The Seller-Buyer Conumdrum

mac5u · Jul 19, 2015

I was reading through this thread, and this post by Saintsfanfl really got me to thinking as I am considering purchasing a resale.

So as a newb to the Resale market, I certainly understand why a Seller would think and do business this way. From a Buyer's perspective working with you, the Seller, why would I be willing to have the funds released before I am assured of both ownership and usage?

And since the conundrum exists, how is it usually resolved, especially amongst Tuggers? How does one go about choosing sellers carefully?
--Michael

Saintsfanfl said:
It's a conundrum. I will not sell a timeshare where I must wait for final transfer in order to be paid. The reason is because I have very little recourse once I sign over my legal title to the property. So from a seller's stand point I will never agree to this for a timeshare that has value. If I was a buyer I would love for this to happen but instead I just choose my sellers very carefully.
Unfortunately the conundrum exists because you have two very separate things. One is the legal title to the deeded property and the other is the timeshare usage. The two can be completely unrelated based on the timeshare usage agreements (floating, points, etc.).

DeniseM · Jul 19, 2015

One solution is to use an escrow company that will release the funds to the seller, upon completion of transfer - but expect to pay for this service.

If you are buying an inexpensive TS, it's not worth the cost of escrow.

*Some transfer companies do "poor man's escrow" in which they simply hold the buyer's check until the transaction is complete, and then mail it.

*Now an armchair lawyer is going to post that this is not "legal" escrow - thank you, you are correct.

Another very important step is to use a reputable and experienced title transfer company to transfer the deed, because they can guide you through the process, make sure the transfer is done correctly, and will be able to spot any shenanigans.

*We recently had a situation reported on TUG in which the seller was paying the buyer an incentive to take their timeshare. The buyer demanded payment as soon as the paperwork was completed (but not recorded.) The experienced and reputable closing company was able to mediate the situation, and the buyer agreed to wait until the deed was recorded.

Passepartout · Jul 19, 2015

Short of paying for escrow, there's trust. If you are buying from a TUGger with a track record of truthful dealings, you probably have less to worry about than say, a Craigslist purchase. An eBay seller with hundreds of sales and overwhelmingly positive approvals is probably worthy of your trust. Most of us have bought our resales in either of the above trustworthy situations.

Just be sure of what you are buying BEFORE you part with your hard earned money. Ask for an estoppel letter from the resort, and REVIEW IT before committing to the purchase.

I think you are perhaps jumping the gun a little. Just because a timeshare is cheap, doesn't automatically make it a good deal. There are 'mud' (undesireable) weeks at every resort, and the MF is the same as a prime one in most cases.

REALLY! Rent a few times at different 'brand' resorts. It will really focus your mind on what is truly important to you and your family. The good deals aren't going anywhere. If you rent a few times, keep an ear to the ground for something you TRULY want in a year or two, you'll be far better prepared to make an informed decision.

All the best.....

Jim

mac5u · Jul 19, 2015

They why the conundrum?

DeniseM said:
One solution is to use an escrow company that will release the funds to the seller, upon completion of transfer - but expect to pay for this service.

DeniseM said:
Another very important step is to use a reputable and experienced title transfer company to transfer the deed, because they can guide you through the process, make sure the transfer is done correctly, and will be able to spot any shenanigans.

I plan on using LT Transfers

DeniseM said:
*We recently had a situation reported on TUG in which the seller was paying the buyer an incentive to take their timeshare. The buyer demanded payment as soon as the paperwork was completed (but not recorded.) The experienced and reputable closing company was able to mediate the situation, and the buyer agreed to wait until the deed was recorded.

Yes, exactly. The quote I used was from that exact thread. It was a little more complicated than a straight sell-and-a-buy. There were other mitigating factors as you noted. It did work out in the end: What wasn't clear, at least to me, is what role LTT ended up playing.

Passepartout said:
Short of paying for escrow, there's trust. If you are buying from a TUGger with a track record of truthful dealings, you probably have less to worry about than say, a Craigslist purchase.

I do need to do a little more reading to try and find out exactly where one finds that track record.

Passepartout said:
An eBay seller with hundreds of sales and overwhelmingly positive approvals is probably worthy of your trust. Most of us have bought our resales in either of the above trustworthy situations.

Right. Which makes me think maybe Saintsfanfl is a DIY person. I don't know and maybe Saintsfanfl will chime in. I can certainly see if one is not using a well-known ebay seller or reputable Tugger where there is an even greater need to exercise due diligence.

