Loss of ownership for being more than 3 months behind of m. fees?

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

Has anyone else heard this? A client was just informed by DRI that their trust ownership is forfeit, as the January fees were not paid. They were in the middle of a sale and transfer and expected the fees to be paid from closing. There was no mortgage, just the 2008 assessment due on the account. When the closing agent informed me, I conferenced the seller and owner services to confirm! The DRI rep stated because it a trust account, a full foreclosure process wasn't necessary!

Another client had called and removed their listing last week for the same reason, but to be honest I hadn't believed them when they said they were only a few months in default.

Someone tell me I heard incorrectly!

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

It's all too correct

Has anyone else heard this? A client was just informed by DRI that their trust ownership is forfeit, as the January fees were not paid. They were in the middle of a sale and transfer and expected the fees to be paid from closing. There was no mortgage, just the 2008 assessment due on the account. When the closing agent informed me, I conferenced the seller and owner services to confirm! The DRI rep stated because it a trust account, a full foreclosure process wasn't necessary!

Another client had called and removed their listing last week for the same reason, but to be honest I hadn't believed them when they said they were only a few months in default.

Someone tell me I heard incorrectly!

You heard EXACTLY correctly. It is one of the downsides most don't hear/notice if they decide to move to the Trust(s) while a BIG upside to Diamond (formerly Sunterra) who doesn't have to go through any scrutinized and costly foreclosure - they just end the ownership based on the current rules THEY control and they are happy. Not so for the (now) former owner who signed over their deed and paid to join the Club/Trust....

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

Not being an advocate for DRI, but why weren't the MF paid? There is the obiligation to do so until the membership is sold. Was there any communication and agreement by DRI that it would look to closing to have past due MF paid?

It is an unfortunate situation and blame is not all on DRI for exercising its contractual rights (assuming it has them).

[GrayFal Silver Contributor and supermoderator Find all posts View Profile Close GrayFal]

That's is awfully scarey - I imagine there are more then a few owners who are not aware of that short time frame.

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

It is important that fees be paid in a timely manner- but this seems to be a ridiculous policy for the developer to implement. Could this be yet another black eye for the timeshare industry from the Sunterra and Diamond brand! If they aren't careful- they'll end up following Royal Holiday Club into the abyss of worthless point ownership that owners can't even give away...

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

I'm not a lawyer and I don't play one on TV or TS4Ms. The 'beauty' of the Trust is in the eye of the beholder. The DRI (formerly Sunterra) salesman will tell you it shields you from big jumps in MFs. All well and good, but the MFs have to be paid and it's all gone come out of the owner's pocket in the wash. My increases at my resorts where I hold a deed, but there is significant Trust ownership, have been less than the increases in the Trust since its inception, go figure, I'm sure that a humongous SA is coming to bring the resort(s) up to Diamond standards.

The biggest beauty is for the developer who no longer has to legally 'foreclose' on an owner for their loan or I guess for late MFs. I'm not a lawyer and I don't play one on TV or TS4Ms but fees are due when fees are due, and the rules are the rules and you can bet that the former Company and the present company have the deck stacked in their favor or the roulette wheel rigged so to speak.

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

Bottom line? It's up to the individual to know the rules and to abide by them. I'm fully aware that very few of us, myself included, read the small print before signing many documents. That however is our choice and we have to accept the consequences.
I can't say that I think foreclosing without warning is good business practice as it could backfire on the company if sales dry up because their actions are perceived as sharp practice. One thing you can be pretty sure of is that the company is applying the rules to the letter and would be in the clear if challenged in court.

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

Will the reduction of active Trust Ownerships increase fees?

Diamond has been very aggressive in re-purchasing ownerships through resale brokers (primarily Hawaii ownerships but also mainland resorts) to increase the ownership percentage allocated to the Trusts. If they also start seizing past due ownerships in this manner- it is conceivable that the trust allocation growth will be massive and much quicker than expected. Do you think the loss of maintenance income from these re-acquisitions will simply be distributed to the remaining trust owners as yet another fee increase?

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

Diamond has been very aggressive in re-purchasing ownerships through resale brokers (primarily Hawaii ownerships but also mainland resorts) to increase the ownership percentage allocated to the Trusts. If they also start seizing past due ownerships in this manner- it is conceivable that the trust allocation growth will be massive and much quicker than expected. Do you think the loss of maintenance income from these re-acquisitions will simply be distributed to the remaining trust owners as yet another fee increase?

There would be hell to pay if it were ever proven that they aren't paying maintenance fees on everything they own.

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

VERY different from deeded homeowner-controlled HOA's which do all they can to work with delinquent owners to pay.

Another disadvantage of RTU or points or trusts.

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

Good luck trying to track inventory allocation via a trust.... I guess that is why they call it that- 'cuz you just have to trust 'em to be honest- and pray the accountants don't place the figures in the wrong column! It will be interesting to see if there is a big increase in lost revenue and receivable collections on the next budget....

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

Another disadvantage of RTU or points or trusts.

Certainly true from the perspective of the owner who gets in a spot of trouble, or just forgets.

On the other hand, I've seen posts from folks here who serve on boards about how much fun it is to try to get the deadbeat owners to pay up. For many resorts, this is a real problem.

I'm glad I'm not subject to the whim of a trust, but I wish there were a way to reduce uncollected MFs that I eventually end up paying for as another owner.

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

VERY different from deeded homeowner-controlled HOA's which do all they can to work with delinquent owners to pay.

Another disadvantage of RTU or points or trusts.

But better than deeded homeowner-controlled HOA's which don't work with delinquent owners to pay.

[Bill4728 Super Moderator Find all posts View Profile Close Bill4728]

Bottom line? It's up to the individual to know the rules and to abide by them. I'm fully aware that very few of us, myself included, read the small print before signing many documents. That however is our choice and we have to accept the consequences.
I can't say that I think foreclosing without warning is good business practice as it could backfire on the company if sales dry up because their actions are perceived as sharp practice. One thing you can be pretty sure of is that the company is applying the rules to the letter and would be in the clear if challenged in court.

My biggest problem with this practice is what if there is a honest mistake?
-You move and the TS didn't get your address right.
-You thought your wife paid it and she thoght you did.
- any number of legit reasons why you may be late.

I would hope that they can't do this without more notice than a quick letter saying tough luck but who knows?

[dougp26364 Senior Member Find all posts View Profile Close dougp26364]

It would really suck if you or a loved one was in the hospital for a major, unplanned reason. It doesn't happen often but, I do see motor vehicle accidents that can spend a LOT of time in the hospital and rehab hospital. I can see a family forgetting to pay a timeshare bill or, being put into a spot where it's tough to come up with all the money in time.

3 months can be an awfully short time depending on the circumstances.