HOA bankruptcy - Sea Ranch II on OBX

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

I am back in the states for the holidays and was catching up on timesharing on the OBX, and learned that the HOA at Sea Ranch II on the OBX filed for chaper 11 reorganization in bankruptcy in November and closed until that is resolved. They hope to reopen in 6-9 months.

The major problem was that the developer, which had acquired a lot of weeks from individual owners in an unsuccesful takeover attempt after Hurricane Isabell damage, has been refusing to pay m/f's causing a cash flow crisis. The developer has done this based on bogus offsets and on a claim that these newly acquired weeks fall under a provision where the developer pays a much reduced m/f for unsold developer weeks. It was determined that the bankruptcy court was the quickest way to resolve these issues and get the HOA back on its feet. It developed that under VRI management, the developer had been renting out quite a few of these weeks and not even paying the m/f on the weeks it rented out!

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

Carolinian, so are you saying VRI management is at fault, or are you saying they are an innocent bystander?

This is very important to me as a person on a board at Twin Rivers that is considering VRI as a management company.

Nice to be back in the good ol' U.S.? I cannot imagine living anywhere else!

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

Carolinian, so are you saying VRI management is at fault, or are you saying they are an innocent bystander?

This is very important to me as a person on a board at Twin Rivers that is considering VRI as a management company.

Nice to be back in the good ol' U.S.? I cannot imagine living anywhere else!

It sound like VRI was re-obtaining previously sold inventory, refusing to pay MF's with the reasoning that the developer was to pay a much reduced MF on unsold inventory and that the cash flow issues caused by the developer refusing to pay the full MF on units it had repurchased via resale caused a cash flow problem for the HOA forcing it into bankruptcy to resolve the matter.

Most unsettling is the accusation that the developer had sold the inventory, then repurchased it on the resale market and was renting out that inventory for profit while refusing the pay the full (or any) maintenance fee on the inventory.

If that's the case, my question is why the HOA allowed those units to be rented out. If I refuse to pay my MF's then my rights of usage are suspended. If I were to rent out a unit that my rights of use were suspended, then I would imagine that those guests would be refused their accomadations. I am supposing that VRI was still managing the resort and that it was their employee's in charge of who was allowed accomadations and who was not. It's to bad that the HOA felt it needed to file bankruptcy to bring this all to light and potentially force the developer to pay their financial obligations to the HOA.

It's stuff like this that could doom timesharing if it become prevelent. It's also something to think about if the economy and real estate tank and renting units appears to be more profitable than selling units. Especially if the developer rights into the contract that it doesn't have to pay MF's or the full MF required to maintain the resort.

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

VRI was not doing the renting. The developer was renting out weeks with unpaid m/f's, during the time that VRI was managing the property.

VRI was the management company, not the developer.

VRI was not still managing the resort at the time of the bankruptcy filing. They agreed to a consent order settling a lawsuit back in the summer which required them to relinquish management.

I don't know the details as to the degree of VRI's fault in the matter, but it is difficult for me to see how there was not some fault in allowing the rentals by the developer.

At the core of the problem is the attempt by the developer to reassert control over the resort and end homeowner control. They had wanted to cash out rather than rebuild after the hurricane, allowing them to regain ownership for a song and then redevelop it themselves.
The homeowners thwarted that powerplay but are now dealing with some of the backlash.

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

VRI was not doing the renting. The developer was renting out weeks with unpaid m/f's, during the time that VRI was managing the property.

VRI was the management company, not the developer.

VRI was not still managing the resort at the time of the bankruptcy filing. They agreed to a consent order settling a lawsuit back in the summer which required them to relinquish management.

I don't know the details as to the degree of VRI's fault in the matter, but it is difficult for me to see how there was not some fault in allowing the rentals by the developer.

At the core of the problem is the attempt by the developer to reassert control over the resort and end homeowner control. They had wanted to cash out rather than rebuild after the hurricane, allowing them to regain ownership for a song and then redevelop it themselves.
The homeowners thwarted that powerplay but are now dealing with some of the backlash.

Sounds like a very nasty mess to me. Hopefully the HOA will prevail and cost the developer a few $$ in the process.

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

developer rentals SRII

VRI was our management company until the receiver took over the HOA during bankruptcy procedures November 2008. VRI had to allow the developer INC,access to their units by an order from a friendly judge, even though they had not paid any maintanence fees as the other owners had. The developer INC, then refused to pay for the services and there was no way to get the money from their dishonest rental agent. The developer INC, has refused to pay any of their maintanence fees from 2003-2008 driving the HOA into the chapter 11 bankruptcy. All paid up owners have been asked to pay $150 per unit to maintain the building during the bankruptcy, then it will be sold or reopened if possible. If it is sold the procedes will be divided among the paid up owners only, the developer will be eliminated and not benefit since their refusal to pay their fair share has caused the HOA bankruptcy.
VRI was in no way responsible for the HOA bankruptcy. They have been a good management company in the eyes of the board and most owners during an incredibly stressful 7 years of litigation between INC and the HOA. VRI has been the management company at Sea Ranch II only two years, a local firm Cape Management was our previous management team. OBX fan