Starwood exercises ROFR at WKORN

THANKS FRED ... other thoughts?

Fredm said:

Never send money directly to an ebay seller. Funds should be held by an independent escrow/closing agent.

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The funds are being sent to Trejesto Title Transfer Agency... they are handling the closing and title transfer. Their website states they set-up separate accounts to hold the funds and the funds will be fully refunded if ROFR is exercised. However when I asked specifically if they were setting up an Escrow Account.. they replied NO ... we always have setup a separate account to handle the transfer after ROFR is waived. I am not sure I understand the difference between setting up an Escrow and setting up a separate account for each transaction????

I further checked Better Business Bureau and they have no complaints and a BBB rating of B+... Also they deal specifically with transferred properties for a charity. My inclination is to trust them since they are a 3rd party, deal with charitable donated property, and had a good BBB rating.... any other opinions out there?

thanks for your help!

rudy

rudy, ... "My inclination is to trust them since they are a 3rd party ..."

You do not know who the owners of the selling agent are. You do not know who owns Trijesto (a Croatian pastry word), the closing company you must use. You do not know if there is any overlap of ownership or control.

Do you know if Trijesto is licensed or bonded? Have you seen an estoppel letter signed by Starwood which certifies that there are no delinquent assessments, what the owner's name is and what unit that person actually owns? Do you know that without escrow instructions you have no control over when the distribution of your funds will occur and no practical recourse against the seller or the closing company for violating any oral agreement? Is this a resale of a foreclosed unit? If so, what happens if the foreclosure proceeding was flawed or the period of any redemption that might exist has not yet expired?

I backed out of an eBay deal with greatamericantimeshares a few months ago because it refused to use a closing company and an escrow. Now, it seems to have associated itself with (created?) a closing company that says it will issue "title insurance" (but at above market rates) and will hold your funds separate (but not in an actual escrow).

greatamericantimeshares is, IMO, a front for selling foreclosures acquired by a company called Callahan & Zalinsky Associates, LLC (there is no Callahan and there is no Zalinsky, IMO - http://www.tugbbs.com/forums/showthread.php?p=878429#post878429) and maybe others. Jessica Miltier is just a very sweet employee.

I raise these questions just to make you realiize the risk you are taking. It may all work out OK. If it does, the prices greatamericantimeshares gets are affected by the pennies on the dollar foreclosures go for. They are very low resale prices. Just be careful and weigh your risk carefully. ... eom

JARTA ... I'm Still confused

Jarta,

Thanks for your post. ... I do want to take all the precautions possible. How do I know/check if they are licensed/bonded?

I have received an Estoppel letter that states unit number and all maintenance fees, etc are paid ..it was signed by an Ingrid Muelman, agent for the Ocean Resort Villas Master Association and dated 1/26/2010. However, it also provides the villa number and week but does not provide the previous owner's name. Everything else in terms of it stating Starwood Network disclosure statement including options for SVN but not StaR points is consistent with the listing and my understanding of a Starwood resale. It specifically states total fees due for outstanding maintenance and assessment fees and taxes is $0.00. Everything in this letter is consistent with the EBAY Lisitng. I even called the resort and they verifed the villa number is legitiimate and consistent with the view category specified.

Has anyone bought a resale for WKORV-N and have their Estoppel letter come from Ocean Resort Villas Master Association, 9002 San Marco Court, Orlando Fl 32819? It seems legit... but who knows now-a-days?

vacationtime1 said:

If the HOA actually went through with foreclosing on units for unpaid maintenance fees, the HOA would own the units. If Starwood exercises ROFR, Starwood would own the units.

But it would be an interesting situation if the HOA foreclosed on some units at the same time as Starwood grabbed some units via ROFR. Starwood would want to sell its units at full retail price. To the extent Starwood-controlled people are on the HOA board, they will have a conflict of interest between their responsibility as Starwood people to maintain retail pricing vs. their responsibility as board members to foreclose and sell units at fair market value (i.e. 25% as much).

