Bluegreen stopping owners from renting?

Hello,
I have a client that just received a letter from Bluegreen stating that they are violating the Bluegreen contract by renting. I could not figure out how to attach this letter so I am pasting it here with the names removed.

SENT CERTIFIED, RETURN-RECEIPT REQUESTED AND REGULAR U.S. MAIL

February 21, 2013





Re: Ownership and use of Vacation Points within the Bluegreen Vacation Club in connection with the operation of business activities; Unauthorized business usage of Bluegreen proprietary materials

Dear Mr. and Mrs. :

A matter has recently been brought to my attention that needs your immediate action.

Our records indicate that you own timeshare interests that are collectively valued in excess of 550,000 annual Vacation Points and 90,000 biennial Vacation Points within the Bluegreen Vacation Club, which except for a relatively small portion of Vacation Points that you acquired at the Big Cedar Wilderness Club through Bluegreen Vacations Unlimited, Inc. ("BVU"), you have acquired nearly all of your Vacation Points on the secondary market or through non-Bluegreen authorized agent(s).

A search of sites through the Internet appears to indicate that you are actually using your Vacation Points to conduct a rental business by means of booking timeshare units in advance and then offering them to customers for vacations and business travel.

Such business activities as mentioned above are in direct contradiction to the personal usage nature of the Bluegreen Vacation Club product that you own. Further, these activities have a substantial adverse effect on the other Bluegreen Vacation Club owners who are seeking to make reservations for their own personal use by removing possible inventory from the reservation pool that would otherwise be available to them for reservations.

Please understand that within Paragraph 5 of the Terms and Conditions of the Owner Beneficiary Agreement contract entered into on February 3, 2007 between you and BVU (the "Contract"), it provides in relevant part as follows:
"...Purchaser further acknowledges and represents that the Resort Interest described herein is being purchased for Purchaser's personal use and for limited exchange purposes, and not for any investment potential or any possible rent returns..." [emphasis added]

In addition, Provision #3 of the Annual Owner Confirmation Interview simultaneously executed by the two of you provides as follows:

"We are not purchasing points as a financial investment. No representation was made to us concerning a financial return or an expectation of profits from resale or rental income." [emphasis added]

Likewise, any contract for a timeshare interest within the Bluegreen Vacation Club acquired on the secondary market by which there was a predecessor in title to you would have contained similar restricted language regarding permitted usage of the interest acquired, and it would have also contained language similar to what is set forth at Paragraph 27(a) of the Terms and Conditions of your Contract which provides that "This Agreement is binding upon the parties hereto and….successors and assigns..." and thus would bind you by this same restricted usage. [emphasis added].

Moreover, Paragraph 4 of the Assignment of Owner Beneficiary Rights entered between you and all of your third-party sellers, provides in relevant part as follows:
"Assignees hereby acknowledge that the failure of any one or all of them to fulfill their joint Owner Beneficiary Obligations, pursuant to the Contract and any documents related thereto, shall subject all Assignees to all remedies available under such documents, including possible suspension or termination from the Bluegreen Vacation Club."

Accordingly, you must immediately cease conducting such unpermitted business activities, and desist from conducting your commercial rental operations involving Bluegreen Vacation Club resort inventory in the future. To this end, we will no longer honor your making of such reservations for this business purpose.

Further, in reviewing your marketing materials on a website (xxxxxxxxxx.com) through which you are conducting your commercial rental activities (a copy of which is also attached for your ease of reference), your eBay auctions listed under xxxxx and your xxxxxxx Facebook® page, it also appears that you are using Bluegreen's proprietary service marks and/or copy, written text, images and/or other materials ("Bluegreen Materials"). In addition, it appears as if the photos you are using were "lifted" from the websites bluegreenonline.com and/or big-cedar.com. Please also be advised that BLUEGREEN is a registered service mark of Bluegreen Corporation (NYSE: BXG), and it has been in use in. commerce in the United States and in various other countries since at least 1996. BLUEGREEN VACATION CLUB is a registered service mark of Bluegreen Corporation. Both of these marks are extremely valuable assets of Bluegreen and no permission has been granted to you for use of any of such Bluegreen Materials.

