Question re Equity

[Frustrated Owner Junior Member Find all posts View Profile Close Frustrated Owner]

Hi there.
My father owns a time share in Velas Vallarta.
Could anyone please explain to me what "equity" in a time share actually means?
If a time share owner has to pay money to get into the time share, as well as pay the yearly dues (or dues for each week) then what exactly can one do with the "equity" when all the weeks are used up and/or cancelled?
This concept of equity has me baffled.

We recently were able to get his contract cancelled so that there was no longer any obligation to pay the remaining 19 weeks. The equity paid out since 2001 for a two bedroom was astonishing (over $38,000). Others we have talked to have only paid $8,000 for the same thing (but for "only" 12 weeks, not the 24 that he got and has already used 5).

Thank you, in advance, for your responses.

[mdurette Senior Member Find all posts View Profile Close mdurette]

Equity is the difference between what you owe on something and what it is worth.

Let's say there is no loan against the time share and it is worth $5,000.
Then your equity is $5,000

Let's say there is a $10,000 loan against it and it is worth $5,000.
Then you have no equity.

Most time shares have very little to no equity. They are worth practically nothing.

[puppymommo Senior Member Find all posts View Profile Close puppymommo]

Most time shares have very little to no equity. They are worth practically nothing.

I agree that the issue of equity has little to do with most timeshares. The only time equity might come up is when some salesperson is trying to get you to upgrade what you have to something more expensive. Then you may get some "credit" for your "equity".

I don't totally agree with the comment that most timeshares "are worth practically nothing." The worth of a timeshare tends to be in the eye of the beholder. If your timeshare is worth something to you, you generally keep it. If it is not worth anything to you, you will want to get rid of it, which can be very difficult to do.

But in terms of equity or resale value, I agree most are worth "practically nothing." Some you cannot even give away!

[aliikai2 Super Moderator Find all posts View Profile Close aliikai2]

In your dads case it wasn't equity, it was money paid

You did well to get the contract canceled as a Velas Vallarta has no resale value.
Unlike a home or a land purchase a timeshare in general losses most of the entire purchase price as soon as the right to cancel expires.

In Mexico, since these are memberships and the VV has very high annual fees compounded by having extremely high All Inclusive fees, these memberships have a negative value as soon as the ink dries.

fwiw,

Greg

Hi there.
My father owns a time share in Velas Vallarta.
Could anyone please explain to me what "equity" in a time share actually means?
If a time share owner has to pay money to get into the time share, as well as pay the yearly dues (or dues for each week) then what exactly can one do with the "equity" when all the weeks are used up and/or cancelled?
This concept of equity has me baffled.

We recently were able to get his contract cancelled so that there was no longer any obligation to pay the remaining 19 weeks. The equity paid out since 2001 for a two bedroom was astonishing (over $38,000). Others we have talked to have only paid $8,000 for the same thing (but for "only" 12 weeks, not the 24 that he got and has already used 5).

Thank you, in advance, for your responses.

[Frustrated Owner Junior Member Find all posts View Profile Close Frustrated Owner]

equity issues

I so appreciate your responses.

Here is my example:
Contract 1 - paid "x" amount
Contract 2 - upgrade to 2 bedroom. Paid "x" amount. Total - about $30,000+
Contract 3 - Sales Agent tried to get father to pay more for a downgrade to a 1 bedroom (they wanted $12,000), plus an extra $800/year in maintenance for 12 weeks and an option for 12 weeks.

Since Contract 2 was cancelled by Contract 3, and it could never be ressurected (their words), Contract 3 was cancelled (within 5 days due to the bad deal) and the obligation to pay any more weeks was eliminated.

However, the "equity" from 1 to 2 to 3 was transferred.
So... with no weeks remaining (no more obligation) has the money invested been lost?

[Frustrated Owner Junior Member Find all posts View Profile Close Frustrated Owner]

having just read Allikai's response, I think I know our answer already.

[aliikai2 Super Moderator Find all posts View Profile Close aliikai2]

Are you sure?

I would make sure in writing that this is over and that your dad has no further liability. It just doesn't sound right that they would let you out of this that easily. Be very careful, don't let this slide.

Greg

I so appreciate your responses.

Here is my example:


Since Contract 2 was cancelled by Contract 3, and it could never be ressurected (their words), Contract 3 was cancelled (within 5 days due to the bad deal) and the obligation to pay any more weeks was eliminated.

[Frustrated Owner Junior Member Find all posts View Profile Close Frustrated Owner]

I agree.
The concept is, in our minds, that since Contract 1 was dead due to Contract 2, and then, at the time of negotiation, it was said on more than one occasion, by certified representatives of Velas Vallarta (one salesman who had been in the business for over 20 years - he boasted - and the Contract Manager himself) that Contract 2 was dead, then the only issue is Contract 3.

If Contract 3 is cancelled... then... what else could be at issue other than the remaining "equity" which, by all accounts, was given to Velas for the "right" to pay high maintenance fees for "x" number of years.

Does anyone know if there is precedence in law (in either California or Mexico) where a purchaser sued for the remaining equity in the time share?