Passepartout said:
Just be sure of what you are buying BEFORE you part with your hard earned money. Ask for an estoppel letter from the resort, and REVIEW IT before committing to the purchase.

The Estoppel letter ensures the title is clear. If I buy a TS from someone and the title is clear, MF paid, etc. I think I am half-way home. Still there is the ability to use the TS and I circle back to my original question: Why would I be willing to have the funds released before I am assured of both ownership and usage? In the thread both Denise and I referred to, there was some question as to when the deal is actually done.

I appreciate the good advice given.

DeniseM · Jul 19, 2015

Yes, exactly. The quote I used was from that exact thread. It was a little more complicated than a straight sell-and-a-buy. There were other mitigating factors as you noted. It did work out in the end: What wasn't clear, at least to me, is what role LTT ended up playing.

LTT held escrow and mediated between the buyer and seller regarding what was "legally" the completion of transfer.

It doesn't have to be difficult - you should have a purchase agreement - in that purchase agreement you should stipulate exactly when the funds will be released. In the deal referenced above, it was a little ambiguous*.

I would stipulate that the funds would be released AFTER the deed had been recorded with the county, and resort management, and that could be verified.

If the seller refuses - then just move on - there are lots of fish in the resale sea.

Also, in the deal referenced above, it was more risky than the normal resale situation in which the buyer is acquiring a timeshare that they really want. In this situation, the buyer had previously posted on TUG stating that he was interested in acquiring timeshares that included an incentive, and also, the timeshare that was transferred was commonly known to be undesirable. These 2 factors raised suspicions that this "buyer," might be someone who was only in it for the incentive, and perhaps did not intend to legally complete the transfer. It's entirely possible that the buyer may still default on this timeshare, but now, that's between him and the resort, and the seller is out of it.

mac5u · Jul 19, 2015

DeniseM said:
It doesn't have to be difficult - you should have a purchase agreement - in that purchase agreement you should stipulate exactly when the funds will be released. In the deal referenced above, it was a little ambiguous.

I would stipulate that the funds would be released AFTER the deed had been recorded with the county, and resort management, and that could be verified.

I'll probably find out soon enough if LT Transfers has a purchase agreement they offer that has that language. If they don't offer, I know there are sample contracts posted elsewhere on TUG so I will review those for suitability.

DeniseM · Jul 19, 2015

mac5u said:
I'll probably find out soon enough if LT Transfers has a purchase agreement they offer that has that language. If they don't offer, I know there are sample contracts posted elsewhere on TUG so I will review those for suitability.

Purchase agreements are not set in stone - it's just a template. I would have LT write the Purchase Agreement and ask them to include that stipulation. That's included in their standard services. Better to let someone with experience AND an attorney on staff handle the whole thing to make sure everything is air tight and legal.

Personally, I would not buy a timeshare if the purchase agreement is written by an amateur buyer or seller.

tschwa2 · Jul 19, 2015

LT can put anything both you and the other party agree to. So as the buyer you would need to see if the seller would agree to those terms. As Saintsfanfl said, he would never agree to those terms as a seller of a timeshare with any value.

DeniseM · Jul 19, 2015

tschwa2 said:
LT can put anything both you and the other party agree to. So as the buyer you would need to see if the seller would agree to those terms. As Saintsfanfl said, he would never agree to those terms as a seller of a timeshare with any value.

But that's just one person's opinion. As long as escrow was held by an reputable independent party, and assuming everything else was kosher, I would agree to transferring funds, when the transfer was complete

tschwa2 · Jul 19, 2015

It depends. There are some resorts that take a long time to transfer for example Harborside 4-6 months. I wouldn't want to wait that long if as a seller I had done my part. It is the same with renting some owners are ok with waiting until after the rental is complete to get the money from an escrow account and some do not want to wait.

DeniseM · Jul 19, 2015

tschwa2 said:
It depends. There are some resorts that take a long time to transfer for example Harborside 4-6 months. I wouldn't want to wait that long if as a seller I had done my part. It is the same with renting some owners are ok with waiting until after the rental is complete to get the money from an escrow account and some do not want to wait.

Then what would you do if for some reason, no fault of the buyer, the transfer was not completed?

mac5u · Jul 22, 2015

I received a sales agreement document from LT Transfers today. I was a little surprised how generic it was. I was even asked if I should have them request an Estoppel from the resort. Well, yes. Don't mean to be snarky.

Anyway, I found sample rental agreements on the Advice section but nothing pertaining to a purchase agreement. I did read the Transfer a Timeshare Ownership article.

