Is that legal ?
-- Alan Cole, McLean (Fairfax County), Virginia, USA.
It may be legal, assuming the LLC isn't formed for the purpose of defrauding the resorts. But some resorts are preparing to deal with such a situation.
One of my resorts made some major amendments to our Declaration of Condominium back in 2004.
The original stated that "Owners" were those people to whom the Developer had conveyed an undivided interest (no room for said owner to convey it to someone else - technically that person would not be considered an owner). Under such rules, if you purchased the unit from the developer, until that unit was returned to the developer (the only other possibility recognized in the DoC), you would remain an owner, and be subject to any assessments, including maintenance fees.
We changed that, to allow for owners to convey to new owners. But we also added other amendments. It now includes the following:
"Any transfer of title to an Undivided Interest shall operate automatically to transfer the membership in the Association to the new owners thereof. The new and former Owners shall be jointly and severably liable for the payment of Assessments on an Undivided Interest and shall be responsible for providing proof of change of ownership to the Association."
Further, from what I understand about most state laws regarding LLCs, if an LLC is disolved, the assetts must be sold or distributed to the members. Thus even if the LLC could somehow write off the past maintenance fees as a business debt, you still have the issue of the LLC owning an assett that must be transferred to somebody. Further, and good HOA will place a lein on the title of the undivided interest. In practice, I don't think placing the timeshares in an LLC is going to make any difference.