Article about terminating a single site timeshare...

[rikkis_playpen Diamond Club Contributor Find all posts View Profile Close rikkis_playpen]

http://www.ballardspahr.com/alertspu...rminating.ashx


Interesting article targeted to single site developers providing info about the process of terminating the condominium..

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

I thought the most interesting part of the article was the endnote - I hadn't before realized that a UDI ownership structure will often exempt a project from condominium and common ownership interest statutes.

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

Sharks like the writer of this article are disgusting slime. It is not ''failing'' timeshares that are targets of scams like he is proposing but resorts that someone can profit from by a takeover bid by selling the property. That has been the type of resort that has been targeted on the Outer Banks, and from what I read on Timesharetalk Forum also in the Canary Islands, and on the old Crimeshare website, also in South Africa. I also read of homeowners thwarting a similar scheme by a developer at a resort in the Bahamas, but they had to band together and go to court to do it.

The bit about offering the multi-resort program is a usual part of these scams in the Canary Islands and South Africa, and those programs universally are considered worthless.

The best way for timeshare owners to avoid these sharks is to terminate any relationship with a developer as soon as they can and get their resort under owner control. Schemes to kick out timesharers seem to arise almost exclusively at resorts where a developer is still lurking around. Points programs where weeks have to be deeded over to a trust are also extremely dangerous for a resort and should always be avoided, as those in control of the trust can often get control of the timeshare HOA.

Another protection is to own at resorts developed before the Uniform Condominium Act was enacted in a particular state. The prevailing model of earlier state legislation requires 100% to terminate a timeshare.

This particular shark does not mention two additional tactics common in such schemes in the Canaries and South Africa. One is running up m/f's and s/a's to run timeshare owners off and the other is engineering a loss of exchange company affiliation.

[rikkis_playpen Diamond Club Contributor Find all posts View Profile Close rikkis_playpen]

I don't share Carolinian's strong view on this article, or the negative impression of the author. The need to terminate a condo can happen for numerous reasons, not simply because of a hostile takeover by a timeshare developer.

Summer Bay in Vegas recently went through a redeeding process transferring ownership to a new location, because the real estate was sold. Owners were treated fairly in my opinion. There have also been cases where natural causes required ownerships to be terminated.

Taino Beach was another example. When the hurricanes in 2004 and 2005 caused the building to be condemned, owners voted on what action to take. Per my notes, the vote went as follows:

Requested termination 13%
Ritz Transfers 33%
Wait on new building 5%
Wants to sell 5%
Keep current membership 11%
Undecided 33%

In this instance, the decision was made to transfer owners to the sister resort, The Ritz I (now called the Ocean at Taino). Again, a termination process was required to accomplish this.

There will always be instances of abuse, the timeshare industry has a long history of these instances. Unfortunately, this seems to be an inborn flaw with human nature. This, however, does not mean the process itself is evil!

This specific article was targeted to developers, and therefore provided information specific to their interest- which would obviously focus on the potential for future profit. (God bless capitalism!)..

However, the issue of termination is one that will at some time face every resort- whether it is owner controlled or developer controlled. As the physical buildings themselves age and deteriorate, there will come a time for every timeshare when the effective age or economic life deteriorates and the property becomes functually obsolete.

When this occurs, and ownership levels become insufficient for the continued existence of the property- a plan for termination will be needed. Every developer and boardmember should have some type of understanding and plan for this process.

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

Actually, some resorts with aging buildings are among those I have enjoyed most, in manor houses in England and Scotland, chateaux in France, and a castle in Austria.

With proper maintenance reserves, there is no reason why most timeshares cannot be kept going indefinitely.

Unfortunately most of these moves to crash timeshares that I have seen have been from greedy developers wanting to push out and cheat the individual timeshare owners. When I get time, I may link some SA and Canary Islands threads on these issues. We have seen the pushy, greedy developer problem at two OBX timeshares, Bodie Island Beach Club and Sea Ranch II. These people IMHO are absolute scum.

