Stardust tahoe help please [Resort blocking transfer to new owner's business name]

Edie and I went to see Shakespeare's "As You Like It" last night at Sand Harbor State Park, Lake Tahoe. Over 400 years old and man it struck home. Justice, greed, villainy, gender, humor, corruption, all the stuff of today's humanity. And well stated reverberating with so many expressions that are still today's cliche's.

Thank you all for the wonderful discussion. Points of clarification:

The would be buyer is a sole proprietorship with a "Doing business As" on file with the Secretary of State in Florida. She is not an LLC. LLC's entered the conversation when we discussed the situation with an assistant general manager of our HOA who informed us that they do not allow transfers to LLC's due to the scams that have been perpetrated.

Mr Pederson is in fact a securities attorney in Colorado that has relationships with attorneys in California that would allow him to represent us in this matter. The original article mistakenly identified Mr Pederson as a New Jersey attorney. Mr Pederson is legally limited in what he can disclose regarding the Space vs Christie Lodge case, however the Eagle County Court records are public. What we were able to find out is that the case was dismissed, with prejudice, under a stipulated settlement. Each side paid their own attorney's fees.


We are California residents, the TS is located in California. Small claims could work for some issues, though how much of our damages would pass the smell test is a good question. In my life I have been sufficiently outraged to go to small claims 3 times and won all three times.

I worked in the California Department of Corrections for 26 years retiring as a Chief Deputy Warden and worked maximum security for most of those 26 years. When pushed, I just can't help but stiff my back and resist. It is a slippery slope to start to compromise.

I have had many a conversation with many an attorney over many issues. The uncertainty of outcomes is not lost on us.

We are loathe to pay anyone to buy our timeshare, it rubs us wrong and feels unethical. Though as we put pencil to paper it does seem a cheaper way to go.

We can't in good conscience proceed with the sale without advising our buyer of the present difficulty. This will surely kill the deal. It is a buyer's market X 10. For me, I just have to rail against the HOA thinking they have such control over my property rights, especially when we have rejected any scheme's at dumping, gifting, paying to buy, or whatever to conclude our time at the Stardust. When you do it right, with best intent, the sale should not be unduly interfered with by the HOA.

I've been reading the California Code of Regulations as it applies to Real Estate, Business Code, and Timeshares. I reviewed everything I could on the Space v Christie Lodge. We discussed our situation with the prevailing attorney in that case, and We have read in detail with great interest and then discussed the many excellent posts on this subject.

We are confident that we can prevail in this matter. The hard questions are which way to proceed and at what costs.

We will keep you apprised and thank you for your thoughts, opinions, research, leads, and suggestions.

Mike
www.fulltimetimeshare.com

pacodemountainside said:

And that brings me back to the legal question of what is allowed and not allowed according to the law of the land, not the governing docs. If it as I suspect, ownership can't be denied to a company.

I tend to disagree with you.

While local, country and state laws and federal laws on discrimination, etc. trump covenants/ governing documents, otherwise IMHO a Developer, land owner, HOA, etc. can made Rules and Regulations that are reasonable, prudent and fairly applied.

For example, Developer/HOA can have ROFR, dictate minimum and maximum size of house and maximum height, prohibit sub-dividing, approve colors, door and window styles, prohibit commercial vehicles, storing stuff in parking space, disallow smoking, mandate no street parking, most co-ops require BOD approval of new owner, restrictions on satellite dishes within FCC laws , lock out owners who do not pay MF, limit how may units one entity can own, limit rentals, etc.Given that TSs are essentially condos sliced into 52 Intervals and sold for outrageous amount laws are similar if not same.


Given this is a state specific, I doubt there is one size law that fits all. But, hopefully one of TUG's barristers will offer some general guide lines.

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I agree with the comments in red. My problem is believing that if I put my condo or house up for sale,
someone who wants to buy it in a company name could be denied that ownership.

I have extended commercial credit to Sole proprietorships, partnerships (generally more recently replaced by LLC's) and all forms of corporations for 30 + years.

Since the underlying ownership determines what person/entity I am entitled to pull credit reports it is critical for me and my staff to be knowledgeable as to the responsible party

In the case of an sole proprietorship, when pursuing debt via suit, the individual is the defendant.

When a sole proprietorship files for bankruptcy, and lists you as a creditor, it's common for none of the documents mailed by the court to all of the creditor to include the dba name. (It can be found on a schedule filed with the court, but you have to search for it)

Mike&Edie said:

We own a Worldmark and Wyndham, which really meet all our needs at this time. Our home resort for years has been the Stardust at South Lake Tahoe. We have enjoyed our stays and our ownership there, but we decided to sell it (or give it away). We listed it on EBay and a woman in Florida bought it. She wanted it put in her company name, which is a sole proprietorship. Very foolishly we used the realty service company recommended and housed at the Stardust Resort, thinking it would transfer quckly.