The person I am entering into a resale agreement with is well known on TUG. I am not expecting any surprises but would solicit advice, maybe via PM, on what I - or anyone for that matter - should have written into the contract to protect seller and me. Denise offered above some helpful info.

Thanks.

DeniseM · Jul 22, 2015

Some resorts charge a fee for an estoppel - which either the buyer or the seller has to pay, so I think that is why LT asks that question - it's standard.

I'm involved in a transaction myself, and the seller didn't know that resort mgmt. is now charging $150 for the estoppel (nor did I) and they were not happy about that.

VegasBella · Jul 22, 2015

Isn't this what small claims court is for?

If you don't use escrow because the amount is too low to warrant it and something goes wrong with the sale then you should be able to attempt to get relief through small claims court.

theo · Jul 23, 2015

Why? Because they can...

DeniseM said:
<snip> I'm involved in a transaction myself, and the seller didn't know that resort mgmt. is now charging $150 for the estoppel (nor did I) and they were not happy about that.

Understandably so, as that figure is outright larcenous for the 30 seconds of effort required to prepare estoppel document.
Many resort management companies, particularly for "independent" (i.e., non-chain) facilities, appropriately charge nothing.

Gratuitous "transfer fees" are bad enough (for another approximately 30-45 seconds of effort required to internally record an ownership change for future billing), but charging $150 just for issuance of estoppel is "over the top" greed, plain and simple. It may be lawful, but it's still entirely inappropriate. :annoyed:

I don't want to impede successful conclusion of your transaction, but I hope that when it is completed you will consider openly identifying these thieves by name.

mac5u · Jul 29, 2015

Remedies

For non-performance, what are the typical remedies the more experienced of you use?

Buyer: Pays expenses of Transfer company and Seller retains deposit?

Seller: Pays expenses of Transfer company and returns the purchase price?

Using Escrow so I can't think of anything more than that. Missing anything?

theo · Jul 30, 2015

mac5u said:
For non-performance, what are the typical remedies the more experienced of you use?

Buyer: Pays expenses of Transfer company and Seller retains deposit?

Seller: Pays expenses of Transfer company and returns the purchase price?

Using Escrow so I can't think of anything more than that. Missing anything?

Unfortunately, like virtually everything else on Planet Timeshare, there is no "typical" or "one size fits all" answer to your question. There are simply too many factors involved in a transaction "gone south", notably including the actual terms and specificity of contract content and the "reasonableness" of the players involved.

vacationhopeful · Jul 30, 2015

mac5u said:
For non-performance, what are the typical remedies the more experienced of you use?

<snip> .... Missing anything?

A chill pill?

Using an independent closing company is worth their price of under $200-500 as a closing costs.

If the buyer does NOT send in money to the closing company (either USPS money order, certified check in Buyer's Name) and perhaps, the signed the Sales Agreement ... there is NO SALE agreed to.

If the seller has NOT signed the deeded and returned it to the closing company, no sale can happen.

The Closing Company manages the paper flow and sends out the payment to the seller. AND the closing company has to GET their fees (and in most cases, before they even open a file for the transaction).

If the timeshare sale is under a few thousand dollars ... held cashiers checks or money orders (DeniseM's poor man's escrow description) works well.

AND many of the more expensive resorts, have Right of First Refusal on resales.

PS If the seller is selling something ... they want it gone ... for whatever reason. And if the buyer has money to pay for it ... they want it.

And a SALE only happens IF YOU HAVE BOTH A WILLING BUYER AND SELLER!

mac5u · Aug 2, 2015

vacationhopeful said:
A chill pill?

I am quite chilled, thank you.

I am merely asking questions that a first-time re-sale buyer might ask. Some of this information is probably found scattered around numerous threads in bits and pieces.

ronparise · Aug 2, 2015

mac5u said:
I am quite chilled, thank you.

I am merely asking questions that a first-time re-sale buyer might ask. Some of this information is probably found scattered around numerous threads in bits and pieces.

Your questions have been answered in this thread,

The problem is you arent getting the answers you want. The simple fact is that there is nothing you can do to protect yourself in any business transaction, much less timeshares. The best you can do is to spell out your expectations in a contract. But a contract is no better than the people signing it.

Ive been involved in hundreds of timeshare transactions with all manner of people and concerns, and in every case, things worked out pretty much as expected. (although there was that one time I had to drive 1000 miles out of my way and park myself on the sellers front porch with a baseball bat, until he delivered my deed).

