New Orleans Resort: Developer takeover of resort and issues under Louisiana Napoleoni

[scootr5 Senior Member Find all posts View Profile Close scootr5]

Is this Jean La Fitte House? I've read a couple times about the developer there trying to block sales/transfers in an effort to get control of the units for himself.

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

You are clearly dealing with a rogue developer who is a threat to the future of your timeshare. Unless members get organized and stand up for their rights, you are likely to get rolled. But members who stand up and fight, often end up winning.

Yeah all my instinct was it is a rogue developer. Renting unassigned weeks without paying anything to the HOA, asking owners to quit claim to the developer rather than the HOA (so it can be resold even at minimal cost to current owners), now asking owners to pay before quit claiming and not sure if the payment goes to HOA.

[RayBan Junior Member Find all posts View Profile Close RayBan]

HOA directors have become developer controlled since they got the management contract.



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[JLB Please excuse me, I'm a Dick. Not a moron just a Dick Find all posts View Profile Close JLB]

He told another owner that he is willing to testify if someone is bringing a lawsuit but some subsequent questions to him were not answered.

Tough questions, probably, like name pi to 100 places, how big is the universe, etc.

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

Okay. Got some more information. The developer got one of his guys on the BOD now but there are 3 other still from before but they seem to do the minimal or not questioning things as much as they should. One of the BOD member did not even make it to the AGM last year.

The developers had sent letters to those who are behind to quit claim (likely to him directly than HOA) in 2011 and last fall also sent letter asking those behind for a $2K admin fee to quit claim (to them rather than HOA) which I presume he is pocketing. There are no items for the admin fee in the budget he submited but to be honest the 2013 proposed budget was an exact copy of 2011. At least they bothered to copy it in 2013 since they never enclosed a budget for 2012, just kept the MF constant by prior agreement with the BOD.

There is a $650K line item in the actual financial report without details and non were provided in the AGM when asked. Claimed the person keeping the books (daughter of developer) was out sick.
The BOD was surprised since they were only given the actual financial report something like an hour before the AGM. Repeated request for financials and information was given the run around.

It seems that the developer does not pay MF on his units and rents out those non owned and weeks behind and pockets the rental income. The management company has a for profit company that has similar name to the HOA name and I believe the checks, MF, etc are made out to the for profit company first.

Renovation is being done but it is pretty tacky.. Fancy NOLA chandeliers in some units while other rooms are having bent wire hangers in the units.

I am seeing major red flags here.

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

What you describes appears to be serious breech of fiduciary duties by management.

I wonder if the state Real Estate Commission is at all proactive on these things. Enough complaints with enough detail might goad them into action.

For decades during the tenure of Blackwell Brogden, the timeshare expert at the North Carolina Real Estate Commission, he would jump on something like this to straighten things out. For example, on the Outer Banks, there was a problem at Bodie Island Beach Club, where a secondary developer, who had bought out the original developer, was controlling management, and through some shady manuevers, also controlling the BOD. A group of members went to the Real Estate Commission, and Brogden came down to investigate. One of the issues involved was the developer not paying m/f on the developer weeks he still owned, as well as a variety of management issues. Brogden uncovered enough dirt that he brokered a settlement in which the developer relinquished management and control of the HOA BOD, agreed to financial restitution to the HOA, and surrendered his real estate brokers license. The new member-controlled HOA BOD then hired an independent management company to manage the resort.

Okay. Got some more information. The developer got one of his guys on the BOD now but there are 3 other still from before but they seem to do the minimal or not questioning things as much as they should. One of the BOD member did not even make it to the AGM last year.

The developers had sent letters to those who are behind to quit claim (likely to him directly than HOA) in 2011 and last fall also sent letter asking those behind for a $2K admin fee to quit claim (to them rather than HOA) which I presume he is pocketing. There are no items for the admin fee in the budget he submited but to be honest the 2013 proposed budget was an exact copy of 2011. At least they bothered to copy it in 2013 since they never enclosed a budget for 2012, just kept the MF constant by prior agreement with the BOD.

There is a $650K line item in the actual financial report without details and non were provided in the AGM when asked. Claimed the person keeping the books (daughter of developer) was out sick.
The BOD was surprised since they were only given the actual financial report something like an hour before the AGM. Repeated request for financials and information was given the run around.

It seems that the developer does not pay MF on his units and rents out those non owned and weeks behind and pockets the rental income. The management company has a for profit company that has similar name to the HOA name and I believe the checks, MF, etc are made out to the for profit company first.

Renovation is being done but it is pretty tacky.. Fancy NOLA chandeliers in some units while other rooms are having bent wire hangers in the units.

I am seeing major red flags here.