The Stardust involved their attorney and started writing letters and simply refused to affect the transfer. They said they were afraid that the person buying it would dissolve their business and would not be responsible for future maintenance fees.

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Not to suggest that you would or should take this path, particularly since you live in the same state as the timeshare, but here is another path that others in your situation might choose, and it shows how illogical the Startdust decision is.

Say another Stardust seller finds an EBay buyer and the buyer wants to hold title as a sole proprietor or LLC or some other form that the Stardust would reject. The seller hires an independent closing company who prepares the new deed and sends it for recording. The recorded deed is returned and the closing company sends notification and a copy of the new deed to the Stardust resort. Only now does the seller learn that Stardust rejects the new ownership and refuses to transfer ownership on their records.

The seller informs Stardust that they can either accept the legal transfer and start accepting maintenance fee payments from the new owner, or they can plan to foreclose on the timeshare, because the seller will not be sending them another penny.

The burden of legal costs is now on the resort. How do they best serve the current owners -- accept the new, sole proprietorship owner, or continue to send maintenance fee bills to the seller, who does not pay them? How does the resort foreclose on the seller, because the county records indicate a different ownership? How can the resort foreclose on the new owner without recognizing their ownership?

An owner who can afford to take the hit to their credit rating can default just as easily as someone holding title as a sole proprietor. The illogic of the Stardust decision in a case such as this is that by rejecting a transfer to someone who has agreed to pay the maintenance fees, they are precipitating exactly the outcome they give as the reason to deny the transfer -- default on maintenance fees and ultimately foreclosure.

There are no easy answers to the transfer of $1 EBay sales or other timeshares that have no value in the marketplace. Arbitrarily rejecting a legal transfer simply because the new owner wants to hold title as a sole proprietor is certainly no answer to the problem.

Dear CO Skier

I utterly totally agree with you and your analysis. I think I will take one more run at talking to Stardust decision makers. I will keep you apprised. Thanks.

Mike
www.fulltimetimeshare.com

Call me pragmatic but for me the bottomline would be, would you pay more out of pocket to the Colorado Attorney than you would paying 2 years of MFs to Stardust for taking the TS back.

If you could retain the Colorado Attorney on a limited basis (ie an agreed-upon 1 to 2 hours) to make a few phone calls to negotiate with Stardust on your behalf, that might not be a bad idea.

But if your out of pocket attorneys' fees is more than 2 years of MFs and you are still holding your TS after paying your attorney, then to me that's just throwing good money after bad.

lilpooh108 said:

Call me pragmatic but for me the bottomline would be, would you pay more out of pocket to the Colorado Attorney than you would paying 2 years of MFs to Stardust for taking the TS back.

If you could retain the Colorado Attorney on a limited basis (ie an agreed-upon 1 to 2 hours) to make a few phone calls to negotiate with Stardust on your behalf, that might not be a bad idea.

But if your out of pocket attorneys' fees is more than 2 years of MFs and you are still holding your TS after paying your attorney, then to me that's just throwing good money after bad.

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I like your pragmatic thinking. It has been quite a while since I hired an attorney, but at $250 to 400 per hour (just a very rough guess on my part of the person's hourly rate), it wouldn't take long to burn through a few thousand bucks - - and have no certainty of winning. Much more $ would be spent if it went to trial.

Another alternative would be to put it back on the market and give it away along with free closing costs and a good bonus reservation. Just a thought....

A second thought...

But this is only of interest if your buyer hasn't already walked away from the deal...

Do a little research of the person/LLC that you are selling to. If you have reasonable evidence that the LLC is in business for real and for profit (not a Viking Ship) and has some sort of business record, client list, perhaps a website, etc., perhaps you could use that to convince the Vacation Club that the deal is legit.

You would want to put together the equivalent of a "resume" of the buyer.

Just another thought...

If the HOA does not recognize the transfer and does not bill the LLC, they will not get the MFs. They can't complain about not being paid, and can't hold the previous owner responsible. End of story.
The law does not recognize an "anticipatory breach".
If the seller loses the sale, he would have a cause of action of "tortuous interference with a contract".