[rikkis_playpen Diamond Club Contributor Find all posts View Profile Close rikkis_playpen]

Construction styles for a castle in Europe and a condo in the outer banks aren't a valid comparison.. That wood-frame building in the Carolina's has no chance of experiencing the same longevity as a timeless stone structure like Chateau de Tredion.

I'm certainly not saying that proper maintenance and reserves are not necessary- they are vital to the long term health of every timeshare property. I'm simply saying that the final reality for most timeshare properties is that at some time in the future, the buildings themselves will become obsolete..

There has been a trend of recent major refurbishments that does give a sense of hope for longevity- but these seem to have been resorts where a developer still has influence (such as Ft Lauderdale Beach Resort, Vistana Resort, and the Royal Floridian). The HOA at Ft Lauderdale under Ken Fromer should truly be applauded! They made very difficult decisions, which at the time angered many owners.. But the end result seems to be very positive, and the improvements have rekindled the vacation dream for the majority of their ownership base.

Perhaps we are just too fickle on this side of the pond and have no inborn appreciation for history and timelessness in our buildings.. But the truth is, many American's simply have no appetite for older resorts. You can drive through Florida and you'll find a number of older resorts that simply can't maintain any real appeal with today's interval owners. Their ownership numbers are falling, and it's only a matter of time before they will no longer be economically feasible unless a big infusion of cash suddenly appears.

Perhaps boardmembers will see these examples and realize that they need to plan for these huge refurbishment and upgrade projects- or they'll need to plan for an eventual temination of the timeshare regime.

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

I have read of some deeded timeshare projects that have a termination clauses in the program documents. Typically these would terminate the timeshare program unless a majority of the owners voted to continue. If the owners did not vote to continue the board would then be authorized to sell the resort on behalf of the owners, with net proceeds from the sale and winddown distributed to the owners in some fashion.

IMHO - if the provisions are properly constructed this is very prudent.

[rikkis_playpen Diamond Club Contributor Find all posts View Profile Close rikkis_playpen]

In many states, the condo declarations have an expiration date (although many people don't realize this!). Florida is one such state.

Prior to the expiration date, the declaration must be renewed by the association.

Some deeds have legal descriptions that include this language, but not all closing agents include that on their documents.

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

I have read of some deeded timeshare projects that have a termination clauses in the program documents. Typically these would terminate the timeshare program unless a majority of the owners voted to continue. If the owners did not vote to continue the board would then be authorized to sell the resort on behalf of the owners, with net proceeds from the sale and winddown distributed to the owners in some fashion.

IMHO - if the provisions are properly constructed this is very prudent.

Most of those in North Carolina, provide a time that there should be a vote, but the way it works is that the resort continues unless there is a vote to terminate. Most also require a majority or even super majority vote of all weeks to terminate, not merely a majority of a quorum, as with most HOA votes. Even a simple majority of ALL weeks is a very difficult thing to get. Some also require other preliminary steps, such as a group of owners proposing termination being required to give notice of asking for that vote a year in advance of the date set in the covenants.

It is NOT terminate unless there is a vote to continue, but on the contrary, continue unless there is a (very difficult to obtain) vote to terminate.

Every move to terminate a resort that I am aware of both in the US and abroad has not come from a public spirited developer, but from a greedy developer trying to screw the owners, which usually end up with little or nothing of value at the end of the day.

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

Most of those in North Carolina, provide a time that there should be a vote, but the way it works is that the resort continues unless there is a vote to terminate. ...

My memory is fuzzy, but I have a mental note filed away there was mention of some covenants that provided automatic termination of the timeshare program at a future date unless the owners voted to continue.

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

My memory is fuzzy, but I have a mental note filed away there was mention of some covenants that provided automatic termination of the timeshare program at a future date unless the owners voted to continue.

I have seen a fair number of these documents and have yet to see one written that way. It is continue unless there is a vote to terminate, and that vote to terminate is often set up in a way that it is not very easy to do, as a practical matter.

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

Carolinian's view is extreme and one sided. I think any reasonable person would make that conclusion. There are many legitimate reasons for why a timeshare project should be terminated.

