need input for HOA weeks giveaway

[PA- Junior Member Find all posts View Profile Close PA-]

Posted on TUG, but wanted feedback here too:

I'm looking for input from knowledgable timesharer people for a resort where I own. We're thinking of offering a unique program for several reasons, outlined below, and need to know if we're on the right track.


BACKGROUND

This is a small, standalone timeshare in a desirable location. The units are nicely remodelled, but it's a mixed use (whole owned condos and timeshares) without a "resort" feel. Fees are relatively low, but they are the same fees regardless of when you own. The cost of buying these timeshares on ebay has dwindled over the years. A high season week can be had for around $1000, mid season around $200 - $500, and off-season around $1. As a result of the owner base aging, the timeshare aging, and 2 special assessments in the last 5 years, we now find ourselves in a position of having lots of weeks owned by the HOA, about 70% off season and 30% mid-season (still red, but not as desirable). We've had to spend a lot of money to foreclose on them, and now we're getting nothing for maintenance fees. We've tried selling them to owners cheap, and we've even advertised on the internet to non-owners for very little, but no interest. So here's what we're considering.

OPTION 1 - WEEKS GIVEAWAY

We've considered giving the weeks away. Of course, we'd probably get rid of all the RED weeks. But since the fees are the same for all weeks, and the RED weeks are so cheap on ebay, we doubt we'd get many takers for the off-season weeks.

OPTION 2 - Right to Use

Under this plan, we would convey all HOA owned weeks to a trust, and the trustees would be the Board of Directors. At that point, we would create non-revocable licenses which we would offer to the owners at no cost (or at some small cost for RED weeks perhaps). If there were any left, we'd make the same deal to non-owners. The non-revocable licenses would grant the holder the same rights to use the timeshares (or bank or rent or sell or whatever) as if they were a deeded owner, with the following differences:

1) Voting rights held by the trust. Since we have difficulty getting enough owners to vote to conduct business, we would keep the voting rights with the deeds in the trust.

2) Sliding scale maintenance fees - According to the covenants, all weeks pay the same maintenance fees. However, the individual owners of the weeks are free to charge more or less than that for the use of the week. So the trust would be free to charge varying fees, depending on the value of the week, for the Right to Use. This would allow us to charge less for the off-season weeks, which should make them more desirable and easier to find homes for.

3) The license to use can be revoked by the HOA if they want (of course they would have to honor deposits and/or refund any fees pre-paid or whatever) if necessary, or can be revoked by the holder at any time.

The advantages to the HOA of this plan are:

1) We get something, rather than nothing from these weeks
2) We never again have to spend $2000 or more to foreclose on these particular weeks
3) Conveying to/from new holders is easy, don't have to worry about death, divorce, etc. If someone doesn't pay their fee within 6 months of usage, we revoke their license and find a new holder
4) Sliding scale maintenance fees make every week desirable. A week with little value costs little, and we can charge a premium for red weeks.

The Advantage to the holder of the RTU:

1) no (or little) cost of entry
2) no long term committment, they can walk anytime
3) Maintenance fee of week is related to value of week

The disadvantages to the HOA

1) Holders are unlikely to pay any future special assessment. It would be incumbent upon HOA to make sure reserves are funded so we didn't have any special assessments. On the other hand, un-sold weeks owned by the HOA wouldn't pay anything either.
2) Existing owners of off-season weeks might be more inclined to turn in their deeds. However, since there are 4 times more red weeks than off-season, this wouldn't necessarily be a killer, and over time this would tend to happen to some degree at any rate. Plus, that can be mitigated by the premium in fees charged to RED weeks.

Disadvantages to Holder:

None that I can think of

So my question is would you consider taking an off-season week for free, if the fees were relatively low? (don't consider using for PFD, I don't think the fees would be that low) For arguements sake, consider around $275 for a 2bedroom during off-season, $450 for RED mid-season, and $550 for RED high season week. Also for arguements sake, figure deeded owners pay $400 for their weeks, regardless of which week they own.

Please don't ask me which timeshare this.

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

Which timeshare is this?

This is what Sunterra, now DRI, did with their Trust. All new property is put in the Trust and old property such as foreclosures and deed backs get folded in, too. This lets them sell the old as new AND makes foreclosure a thing of the past, the owner of the rights (points) daoesn't pay their note or their MFs, they're gone. They sell points so the scheme of value for MF is inherently there.

So, you're in good company, wherever that resort is! You may want to give away weeks in pairs Red and less togehter, that's the way one of the SA sellers was packaging things a few years back, good old Herb, two weeks for $1K.

Posted on TUG, but wanted feedback here too:

I'm looking for input from knowledgable timesharer people for a resort where I own. We're thinking of offering a unique program for several reasons, outlined below, and need to know if we're on the right track.


BACKGROUND

This is a small, standalone timeshare in a desirable location. The units are nicely remodelled, but it's a mixed use (whole owned condos and timeshares) without a "resort" feel. Fees are relatively low, but they are the same fees regardless of when you own. The cost of buying these timeshares on ebay has dwindled over the years. A high season week can be had for around $1000, mid season around $200 - $500, and off-season around $1. As a result of the owner base aging, the timeshare aging, and 2 special assessments in the last 5 years, we now find ourselves in a position of having lots of weeks owned by the HOA, about 70% off season and 30% mid-season (still red, but not as desirable). We've had to spend a lot of money to foreclose on them, and now we're getting nothing for maintenance fees. We've tried selling them to owners cheap, and we've even advertised on the internet to non-owners for very little, but no interest. So here's what we're considering.

