The importance of due diligence

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

I admit it. I got lazy and didn't do all of the checking I should have.

We just got the final paperwork from Holiday Group on our purchase of what we thought was a one-bedroom EOY unit at Pahio Bali Hai villas. Picked it up for what I thought was dirt cheap on an eBay auction. I'm pretty pleased.

So I get the paperwork and I'm perusing it in more detail, and suddenly a couple of things start me scratching my head. The inventory control numbers says "EO" after the unit and week; when I got the paperwork initially I fgured that meant even only. But then I note that the "Property Description part of the deed says I have a "2/102nd interest" in the unit, where I would have expected it to say "1/102nd". And I start thinking that maybe that "EO" actually means "Even-Odd".

(Do you think you know where this is heading???)

Finally, I get a letter yesterday from Pahio confirming the transfer of ownership, and it says the ownership is "Even & Odd Year". Meantime, I've already been in contact with Pahio, because I have to have them transfer one of their bulk banked weeks into my account so I can get something out of the 2006 usage. So I also ask them whether this is even years or annual.

Yep - it's actually an EY ownership. For some reason it's deeded as a combined even year and odd year ownership instead of a simple EY ownership (hence the odd references to "2/102nd" ownership instead of a "1/51st" and the reference to "even & odd year"). My best guess is that someone at Holiday saw the "EO" reference, figured that meant "even only", and entered in their system as "even years" instead of annual usage.

Sweet!!!

[BocaBum99 Super Moderator Find all posts View Profile Close BocaBum99]

What does this have to do with Due Diligence? You would have been better off not doing any due diligence on this deal at all. Since you did it, they could have charged you for an EY deed instead.

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

What does this have to do with Due Diligence? You would have been better off not doing any due diligence on this deal at all. Since you did it, they could have charged you for an EY deed instead.

In this case, the listing error broke in my favor. It could have as easily gone the other way, and there would have been a mess to sort out.

In any case, we had already entered into a contract for purchase of a given contract so even if I had done due diligence in this case, I had every reason to proceed with the deal. There are many cases in which people have done due diligence on units, only to find errors in listings that made the unit more valuable.

Isn't that how some of us score some good deals??? In this case, I would have deduced that earlier (perhaps before the auction closed) and would have been willing to pay even more (though, since no one was bidding against me it didn't make any difference).

[BocaBum99 Super Moderator Find all posts View Profile Close BocaBum99]

Steve,

I know your point and I agree with it. I was really just kidding about my comment.

I have found that it is more important to have a solid agreement that specifies what you are buying. Because, if someone is different than that, you can reject it at closing. Or, re-negotiate.

This happened to me on an every year unit I bought that turned out to be an every other year unit. This is the opposite of the case you described. However, since I had an agreement for an Every Year unit, I had the right to cancel.

I discovered it when I reviewed the warranty deed and noticed it was deeded as an EOY unit. The thing that surprised me is that the closing company and the broker didn't catch it. I actually read the warranty deed.

So, the additional lesson is make sure you have the right agreement and you review all documents before you sign them.

[taffy19 Gold Contributor Find all posts View Profile Close taffy19]

Does this mean that the seller didn't even know what he was selling? How stupid he was but you did OK. What a nice surprise.

Did you find a buyer for the Hanalei Bay Resort timeshare you were in the process of buying in Kauai? It looked like a very nice resort but my DH didn't even want to look at the web site. We are done as far as he is concerned and he is right with the maintenance fees going up so much at many resorts plus the last minute deals that are out there.

How many weeks do you own on the Islands of Hawaii now? It isn't worth flying over there for just one single week and it is expensive too plus the loss of almost two days. JMHO.

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

Does this mean that the seller didn't even know what he was selling? How stupid he was but you did OK. What a nice surprise.

Did you find a buyer for the Hanalei Bay Resort timeshare you were in the process of buying in Kauai? It looked like a very nice resort but my DH didn't even want to look at the web site. We are done as far as he is concerned and he is right with the maintenance fees going up so much at many resorts plus the last minute deals that are out there.

How many weeks do you own on the Islands of Hawaii now? It isn't worth flying over there for just one single week and it is expensive too plus the loss of almost two days. JMHO.

Emmy:

Yeah - that's right, they didn't know what they were selling. If they had been selling an annual, I would have investigated more thoroughly since it's not uncommon for EOYs to get listed as annuals. Or if it had been a private individual (instead of known commercial entity) I would have done more work. But I was mostly concerned with not getting stuck with some unpaid assessments, and going through escrow I was protected against that. So I slacked off a bit.

re Hanalei - after returning to the Embassy/Sunterra, we decided to retain our ownership there. So we dropped the Hanalei purchase and advised the person who had responded to us to contact the resort about selling it back to Quintus.

When we go to Hawai`i we always go for two weeks. Kaua`i is our favorite island, and a couple of years ago we spent one week in Princeville (at Shearwater) followed by a week at Po`ipu. We liked that arrangement a lot, and had planned on doing that more frequently. So when this came up, we thought we were getting an EOY Kaua`i that would blend right in with our plans - even years we would spend two weeks on Kaua`i, and odd years we'd do one week on Kaua`i and one week on another island.

Now I've got another week to figure out what to do with!!! I had actually been thinking about adding a Vacation Internationale ownership to get access to VI's inventory of resorts on other islands (i.e., not have to wait on exchagne companies and pay exchange fees), but now I'm not quite sure how to work all of that in.