You must IMMEDIATELY CEASE AND DESIST from all future and further use of Bluegreen Materials on your website(s), eBay, Facebook ®, and on any auction or other Internet sites. Your failure to do so will result in Bluegreen exploring all legal options available to it to protect its proprietary information from your unauthorized usage and financial gain.

If you have any questions whatsoever regarding this matter, please contact me immediately at 561-443-8713.

First, I need some help from you out there, Has anyone else received a letter such as this? If so, how long ago and can you tell me the outcome.

Second, I am not concerned with the last part of the letter dealing with copyrights as names of websites, pictures and marketing material can be changed.

Third, My concern is with the portion of the letter that states the client cannot be using their points for rental income. I specifically remember the timeshare pitch at Bluegreen Falls Village to include the phrase "you can deed, will, sell, use, loan or rent your ownership" I even remember a document that Bluegreen gave to their new owners defining the Bluegreen Rental Agreement that they could opt into.

Fourth, Does anyone out there have this Paragraph 27 that states you can't rent your points?

So, am I reading this letter incorrectly? I know for a fact that there are other Bluegreen owners with rental pools that greatly exceed this person's and I have not seen any change in their practices.

Any more information would be greatly appreciated and I thank you for your time.

Jeff Brown
Sumday Vacations

I specifically remember the timeshare pitch at Bluegreen Falls Village to include the phrase "you can deed, will, sell, use, loan or rent your ownership" I even remember a document that Bluegreen gave to their new owners defining the Bluegreen Rental Agreement that they could opt into.

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This statement below seems to negate your argument that they were sold on the idea of being able to rent. They make a point in the letter of singling out the fact they purchased the vast majority on the secondary market.

which except for a relatively small portion of Vacation Points that you acquired at the Big Cedar Wilderness Club through Bluegreen Vacations Unlimited, Inc. ("BVU"), you have acquired nearly all of your Vacation Points on the secondary market or through non-Bluegreen authorized agent(s).

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it's a lot to read

I think you just took my statement wrong.

In other words, when I was at Bluegreen Falls Village (1999 or so) they used that pitch.

I am not the owner of these points. but yes they did buy most in the resale market. That should not stop them from receiving the rights of ownership that come with the ownership.

I fully understand that the perks are not included in a resale purchase of Bluegreen points but being able to use, sell or rent that ownership is an inherent right that passes with ownership.

Did you search over here:

http://www.timeshareforums.com/forums/forumdisplay.php/98-Bluegreen-Resorts

http://www.timesharekahuna.com/mytimesharerentals/

http://www.timesharekahuna.com/bluegreen/

http://tugbbs.com/forums/member.php?u=1102

I received a similar letter from RCI several years ago. The result was they closed my accounts and cancelled my exchanges. I don't think there is any prohibition to renting the property you OWN, only using your points EXCHANGED for another property is a problem.

None of this is meant to be a professional opinion - it's just what I thought reading the letter. I didn't read it as saying that your client's right to rent out intervals is more limited as an external-resale purchaser than as a direct purchaser. I read it as no matter how the points are purchased, if BG thinks that the amount of rentals generated by one owner is sufficient for them to invoke their vague restriction against, "a rental business," then they'll use their leverage to go after whichever owners they choose.

I might be wrong but it seems to me that the reason the letter goes into any detail about how your client's points were purchased, whether direct or as external resales, is simply to prevent in advance your client possibly claiming that as an external purchaser s/he wasn't aware of the restriction against using the timeshares "to conduct a rental business." The letter points out that if your client wanted to use that defense now, BG can defend against it because whether or not your client knew the specific rights and restrictions of the external-resale, s/he signed papers at the time of purchase stipulating that all rights and restrictions transfer upon resale to all "successors and assigns."

Marriott governing docs contain similar language restricting what might be considered a commercial renting venture. It's vague purposely so that they can invoke the restriction in certain instances while not infringing on other owners' rights to rent their ownerships. That right to rent out ownerships extends only so far, and not to the point where a "commercial venture" is undertaken. If I owned enough Marriott product to be doing the amount of rentals that it seems your client is doing, and got a letter like your client did from Marriott, I'd be talking very soon with a lawyer versed in real estate law (I apologize if you are one, but I'm guessing not because you wouldn't be questioning TUG) and I'd be thinking real hard about making a deal with BG to at least let my booked clients take their already-reserved vacations. But I'm not big into risky ventures - I'm sure other TUGgers might challenge Bluegreen.