Bottom line, treat this "business" like a visit to Las Vegas. Dont place any bets you cant afford to lose.

mac5u · Aug 5, 2015

ronparise said:
Your questions have been answered in this thread,

The problem is you arent getting the answers you want. The simple fact is that there is nothing you can do to protect yourself in any business transaction, much less timeshares. The best you can do is to spell out your expectations in a contract. But a contract is no better than the people signing it.

I don't mean to sound argumentative. Actually, I am getting answers - and am not rejecting or dismissing them. Thank you to everyone who has offered advice.

Suggestions have been put forward to use a reputable transfer / escrow company. I am doing just that. I wrote earlier that the purchase agreement I received was pretty "generic". A better word to use was "Basic" . It was pretty bare bones - and that surprised me.

Denise's comments that these agreements are templates is spot-on with my experience so far so I am trying to build out the contract language.

I figured there would be some performance language and there wasn't. I figured there would be language as to timing of the release of funds. There wasn't. So, as has been suggested, language has been added to address the ambiguities.

I don't know that there is"....nothing [one] can do to protect [oneself] in any business transaction...".

I do not foresee any issues. Really. The person I am dealing with is well-known here on TUG and the escrow company is one that ya'all have recommended. I still find it interesting that Denise's question in Post #11 hasn't been answered by anyone. I guess in the millions of re-sale transactions, nothing has ever gone wrong.

DeniseM · Aug 5, 2015

There is no one-fits-all answer. When something goes wrong, you start with the terms in the contract and go from there. Even when you cover all the bases things can go wrong.

Examples from two of my resale purchases:

-The TS was in foreclosure, and this wasn't disclosed on the estoppel or by the owner.

-The owner deposited the 2015 week and lied about it.

On the first one, the sale could not be completed, and I got a refund - but this was AFTER the deed had been completely transferred, and that had to be unwound.

On the 2nd one, the seller's agent somehow got the deposit back from RCI and I proceeded with the purchase.

ronparise · Aug 5, 2015

mac5u said:
I don't mean to sound argumentative. Actually, I am getting answers - and am not rejecting or dismissing them. Thank you to everyone who has offered advice.

Suggestions have been put forward to use a reputable transfer / escrow company. I am doing just that. I wrote earlier that the purchase agreement I received was pretty "generic". A better word to use was "Basic" . It was pretty bare bones - and that surprised me.

Denise's comments that these agreements are templates is spot-on with my experience so far so I am trying to build out the contract language.

I figured there would be some performance language and there wasn't. I figured there would be language as to timing of the release of funds. There wasn't. So, as has been suggested, language has been added to address the ambiguities.

I don't know that there is"....nothing [one] can do to protect [oneself] in any business transaction...".

I do not foresee any issues. Really. The person I am dealing with is well-known here on TUG and the escrow company is one that ya'all have recommended. I still find it interesting that Denise's question in Post #11 hasn't been answered by anyone. I guess in the millions of re-sale transactions, nothing has ever gone wrong.

Thats my point, Things go wrong all the time. You do your best to anticipate every possible problem and address them in the purchase and sale agreement, but you cant anticipate everything that could happen. In the end both parties have to trust each other to do the right thing.

mac5u · Aug 6, 2015

Deed Search

LTT has ordered the estoppel letter. They have inquired about doing a deed search. I have asked them if the search is part of their usual service and who would pay. The Seller originally agreed to pay "closing and transfer".

Would the experienced of you consider a deed search

Part of the usual closing process, or
Part of the Closing and Transfer, or
Something separate that should have been negotiated in the beginning?

Thanks.

ronparise · Aug 6, 2015

mac5u said:
LTT has ordered the estoppel letter. They have inquired about doing a deed search. I have asked them if the search is part of their usual service and who would pay. The Seller originally agreed to pay "closing and transfer".

Would the experienced of you consider a deed search

Part of the usual closing process, or

Part of the Closing and Transfer, or

Something separate that should have been negotiated in the beginning?

Thanks.

I would consider a deed search would be considered an unnecessary extra

The Seller-Buyer Conumdrum

mac5u

DeniseM

Passepartout

TUG Review Crew: Veteran

mac5u

DeniseM

mac5u

DeniseM

tschwa2

TUG Review Crew: Veteran

DeniseM

tschwa2

TUG Review Crew: Veteran

DeniseM

mac5u

DeniseM

VegasBella

theo

TUG Review Crew: Veteran

mac5u

theo

TUG Review Crew: Veteran

vacationhopeful

TUG Review Crew: Rookie

mac5u

ronparise

mac5u

DeniseM

ronparise

mac5u

ronparise