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

I have been told with Napoleanic law of LA for TS, it works a little differently than some other states. Also the consumer protection law is much weaker there.

One of the owners had contacted the LA Real Estate commission regarding his Jazz Fest week but he was in dispute with the managment company about a years MF which he said he paid ahead but the Management Co said he did not. He wrote letters to the BOD members but I think the management company stated to the BOD that he is deliquent and barred him from the use of his week. He tried to challenge the raise in MF with Special Assessment also. I think he wrote the letter after he missed another MF so not sure if it would impact his letter with Real Estate Commission. Basically the the Management company replied he was behind on his MF and don't have any claims to his week. Of course the management company is renting it out (without paying MF to BOD).

We do not have the list of owners and it seems that the BOD have not been following it up that much with the issues they raised. An owner went to the AGM and was concerned about some of the details and also the lack of some of details but several owners request for information such as budget have been given the run around.

Also appearently the non-profit registered for the HOA is now non-compliant with financial filing. The management company's for profit company have filed but I am pretty sure they channel money through it and skim some since there is no line item for rental income or even owner rental income/ switch week fees in the actuals.

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

Got sent a letter from one of the owners sent to the Attorney General of LA in dispute with the management company Last June. The management company replied stating that the owner was behind in MF and the developer/ management company claimed he did not control units that owner heard they have I have also heard that the developer referred to those units he controls in another letter someone else received.

I think the letter written by the owner is not as clean and precise as it can be and brought up several less pertinent points that I think detracted from the main points that needed to be made which are:
1) The developer controls a X number of units which he is voting to put in his own nominees for BOD (which 1 in already)
2) that they are not paying MF on the units that they own and
3) rental of non-owned weeks or deliquent weeks are not making its way into the revenues of the resort.

Basically the Attorney General said that if the mediation effort does not resolve the issue, he may persue the matter further by consulting with private consul.

I now have paid for access of the notary archives and trying to put together an owners list.

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

Good to see your efforts Mary. When you get an owners list, form a committee of concerned owners and get ready for battle! You will need a candidate for the next board election, as well as a proxy fight. If you get a majority of proxies, pass resolutions as far as the annual meeting has authority. I would, for one thing, direct the BOD to audit all transactions with the managment company, specifically the things you have mentioned, and also making a finding that management's stooge on the BOD has a conflict of interest in voting on any issue involving the managment company and insisting that he abstain.

I remember one proxy fight on the OBX, where one member could not find anyone else to form a committee, although several did contribute to expenses. He did a mailing in his own name, and walked into the annual meeting holding proxies that added up to an absolute majority of the vote.

BTW, what is the name of this management company? That should be exposed so that others know not to hire them.

[timeos2 Senior Member Find all posts View Profile Close timeos2]

Go get 'em Mary! It is great to see concerned owners fight for the resort they like and try to get other owners to care. When interest is ramped up great things can be accomplished. From what you described this is an all too typical situation where the developer has held on to management way beyond the time they should be out and control given to the owners. If the story is true they are taking liberties with the owners funds clearly outside the rules. This needs to be addressed and your work may be the way to get the proper people in charge. Good luck to you and those that join you in the battle.

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

The management company owns another resort in New Orleans in the Warehouse district for which they are the developer and another in LA.

The developer's nominee and member on the BOD is one of his subcontractors. It is very possible that person is being used for some of the renovation and he is now secretary of the BOD. Definitely conflict of interest in my opionion. Only the president of the BOD is listed as a director of the non profit owners association with the other 2 directors being this developer and his family member.

One of the 3 directors that were there before the developer got his management contract did not show up for the AGM last year and another flew out/left right after the AGM. Unfortunately the one that did not make it there was the retired executive that seemed the most business savvy.

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

Also searching the corporate databse of LA, I found that they took over both of the 2 for profit companies from the original developer/management company in 2009. But one of the companies had 3 other companies owned by the previous developer merged into it.

1) marketing company originally registered in 1985
2) another marketing company registered in Nov 1992.
3) a company registered in Jan 1992 with Utility and Telephone in the name..

I am especially surprised with 3). Why would the original management own a company with those words in the name?

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

BTW, what is the name of this management company? That should be exposed so that others know not to hire them.

Did I miss this question being answered? Scary the stuff some get by with. Too bad the one director resigned...

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

Sorry one of the owners are trying to speak to one of the directors that was at the AGM so do not want to publically confront the issue until we know that the directors route is not going anywhere.

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

There is a complicated % of common area for each building and then each building is divided by the unit/week in that building to get % of common area for the week. There is a building with small number of units but comparably high % of common area which the original developer / management company had control of for a period.

The % of common area equates to % of vote.

So it might have been structured to give the original developer / management company more control.