This is interesting.

I own Bluegreen. I just scanned my contracts quickly but didn't see anything like the para 27 mentioned above. I did not go through them in detail, though.

I have rented to friends on several occasions and have rented out units that I originally booked for myself but ended up not being able to use. I've never booked deliberately to rent, though I'm not at all opposed to this on a limited basis.

I have definitely noticed that the majority of ebay ads use copyrighted photos.

However, I ran across this operation last week, and for the first time found myself wishing there were some limitation on renting. The breadth of this took my breath away. I don't mean to be hypocritical since I've rented myself, and I am not sure yet how I would want to see this working, but sheesh, this is too much!

http://stores.ebay.com/bigcedarwildernesslodgetravel

Anita

JeffBrown said:

... I even remember a document that Bluegreen gave to their new owners defining the Bluegreen Rental Agreement that they could opt into...

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Jeff, this appears to mean you could let Bluegreen rent your unit for you.

It would not imply that you could start a rental business with your ownership.

We all know that RCI, II, and DAE do not allow you to get an exchange then rent or trade it. It will be interesting to see if Bluegreen actually has this written into it's contracts.

My contracts are a mess

I just went through all of my contracts (five different purchases) and they aren't even all the same. I read them at the time, but I have no idea anymore what they say. ARgh.

akp said:

However, I ran across this operation last week, and for the first time found myself wishing there were some limitation on renting. The breadth of this took my breath away. I don't mean to be hypocritical since I've rented myself, and I am not sure yet how I would want to see this working, but sheesh, this is too much!

http://stores.ebay.com/bigcedarwildernesslodgetravel

Anita

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I'm pretty sure that's the one Jeff is talking about.

kcbedo said:

I'm pretty sure that's the one Jeff is talking about.

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I thought so, too. Their website it "temporary offline" but their Facebook page is still up.

I can't speak as to Bluegreen, but the language is similar to what was in Club Sunterra/Diamond. There is a TUGgers who used to be quite active here who had accumulated a similarly large number of points and was running a rental business using them. Diamond shut him down; with disastrous financial consequences for him.

I think I overreacted a bit...

akp;1433238 However said:

http://stores.ebay.com/bigcedarwildernesslodgetravel[/url]

Anita

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I posted this based on a rush to judgment. I scanned their listings for May (and there are many) and saw that they had buttons for each month of the year. I ASSumed that they had tons of listings for each month. I was wrong.

Sorry about that!

Owner Beneficiary Agreement

Jeff

Bluegreen are correct your client signed to the fact he/they were not purchasing points for "Any Possible Rent Returns". It is in the middle of paragraph 5 not paragraph 27.

Andy

GumpyGa said:

Jeff

Bluegreen are correct your client signed to the fact he/they were not purchasing points for "Any Possible Rent Returns". It is in the middle of paragraph 5 not paragraph 27.

Andy

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That's what the letter says, that the stipulation in the Contract for the client's direct purchase is in para 5 of the t&c's in the Owner Beneficiary Agreement:

... Please understand that within Paragraph 5 of the Terms and Conditions of the Owner Beneficiary Agreement contract entered into on February 3, 2007 between you and BVU (the "Contract"), it provides in relevant part as follows:
"...Purchaser further acknowledges and represents that the Resort Interest described herein is being purchased for Purchaser's personal use and for limited exchange purposes, and not for any investment potential or any possible rent returns..." [emphasis added] ...

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The para 27(a) in the client's same Contract is mentioned as one form of the stipulation that external-resales are subject to the same rights and restrictions as direct-purchases, because all rights and restrictions transfer upon resale to all "... assigns and successors ..." But the letter says that the client's resale contracts may only contain "similar restricted language," meaning not necessarily the same notated para 27(a):

... Likewise, any contract for a timeshare interest within the Bluegreen Vacation Club acquired on the secondary market by which there was a predecessor in title to you would have contained similar restricted language regarding permitted usage of the interest acquired, and it would have also contained language similar to what is set forth at Paragraph 27(a) of the Terms and Conditions of your Contract which provides that "This Agreement is binding upon the parties hereto and….successors and assigns..." and thus would bind you by this same restricted usage. [emphasis added]. ...

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Check the Multi-Site Public Offering Statement

The legality of renting is very confusing to say the least.