I am the real estate broker for the Association. Here is what actually happened here. The Seller’s listed their timeshare interval for sale on Ebay. The buyer wanted to transfer the interval into the name of a corporation. The Association checked with the Florida Secretary of State’s Office to see if the corporation was in good standing. They found that the corporation was listed as inactive for many years and therefore was not in good standing. The Association, stating such to the sellers, expected that the buyer would cure any issue with the Secretary of State’s Office and become an active corporation. But instead, the buyer then wanted to place the interval in the name of a fictitious business name. The Association’s attorney reviewed the proposed transfer and determined that a fictitious business name can’t take title to real property. What happens when the fictitious business name expires after several years, then who is the owner? At least corporations and LLC’s have winding down provisions.

Thank you for the reply.

From you answer can we assume that you don't automatically refuse to accept a transfer to a corporation just because it's a corporations.

WOW!

Has this taken twists and turns. A DBA proprietorship, LLC and now a defunct corporation.

It would be helpful if OP posted copy of actual refusal document.

Always interesting to hear both sides of an argument before forming an opinion.
Sometimes the glass is half full, sometimes it's half empty.

Definately changes the entire conversation for sure!

Thank you for sharing the "rest" of the story!

Yessa!

WOLFRS said:

I am the real estate broker for the Association. Here is what actually happened here. The Seller’s listed their timeshare interval for sale on Ebay. The buyer wanted to transfer the interval into the name of a corporation. The Association checked with the Florida Secretary of State’s Office to see if the corporation was in good standing. They found that the corporation was listed as inactive for many years and therefore was not in good standing. The Association, stating such to the sellers, expected that the buyer would cure any issue with the Secretary of State’s Office and become an active corporation. But instead, the buyer then wanted to place the interval in the name of a fictitious business name. The Association’s attorney reviewed the proposed transfer and determined that a fictitious business name can’t take title to real property. What happens when the fictitious business name expires after several years, then who is the owner? At least corporations and LLC’s have winding down provisions.

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Good for your HOA for being diligent and thereby looking out for the best interests of all owners at your facility, despite the apparently unwelcome "inconvenience" to an owner seeking the exit ramp. That's the kind of HOA I want to be part of and with which I'd be pleased to be affiliated as either an owner or as a Board member.

I'm guessing that the OP / seller won't likely choose to pursue "legal action" in a (futile) effort to force the HOA to accept a fictitious business as a "grantee".

While I completely understand the OP's frustration regarding selling their timeshare, based on this info., it sounds like management made a prudent decision.

WOLFRS said:

The Association’s attorney reviewed the proposed transfer and determined that a fictitious business name can’t take title to real property. What happens when the fictitious business name expires after several years, then who is the owner? At least corporations and LLC’s have winding down provisions.

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So this is a great part of what is driving me crazy about dealing with these people and this issue. She writes, "The Association's attorney reviewed the proposed transfer and determined that a fictitious business name can't take title to real property." This is blatantly false. A sole proprietorship, doing business under a name other than the person's name is required to file a fictitious business name statement, also referred to as "doing business as"(DBA). A person operating a business under a fictitious name is allowed credit, property, all full property rights and it is tied to them. So is she saying that the law prohibits a sole proprietorship, named other than the person, is legally forbidden from legally holding title to property? That the transfer would be an illegal transfer forbidden in law? Or is she really saying to the effect that our attorney doesn't like it, so well just say they can't do it? This is false legal advise that is contrary to the law! And if the fear is that the transfer takes place; and that would heavily imply that it is a legal and lawful and possible transfer, then when the DBA expires, we won't be able to collect our maintenance fees, then the attorney's opinion that it can't be done was false. You can't have it both ways: either you can't legally do the transfer, or if you can do the transfer but you are afraid who will pay in 5 years, one or the other, but don't tell me "the attorney says we can't do it" and expect me to buy it.

The buyer was never a corporation. Stardust requires that you fill out forms to notify of the transfer. The forms are set up for a person or a corporation. My buyer did her best to put the square peg in the round holes. She clearly put on there that she was a sole proprietorship, all the LLC stuff she left blank. When we were notified of the problem with the inactive status we went to the Florida Sec of State list of corporations and could not find anything on the LLC. I wrote the buyer, she told me there was no LLC, active, inactive, former, current, none. I think Stardust, or the attorney, or I don't know who, made assumptions about an LLC that has nothing to do with this buyer or this sale. I don't know what they are talking about regarding an inactive LLC, the buyer does not know. The buyer clearly stated that she was a sole proprietorship and sent her Fla Sec of St DBA to Stardust and she also sent it to me. I advised Stardust and now they are telling me this nonsense that a sole proprietorship fictitious business name cannot hold title, because if they do and the statement expires who will pay??? They are not talking law, I am not sure what they are talking. I made the mistake of using their "independent" realty service. What are they doing stepping into my property transfer at such an early stage of the process? What are they doing rendering false legal opinions on my title transfer and instructing the realty service not to process the grant deed transfer? They have no legal standing in my property rights, they are an HOA, they have authority over membership, they have interjected themselves inappropriately into this sale.