The problem is that fundamentally, a timeshare project is not the best and highest use of real property, except for the original developer. Once most of the intervals are sold, value is destroyed. The timeshare project destroys value because the market value of the property as whole condos is much higher than the sum of the individual intervals.

I would be in favor of a 30 year plan for a timeshare project. The plan terminates after 30 years unless a super majority of 75% votes to keep it in place. The property is then sold and the proceeds are distributed to the owners. Then, the new developer can sell the whole condos, renovate or tear it down and build it new. In any event, this is the best way for current owners to actually realize the value in their real property.

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

Carolinian's view is extreme and one sided. I think any reasonable person would make that conclusion. There are many legitimate reasons for why a timeshare project should be terminated.

The problem is that fundamentally, a timeshare project is not the best and highest use of real property, except for the original developer. Once most of the intervals are sold, value is destroyed. The timeshare project destroys value because the market value of the property as whole condos is much higher than the sum of the individual intervals.

I would be in favor of a 30 year plan for a timeshare project. The plan terminates after 30 years unless a super majority of 75% votes to keep it in place. The property is then sold and the proceeds are distributed to the owners. Then, the new developer can sell the whole condos, renovate or tear it down and build it new. In any event, this is the best way for current owners to actually realize the value in their real property.

Jim - I totally and fully concur.

I think there are some additional considerations.

First, as the termination date approaches the value of the timeshares should stabilize at a price somewhat close to the intrinsic value of the interest as real property. It would be akin to the residuals on the Royals in Cancún. Because this is will often be an aging resort, this payout would be an incentive for offseason owners to hold on to their ownerships.

Second, one of the realities of timeshare is the unending obligation. Creating a finite life for the timeshare operation assures an out. If owners want to continue in timesharing whent that time is reached for a specific resort they can redeploy their proceeds into buying another property. But for those who want to move on, there is an easy exit with a payout reward for their ownership.

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

What you have in this article is a shark trolling for business from greedy developers with dollar signs in their eyes. Every now and then there is a timeshare in a genuine death spiral that was not artificially induced by a greedy developer, the old Spanish River resort in Florida some years ago being one that comes to mind. Most push-outs, however, are artificially induced by greedy developers and are against the interests of the timeshare owners. Some developers lie, cheat, and steal to push timesharers out. The key to killing the Bodie Island Beach Club, for example, was a baldfaced lie told in court to Judge Griffin by the developers attorney which led Griffin to enter an order screwing the timeshare owners who had no knowledge of the matter at that time. It also involved shady under-the-table deals with whole owners on the HOA board to screw the timeshare owners. There should have been seperate lawsuits against those HOA board members for violation of their fiduciary duties, but at least there is now an ethics grievance filed with the State Bar against the developer's attorney by a group of timeshare owners.

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

Here is a post from the old CRIMESHARE site which was run by the Timeshare Consumers Association leadership on a similar shark operation in the Canaries.

Nexus and Compass Club were involved in the crashing of one timeshare resort on the Canaries the following year, and have recently made another appearance for the same purpose.

As timeshare owners, we need to fight these anti-owner sharks.

FROM CRIMESHARE:

Nov 10 2004
Nexus Dismemberment Ltd now offer the perfect exit package for developers.
• Are owners getting in the way of your profits?
• Could you realise the real estate value of your property if you didn’t have timesharers cluttering up the resort?
• Do you want a simple solution to this problem?
We will provide you with an exit package which is a proven winner.
The three stage process:-
1. We offer your owners membership of the Compass Club/Compass Club Premiere which offers so much more than they currently have.
2. We arrange with RCI for your resort to lose its affiliation – failing health and safety requirements is always a good story
3. As a final clearing-out procedure we increase annual fees - necessary refurb, etc.
By which time you will be left with the majority vote to wind up the club.
No come back. No refunds. No legal actions.
All thanks to Nexus Dismemberment Ltd.
Give Diane Walley a call on +44 208 423 7330 for details of how we can solve YOUR problem. - AdMan

(Of course, Compass Club is a total joke!)