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I believe it has been well established that there are no "Starwood-controlled people" on the WKORV HOA board. None of the board members has any financial ties to Starwood, other than owning weeks at the time share.

Greg

Greg - isn't at least one of the board members a Starwood employee? I haven't see the update since the last election, but previous to that it was true.

Denise,

Oops. You are right. I forgot about the one board member that Starwood gets to appoint. The other 4 members are not affiliated with Starwood.

Greg

gregb said:

I believe it has been well established that there are no "Starwood-controlled people" on the WKORV HOA board. None of the board members has any financial ties to Starwood, other than owning weeks at the time share.Greg

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I don't believe this has been established at all. Starwood still controls what names go on the ballot, no?

LisaRex, ... "I don't believe this has been established at all. Starwood still controls what names go on the ballot, no?

No. Your statement is just not true. Starwood does not control which names go on the ballot in Hawaii. Hawaii statutes control which names go on the ballot. Starwood must comply with the law.

TUG member, j4sharks - Jeff Hyman, had his name put on the ballot/proxy and his statement distributed free of charge to all owners receiving a proxy in the most recent WKORV election. j4sharks followed the simple steps of making a timely request and sending in his written statement.

We had a TUG thread all about Jeff's candidacy. See the last 3 posts of this thread, 157 and 159 by you earlier this month and 158 by Jeff saying there is no need to sue to get a list of WKORV owners. He said just ask.

http://www.tugbbs.com/forums/showthread.php?p=875128#post875128

Getting on the ballot/proxy is merely the first step to getting elected. After all who comply with the law are put on the ballot/proxy, the person who gets the most votes wins. There is no entitlement of any candidate or group to a contested HOA board seat.

Given what happened in the February WKORV election, why do you continue to insist that Starwood still controls what names go on the ballot? ... eom

DeniseM said:

Hi Lisa -

Was that a joke, or do you really think they have begun processing foreclosures?

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Last week, at SDO, our salesperson stated that recent inventory at SDO they were selling, was available due to forclosures. Not sure how to confirm/refute this, but she said it.

ROFR considerations

Thought I would pass on a couple of issues for buyers and sellers to consider when faced with a ROFR exercise.

If you are the seller, it's no big deal. All that happens is that you have a different buyer. Price and terms must be the same as you originally agreed to.
Starwood will mail new documents which should reflect these same terms of sale. If they do not, don't sign them. Get it straight first.

If you are the buyer, all is not lost.
You can offer the seller a higher price.
Nothing requires the seller to sell to the developer under the previous terms, if presented with a higher legitimate offer (unless the seller has already signed the developers replacement contract).
The developer can then review the new terms for exercise consideration.

Both buyer and seller should understand the ROFR review period (usually 15 days from notice to Starwood).
It is not uncommon for a developer to declare the exercise of its preemption right after the review term has expired.
The seller may not care. Again, the only change is the name of the buyer. However, the buyer may care. At this point the buyer can claim the developer is unlawfully interfering with a valid contract.

Most often, a ROFR simply goes off without a hitch.
The seller gets what they want. The buyer is not inclined to chase the deal, or spend the additional effort.

Sellers and buyers should just keep in mind that a higher offer is possible, if the seller has not signed the developer replacement contract.

Broker perspective.
It is often assumed that timeshare brokers hate ROFR's.
Not true. From a business perspective, I love them.
The sale occurs, and a commission is paid. However, I still have a buyer who has already placed money on the table to sell another interval, if the ROFR is exercised.

LisaRex said:

I don't believe this has been established at all. Starwood still controls what names go on the ballot, no?

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Hi Lisa - In the last election, there were 2 candidates on the ballot who were screened and chosen by Starwood, plus, Tugger j4sharks. j4sharks looked up the local election laws and discovered that he had the right to place himself on the ballot, without Starwood's approval. Previous to that, ALL candidates were hand selected by Starwood.

This is the interesting part - now that it's been revealed that in the past Starwood was breaking local law, by denying owners the right to nominate themselves, will they continue to screen applicants, or will they allow all interested owners to be on the ballot?