OPTION 1 - WEEKS GIVEAWAY

We've considered giving the weeks away. Of course, we'd probably get rid of all the RED weeks. But since the fees are the same for all weeks, and the RED weeks are so cheap on ebay, we doubt we'd get many takers for the off-season weeks.

OPTION 2 - Right to Use

Under this plan, we would convey all HOA owned weeks to a trust, and the trustees would be the Board of Directors. At that point, we would create non-revocable licenses which we would offer to the owners at no cost (or at some small cost for RED weeks perhaps). If there were any left, we'd make the same deal to non-owners. The non-revocable licenses would grant the holder the same rights to use the timeshares (or bank or rent or sell or whatever) as if they were a deeded owner, with the following differences:

1) Voting rights held by the trust. Since we have difficulty getting enough owners to vote to conduct business, we would keep the voting rights with the deeds in the trust.

2) Sliding scale maintenance fees - According to the covenants, all weeks pay the same maintenance fees. However, the individual owners of the weeks are free to charge more or less than that for the use of the week. So the trust would be free to charge varying fees, depending on the value of the week, for the Right to Use. This would allow us to charge less for the off-season weeks, which should make them more desirable and easier to find homes for.

3) The license to use can be revoked by the HOA if they want (of course they would have to honor deposits and/or refund any fees pre-paid or whatever) if necessary, or can be revoked by the holder at any time.

The advantages to the HOA of this plan are:

1) We get something, rather than nothing from these weeks
2) We never again have to spend $2000 or more to foreclose on these particular weeks
3) Conveying to/from new holders is easy, don't have to worry about death, divorce, etc. If someone doesn't pay their fee within 6 months of usage, we revoke their license and find a new holder
4) Sliding scale maintenance fees make every week desirable. A week with little value costs little, and we can charge a premium for red weeks.

The Advantage to the holder of the RTU:

1) no (or little) cost of entry
2) no long term committment, they can walk anytime
3) Maintenance fee of week is related to value of week

The disadvantages to the HOA

1) Holders are unlikely to pay any future special assessment. It would be incumbent upon HOA to make sure reserves are funded so we didn't have any special assessments. On the other hand, un-sold weeks owned by the HOA wouldn't pay anything either.
2) Existing owners of off-season weeks might be more inclined to turn in their deeds. However, since there are 4 times more red weeks than off-season, this wouldn't necessarily be a killer, and over time this would tend to happen to some degree at any rate. Plus, that can be mitigated by the premium in fees charged to RED weeks.

Disadvantages to Holder:

None that I can think of

So my question is would you consider taking an off-season week for free, if the fees were relatively low? (don't consider using for PFD, I don't think the fees would be that low) For arguements sake, consider around $275 for a 2bedroom during off-season, $450 for RED mid-season, and $550 for RED high season week. Also for arguements sake, figure deeded owners pay $400 for their weeks, regardless of which week they own.

Please don't ask me which timeshare this.

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

Isn't this about what that Inverness place in Texas did a year or so ago? I wonder if they would talk to you about it and explain how they handled it?

Not much to contribute here, but we used to see flyers for a timeshare in the Poconos that did something similar to the giveaway you're thinking about. The flyers were just simple printed and tri-folded pieces of paper and they left them in restaurants and attractions in the area (just like a developer would leave fancy full-color flyers).

They said something like "Get a timeshare for $100! XYZ Timeshare in the Poconos is giving away timeshares for just the cost of the deed transfer!" Inside, it explained that these were weeks controlled by the HOA and there was an annual maintenance fee and call this number to see the place.

I thought it was a great idea. If developers can sell timeshares for big money, why shouldn't HOAs be able to give them away for next to nothing? People bought those timeshares once upon a time, there are probably still people who would enjoy staying there.

[jfitz Member Find all posts View Profile Close jfitz]

If the weeks are put in a trust, the trust, as an owner, becomes liable for the same per interval maintenance fee as the other owners. This being the case, how will the trust cover the shortfall between the lower MF you intend to charge some participants in the trust and the MF fee the covenant requires to be paid to the HOA?

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

Make value from bad times

If the weeks are put in a trust, the trust, as an owner, becomes liable for the same per interval maintenance fee as the other owners. This being the case, how will the trust cover the shortfall between the lower MF you intend to charge some participants in the trust and the MF fee the covenant requires to be paid to the HOA?

Because the Trust IS the other owners. Whatever shortfall there is will be spread over all owners. It is a way to get the "good" weeks paying more (as unfortunately they should have all along) while not simply dumping 100% of the "dog" week fees onto the better weeks. Since there is some income it helps lower the hit overall. The problem was the thought in the early days that all weeks pay the same. Viable when fees were a couple hundred dollars and you could trade to a better place for a low exchange fee. Not so viable when fees are reaching $500+ and exchange costs are pushing $200 with membership & individual exchange fee - not to mention the far more strictly enforced "like for like" trades meaning your dog will only get you another dog in trade. Hardly worth upwards of $700 is it? The seasonal resorts need to find a way to give at least some value to the dog times. A Trust, lease, rental, RTU whatever with lower fees than the "regular" week would carry is one way to accomplish that. Or watch the resort go down eventually.