What are people investing in, putting into equity, and paying maintenance fees, if, at the end of the day, it means nothing?

[fishingguy Member Find all posts View Profile Close fishingguy]

Contrary to what any sales rep, salesman or contract manager may have said, the purchase of a timeshare is not an investment.

If you don't have anything in writing that clearly indicates that Contract 1 and 2 are totally cancelled I'd be worried. Verbal assurance from anyone isn't worth anything -- it has to be in writing. Instead of suing to get your equity back, I'd be concerned about them suing you, if you had nothing in writing.

...just some thoughts.

[mdurette Senior Member Find all posts View Profile Close mdurette]

What are people investing in, putting into equity, and paying maintenance fees, if, at the end of the day, it means nothing?

We are actually investing in vacations....family time....time for ourselves. Whatever the reason.

Like your dad - many people learn the hard way with timeshares. They buy from the developer upfront and spend thousands on something that a week later is worth a small fraction of what you paid.

But...the concept is still there - great resort - great vacations, etc. If you spend sometime away from the TS sales people (like you are now). You learn how to make this all work and be ahead financially. Most of here now buy our TS's resale - check out ebay - many, many are sold for $1.00. We learn how to trade our weeks with trading companies.

To answer your question...TS are NOT an investment as far as value and making the most out of your money. But, they have a value if done correctly. Example: I own two TWs that I purchased on ebay for less than $400. I know how to work them now that I get 4 weeks vacation every year from them. Total cost with MF's, exchange fees, memberships. About $1,500 per year. THAT is a value to me. $1,500 for 4 weeks accomidations in beautiful resorts.

[Frustrated Owner Junior Member Find all posts View Profile Close Frustrated Owner]

Developers taking advantage

I appreciate all your comments. Thank you.

I am wanting to further inquire if anyone knows of legal precedent to sue the Developer for false and misleading statements at the time of the initial contract? Any lawyers out there? Has anyone won a case against a Time Share Seller or Developer?

Time Share Sellers take financial advantage of seniors, let alone others who are unsuspecting and trusting. It is a scam perpetrated on those less knowledgeable in very high pressure situations.

I think it is horrific that these Sharks (Time Share Sellers) use Legal Terms such as "equity" to explain one's "investment", when making the initial pitch. That should be actionable.

The fact that some purchasers have now figured out how to use other people's (bad) investments in time shares to their own advantage (purchasing, in essence, their contract - right to use), still doesn't feel right. It is only perpetuating the scam. While I applaud those who have figured it out, it is still a situation where one is feeding off those who don't understand the system and who have been "taken" by the Sharks.

I would like to know if there is any legal precedence to sue for the equity.
Also... does any know of any good Lawyers in California who can address this.

Luckily my father-in-law was able to get out of the obligation to pay the remaining 19 weeks of his contract. This last issue still remains to be researched.

Thank you, in advance, for your comments.

[T. R. Oglodyte Moderator Find all posts View Profile Close T. R. Oglodyte]

If you rescinded contract 3, it's most likely that you are back in Contract 2. In rescinding, you essentially returned to where you are before you signed contract 3; you unraveled everything that had been done.

I think the legal position would be that contract 3, in essence, was never completed. Since contract 3 never took effect, everything that was contingent on contract 3, including the absorption of contract 2, never happened either.

******

But that's just speculation - if you want a better answer you need to contact a Mexican abogado (lawyer).

[Frustrated Owner Junior Member Find all posts View Profile Close Frustrated Owner]

We have a letter confirming contract 2 was cancelled. Hence... no obligation on any contract.

I do not believe that means that contract 2 and 1 never happened, let alone that the "equity" was invested has not disappeared.

[Frustrated Owner Junior Member Find all posts View Profile Close Frustrated Owner]

As I mentioned... we have documentation on the cancellation of the contract. Without wanting to offend, I believe that those who pick up the pieces of other frustrated owners are only benefiting on the backs of those who have been hurt by the SHARKS (dubious time share sellers).

[aliikai2 Super Moderator Find all posts View Profile Close aliikai2]

Welcome to the real world

I guess you feel that way about a buyer of a home that was foreclosed?

Or a car that had been repossessed?

Something that needed to be sold because of a divorce?

As adults in a free society we have rights and we also have responsibilities.

Your dad doesn't seem to feel that he has been taken, why do you?

This type of sales is very common, anytime someone gives you a free item, cash, meal, etc to view their presentation, they have bought your time and will do the best job they can to take your money and get paid. They are slick, they are well paid, and they listen to their client to find what motivates them to make such a purchase. They use half truths, some white lies, sometimes even down right lies. But as the process if finishing the closer makes sure to get a signature on the contract that states, " Items that are not in this contract are valid or binding."

Is this type of sales fair? No, is it against any law? No Did he pay more than he could have bought a resale for? Yes

While you are upset that your dad spent this money, there is no one to blame here, except your dad.

fwiw,

Greg

As I mentioned... we have documentation on the cancellation of the contract. Without wanting to offend, I believe that those who pick up the pieces of other frustrated owners are only benefiting on the backs of those who have been hurt by the SHARKS (dubious time share sellers).