Starwood - we will be watching...

DeniseM said:

This is the interesting part - now that it's been revealed that in the past Starwood was breaking local law, by denying owners the right to nominate themselves, will they continue to screen applicants, or will they allow all interested owners to be on the ballot?

Starwood - we will be watching...

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Well... this gets tricky. The "interview" process Starwood performs for their elections may not have broken local law. Starwood may simply not be assisting any interested party in getting on the ballot. If they like you, then perhaps they will. And if not, you have the right to get listed on the ballot as Jeff did (though they may not tell you about this option). I'm not sure the developer has any obligation to assist any owner in getting listed on the ballot. We've already established they're not a disinterested party. And, if you list yourself in this manner, you should expect the current board not be impartial toward your selection, assuming the majority votes are performed via proxy and voted by the board.

I'm not a lawyer, but that's how I see it now.

Ken - I see what you are saying, but the process used in the past, seems intentionally misleading to me. Completing an application obviously indicates an owner's desire to be placed on the ballot. It is duplicitous for Starwood to say, "Yes, we send out applications, but that's not how you get on the ballot, and we aren't going to tell you that."

After all THEY WORK FOR US - what right do they have to manipulate the election process? WKORV is sold out - and the resort and elections should be in the hands of the BOD - not the developer.

BTW - a Starwood employee manages the elections, and should know the local election laws.
YMMV

DeniseM said:

Hi Lisa - In the last election, there were 2 candidates on the ballot who were screened and chosen by Starwood, plus, Tugger j4sharks. j4sharks looked up the local election laws and discovered that he had the right to place himself on the ballot, without Starwood's approval. Previous to that, ALL candidates were hand selected by Starwood.

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Of course you are correct. I retract what I said. What I SHOULD have said was that the current proxy system completely favors whomever the current board wants to win. Getting a truly independent candidate on the board is akin to surmounting a coup. See the WSJ thread for what I mean.

LisaRex said:

What I SHOULD have said was that the current proxy system completely favors whomever the current board wants to win. Getting a truly independent candidate on the board is akin to surmounting a coup. See the WSJ thread for what I mean.

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I completely agree!

Fredm said:

Nothing requires the seller to sell to the developer under the previous terms, if presented with a higher legitimate offer (unless the seller has already signed the developers replacement contract)

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This certainly isn't the way most commercial ROFR provisions work. I've actually never heard of an ROFR provision that doesn't require the seller to sell once it's exercised. If the seller has the ability to continue to negotiate, that defeats the whole purpose of the provision.

Have you actually been involved in a transaction where the seller submitted a new higher price after the ROFR was exercised?

LisaRex, ... "the current proxy system completely favors whomever the current board wants to win"

The current board has to vote a proxy as it is marked by the owner. If the proxy is marked as a vote for j4sharks, there is no discretion to vote it any other way. However, unmarked proxies returned to the HOA (except those marked as returned merely to achieve a quorum) give the current board the discretion to vote them the way the current board feels is best for the association.

That's the way it works for every election for every corporation or homeowners association in every State in the USA. 50 State legislatures - all giving the current board the right to vote unmarked proxies. You should ask yourself how that unanimity of result came to be.

You may not like this maxim of Corporate Law 101. If so, get a State legislature to change the law to accommodate your sense of how corporate and association elections should be run. Or, stop complaining about how unfair it all is and start working hard within the existing law to make sure that the proxy votes cast for your candidate exceed the votes that will be cast for any other candidate. ... eom

RLG said:

This certainly isn't the way most commercial ROFR provisions work. I've actually never heard of an ROFR provision that doesn't require the seller to sell once it's exercised. If the seller has the ability to continue to negotiate, that defeats the whole purpose of the provision.

Have you actually been involved in a transaction where the seller submitted a new higher price after the ROFR was exercised?

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Yes, I have been involved in several.

