§ 14-12B-02. Registration and surety
West's Annotated Code of MarylandCommercial Law
MD Code, Commercial Law, § 14-12B-02
§ 14-12B-02. Registration and surety
(a) Each person who sells health club services in this State shall register with the Division on forms the Division provides. The person shall furnish the full name and address of each business location where health club services are sold as well as any other registration information the Division deems appropriate.
(e)(1)(i) Subject to the provisions of paragraph (3) of this subsection, a person who sells health club services agreements shall purchase a surety bond in an amount not less than the aggregate value of outstanding liabilities to members, including all prepaid fees, membership fees, dues, deposits, initiation fees, and fees for health club services. For the purposes of this section, “liabilities” means the moneys actually received in advance from the members less the prorated value of services rendered by the health club facility. In the case of a lifetime contract, the liabilities shall be calculated on a prorated basis for not more than 36 months.
(ii) The amount of the bond shall be based upon a report prepared by an independent certified public accountant describing the health club's outstanding liabilities to the members using accepted standard accounting principles. In this section “outstanding liabilities” includes all amounts that would be required to be refunded to members if the health club facility ceases operations.
1. When the health club facility's outstanding liabilities to members increase or decrease by $10,000; or
2. On a quarterly basis.
(ii) If a registrant's outstanding liabilities to the members exceed the amount of the bond, and the registrant has failed to increase the bond, then the registrant shall immediately stop selling health club services agreements and shall refrain from selling health club services agreements until the requirements of this subsection have been satisfied.
(ii) Notwithstanding any other provision of this subtitle, a seller of health club services agreements does not have to file or maintain a bond, letter of credit, or cash in excess of $200,000 per health club services facility. The bonding requirement of this subsection applies to each location at which health club services are sold in any case where a person operates or plans to operate more than one facility within the State.
(f)(1) A buyer of health club services who suffers or sustains any loss or damage by reason of the closing of a facility or bankruptcy by the seller of the health club services agreement shall file a claim with the surety and, if the claim is not paid, may bring an action based on the bond and recover against the surety. In the case of a letter of credit or cash deposit that has been filed with the Division, the buyer may file a claim with the Division.
(2) Any claim under paragraph (1) of this subsection shall be filed no later than 1 year from the date on which the facility closed or bankruptcy was filed. The Division shall notify each known buyer described in paragraph (1) of this subsection about the procedure for filing a claim, unless the seller of the health club services agreements has provided sufficient notice to each known buyer.
(2) Any person who sells health club services agreements shall maintain accurate records, updated as necessary, of the name, address, contract terms, and payments of each buyer of health club services. These records shall be open to inspection by the Division, upon reasonable notice, at any time during normal business hours.
(i) For purposes of subsections (e) and (f) of this section, any initiation fee, or other fee, that exceeds $200 and that is not identified as a payment for specific future services will be deemed to be a payment for services to be delivered during the initial 2 years of the buyer's membership term.
(j) Any information received by the Division in the course of administering the registration program under this subtitle shall be made available to the public subject to the provisions of the Maryland Public Information Act.1
Credits
Added by Acts 1982, c. 892, eff. July 1, 1982. Amended by Acts 1983, c. 548, § 2; Acts 1986, c. 837; Acts 1986, c. 838; Acts 1990, c. 582; Acts 1993, c. 259; Acts 1998, c. 581, § 1, eff. July 1, 1998; Acts 2004, c. 430, § 4, eff. July 1, 2004.
Footnotes
State Government, § 10-611 et seq.
MD Code, Commercial Law, § 14-12B-02, MD COML § 14-12B-02
Current through legislation effective through April 9, 2023, from the 2024 Regular Session of the General Assembly. Some statute sections may be more current, see credits for details.
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