligation to collaterally assign receivables to the trustee shall cease when the membership camping operator has collaterally assigned to the trustee an aggregate principal amount of receivables equal to 100 percent of the aggregate principal indebtedness remaining due under the blanket encumbrance.

(C) If the outstanding balance due under the blanket encumbrance at the time of execution of the encumbrance trust agreement exceeds the anticipated gross revenue based upon the membership camping operator’s price list to be generated by the sale of the anticipated total number of contracts as calculated in subparagraph (B), the membership camping operator shall meet the conditions specified in paragraph (1), (2), or (4) of this subdivision as to the full amount of the excess.

(D) It may be terminated by the membership camping operator if the membership camping operator has satisfied the obligation secured by the blanket encumbrance in full or has complied with paragraph (1), (2), or (4) of this subdivision. Upon termination of the agreement, all receivables and proceeds thereof held by the trustee shall be immediately assigned and delivered to the membership camping operator. All costs of administering this trust, filing, and perfecting the security interest, and foreclosing the lien shall be borne by the membership camping operator.

(4) Any financial institution which has made a hypothecation loan to the membership camping operator (a “hypothecation lender”) shall have a lien on, or security interest in, the membership camping operator’s interest in the campground, and the hypothecation lender shall have executed and recorded a nondisturbance agreement at the county recorder’s office for the county in which the campground is located. Each person holding an interest in a blanket encumbrance superior to the interest held by the hypothecation lender shall execute and record at the county recorder’s office, an instrument stating that the person shall give the hypothecation lender notice of, and at least 30 days to cure, any default under the blanket encumbrance before the person commences any foreclosure action affecting the campground. For the purposes of this paragraph, a “hypothecation loan to a membership camping operator” means a loan or line of credit secured by membership camping contracts receivable arising from the sale of membership camping contracts by the membership camping operator, which exceeds in the aggregate all outstanding indebtedness secured by blanket encumbrances superior to the interest held by the hypothecation lender.

A hypothecation lender who obtains title or possession, or who causes a change in title or possession, in a campground, by foreclosure or otherwise, and who does not continue to operate the campground upon conditions no less favorable to purchasers than existed prior to the change of title or possession shall either:

(A) Offer the title or possession to an association of members to operate the campground.

(B) Obtain a commitment from another entity which obtains title to, or possession of, the campground to undertake the responsibility of operating the campground.

(b) Any membership camping operator which does not comply at all times with subdivision (a) with regard to any blanket encumbrance in connection with any campground subject to that subdivision is prohibited from offering any membership camping contracts for sale during the period of noncompliance.

(Added by Stats. 1990, Ch. 1529, Sec. 13.)