The principle involved is best stated in the following:

Analysis of the rationale relied on by the
Anderson court persuades us that a good-faith withdrawal
of a third-party offer to purchase should not
activate a right of first refusal. First, the purpose for
which the right of first refusal was created is
essentially a control technique to secure a community
of qualified, congenial residents while protecting
the value of their apartments.11 This purpose
was held by the Anderson court to be sufficient to
satisfy the “purpose” portion of the tri-partite test
for establishing the validity of a right of first refusal
in condominium bylaws. However, where the sale
to a third party is abandoned or withdrawn, that
purpose is not present. The would-be seller remains
a member of the condominium community and
there is no further need to secure or protect the
community. Thus, the exercise of a right of first
refusal by a board when the primary motive is to
capture a “bargain” purchase may always be
vulnerable to a modification or withdrawal.

As with all legal matters, such language gives lawyers something to argue about. But, as a practical matter, timeshare developers are not going to go to the mat with its owners over such a trifle.
Of course, it cuts both ways. IF a developer pushed back (although they have not to my knowledge), the seller and/or buyer may quickly decide it is not worth pursuing. Usually the amount under dispute is +/- $1,000.

My experience has been that they will simply evaluate the new offer, take it or leave it, and move on to the next transaction overflowing their in-box. Attempting to force an owner to sell in light of a better offer is not only dangerous to the integrity of their reserved rights, it's bad business.

Commercial real estate may be a different animal. I don't know.
My post was simply a contribution, based on my professional experience in transacting timeshares.

Fredm said:

I agree. ROFR is an opportunistic exercise. One may be exercised today, and another at a lower price may not, tomorrow.

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I think the biggest opportunity is the "hype" that will be caused by their refusal.

James1975NY said:

I think the biggest opportunity is the "hype" that will be caused by their refusal.

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I agree with that!

What 'hype'? It seems that only Tuggers are informed when other Tuggers post a SVO ROFR occurance (rare) here on TUG, and Tuggers likely represent <1% of all SVO Owners. So it is not more then... 'interesting'.

At some resorts like (e.g.) WKORV/N, WPORV, HRA, WSJ, WKV - I think SVO is missing a profitable opportunity considering that they have the sales infrastructure (and certainly enough 'fish') to exercise a ROFR and turn-around and sell the VOI at a profit to the many fish (...I mean rose-colored glass wearing vacationers...) passing through. IMO - this would benefit SVO by profiting from the ROFR, and Owners in supporting the underlying value of the VOI. Of course - this only holds for those VOIs that have perceived value, and where the profitability ends for SVO.
IMO.

Interesting is a better word, for now.

Back a couple of years, hype ran rampant with Marriott shares. But, of course, Marriott was being very active with it's ROFR. No so yet with Starwood.

If/when more are exercised, owners will begin using ROFR prices to tell buyers that a lower price will get swiped. That is what I call 'hype'.

jarta said:

Fred, ... "Starwood just exercised ROFR on an annual 1 bedroom OV at KOR. $5,000. (doing it again)"

2 ROFRs in 2 days? I guess it is no longer an isolated incident. Maybe there actually is intrinsic value in those WKORV and WKORV-N units above the panic-driven eBay prices. I could speculate on why that may be so. But, I won't.

TUG members make buys on eBay at cheap prices to visit, rent out and trade. What's wrong with Starwood making buys at cheap prices to resell or rent? From the WKORV and WKORV-N HOA point of view, there probably is no more reliable entity to pay MF than Starwood.

Plus just the threat of Starwood exercising its ROFR can prop up the prices of all weeks. Isn't that a good thing for all WKORV and WKORV-N owners? ... eom

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More timeshares = more votes?

James1975NY, ... "More timeshares = more votes?"

Sure, more votes for Starwood; less votes for others. The total number of votes, however, stays the same. lol!

Starwood's share of MF goes up. ... eom

jarta said:

James1975NY, ... "More timeshares = more votes?"

Sure, more votes for Starwood; less votes for others. The total number of votes, however, stays the same. lol!

Starwood's share of MF goes up. ... eom

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Nah. Starwood probably holds title for 15 minutes.
They won't exercise on something they don't already have a buyer for.