Theo, I'd love to give it to you and I will pay the transfer fee. You can be proud, and stuck!

Brian, There's more to the rest of the story than the bilge they are pumping. I just want to give the thing away, without any trickery that sticks the HOA with a nonperforming interval. They are acting in the worst mentality of the timeshare industry where they act as if they have got us and there is no escape but death and then we are coming after your kids. They are not doing proper business in a proper business fashion, they are behaving incompetently IMHO in this instance.

Mike
www.fulltimetimeshare.com

*shrug,

I have no problem whatsoever in an HOA screening sales to "corporations" before completing the title transfer.

Sounds like there were red flags all over this "llc"...kudos to the HOA for not letting the transfer through in this case.

Brian,

Please read the whole post. There was NO llc.

Mike
www.fulltimetimeshare.com

you are arguing a semantic point now.

llc, s-corp, dba, etc etc....the seller wanted to transfer the deed to the ownership of a corporation...one that could not be verified as legitimate.

so, i repeat...in this situation I have zero problem with the Hoa denying the transfer to an unverifiable entity.

Brian,

I am at a loss and don't know what to say to you. Either you can't or won't understand that there was no LLC. There was only a sole proprietorship doing business under a business name, like TUG. No Inc. Not semantics but critical points. Stardust telling me I can't sell my grant deed would be like AAA telling me I can't sell my car, because I am a member. They have some rights, but they do not have the right to tell me who I can sell my timeshare too, all they can legally do is refuse to recognize that person, or business, or corporation for a time until they are pushed to it.

Mike

Hi Mike - What doesn't the buyer just take title in her personal name, and make it simple?

Mike&Edie said:

Brian,

I am at a loss and don't know what to say to you. Either you can't or won't understand that there was no LLC. There was only a sole proprietorship doing business under a business name, like TUG. No Inc. Not semantics but critical points. Stardust telling me I can't sell my grant deed would be like AAA telling me I can't sell my car, because I am a member. They have some rights, but they do not have the right to tell me who I can sell my timeshare too, all they can legally do is refuse to recognize that person, or business, or corporation for a time until they are pushed to it.

Mike

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so basically you are saying what was posted by the resort representative above...is a lie?

the HOAs job is to manage the resort, they absolutely have every right to vet a potential buyer given one of the most common scams in the industry today is fictional corporate entities that abandon obligations after the title has been transferred.

AAA has no financial obligation to you or your car...so that analogy is invalid.

the HOA (and all the other owners) are responsible for paying for your timeshare should you or the person you plan to sell it to defaults on the payments....why do you feel that they are not due at least some level of "checking" to verify that the person looking to buy the property doesnt intend to default on it when the bill comes due?

they are taking 100% of the risk, how can you tell them they cant put forth efforts to ensure they dont get burned?

csxjohn said:

Thank you for the reply.

From you answer can we assume that you don't automatically refuse to accept a transfer to a corporation just because it's a corporations.

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CSXJohn,

In a face to face meeting with the assistant GM we were told that they no longer allow transfers to LLC's. I note she is not repeating that here, probably on advise of counsel. Stardust is currently suing over a hundred individuals and corporations regarding the pay to buy schemes, as they should. But they should not interfere with legitimate sales because they misunderstand if a business is a corporation or not.

Mike

According to the definition below (from http://www.legalzoom.com/dba-guide/dba-defined.html), could this situation be "simply" resolved by recording the title as "Jane Smith DBA My Business Name"? Or list Jane Smith and My Business Name as co-owners. Either way, Jane Smith is still personally bound to any liability incurred by the DBA. I'm not a legal expert, so this is not a rhetorical question, but one actually seeking an answer.


1. Definition of a DBA DBA is an abbreviation for "doing business as." Certain jurisdictions may also use the terms "fictitious business name," "trade name," or "assumed name." DBA registration is necessary if your business operates under a name other than its legal name.

For a corporation, LLC, or other state-registered entity, the legal name is the name on the filed articles so, if you want your corporation or LLC wants to operate under a different name, you must file a DBA registration. For all other business structures, such as a sole proprietorship or partnership, the legal name is the personal name of the business owner or owners. Conducting business and opening a bank account under any name other than your legal business name is only possible after fulfilling your state's DBA filing requirement.

...

One of the main disadvantages of operating a sole proprietorship or partnership with a DBA, as opposed to forming an LLC or corporation is that you [the legal owner] do not have liability protection as a sole proprietorship or partnership. You will be personally liable for the debts of your business.