On Page 68 of Exhibit 0 of the February, 2012 Multi-Site Public Offering Statement we find:

"No guarantee is made that an Owner Beneficiary will be able to rent Accommodations to a third party and no agent or representative of the Developer is authorized to assist an Owner Beneficiary with renting their Resort Interest or locating potential renters. Further, no guarantee is made that if an Owner Beneficiary locates a third party to rent Accommodations that the monies derived therefrom will cover the cost of owning their Resort Interest, including but not limited to, Common Assessment Fees."

To me this statement does not exclude owners from renting reservations.

Charles

robcrusoe said:

Been there, done that, have the T-shirt, don't do RCI anymore, although I still have several accounts active. You are way wrong ... if you own a staright deed week, fine, but most point/mini systems have the stipulation that you can't be commercial and the usually further define that as making money on rentals. If you have a deeded week that you still own but pledge it to points systems, you're under their "Club" rules! ...

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Now we're getting off into abstracts but it's not necessarily true that every deeded week system allows unrestricted/unlimited rentals by owners. Marriott was a straight deeded week system long before its point system was introduced in 2010, and the Marriott weeks contracts I know of have always included some version of a "commercial venture" rental restriction alongside related language throughout the docs referencing an owner's right to rent his ownership privately or through Marriott's rental program. As well, Marriott contracts include similar language to what's mentioned here in BG's relating to all rights and restrictions transferring upon resale to the new owners. I haven't heard of a Marriott weeks owner being penalized as a commercial rental business but it appears that the docs would certainly allow for such a thing.

DVC (Disney) contracts have also always allowed for owner rentals with a vague "commercial activity" restriction, but they're a deeded points system. Within the last few years, though, DVC has taken a few steps to try to curtail owner rentals. They've advised owners that if an account has a certain number (10, I believe) of reservations with guest names added, they'll be reviewing it as possible commercial rental activity, and they've limited the number of annual transfers in or out of an owner's account.

Interpretation of Par. 5

GumpyGa said:

Jeff

Bluegreen are correct your client signed to the fact he/they were not purchasing points for "Any Possible Rent Returns". It is in the middle of paragraph 5 not paragraph 27.

Andy

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I've read that and concentrated on it in many different viewpoints and I truthfully believe that this paragraph is in the contract to protect Bluegreen from their timeshare salesman. In other words, a ruthless salesman using a rental pitch can embellish quite a bit, this paragraph tells the buyer that no matter what Bluegreen is not guaranteeing any possible rent returns. BUT, it DOES NOT state specifically that the buyer CANNOT rent their unit.

Where does their contract state you can't

CharlesS said:

The legality of renting is very confusing to say the least.

On Page 68 of Exhibit 0 of the February, 2012 Multi-Site Public Offering Statement we find:

"No guarantee is made that an Owner Beneficiary will be able to rent Accommodations to a third party and no agent or representative of the Developer is authorized to assist an Owner Beneficiary with renting their Resort Interest or locating potential renters. Further, no guarantee is made that if an Owner Beneficiary locates a third party to rent Accommodations that the monies derived therefrom will cover the cost of owning their Resort Interest, including but not limited to, Common Assessment Fees."

To me this statement does not exclude owners from renting reservations.

Charles

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Charles,
I think along the same lines you are. I've seen many of these statements and all of them are basically stating that Bluegreen does not and will not guarantee an Owner Beneficiary any financial gain from renting, thus do not use it as a reason to buy.

What I'm looking for is the obvious statement in their contracts that says an Owner Beneficiary cannot rent their points.

I know for a fact there are atleast 3 other TUG members who own MANY more points in Bluegreen than this person, who have been marketing them for rentals and who use copyrighted materials to do so, and this activity has been going on for years. If Bluegreen was making this action part of their new agenda which includes exercising FROR then why are these other companies which are much more obvious not being informed?

By the way, Bluegreen the word is protected, so even using that word in your advertisements is against their rules. Every couple of years they come around and make me alter my website/ebay ads to get rid of/disguise that word.

JeffBrown said:

I've read that and concentrated on it in many different viewpoints and I truthfully believe that this paragraph is in the contract to protect Bluegreen from their timeshare salesman. In other words, a ruthless salesman using a rental pitch can embellish quite a bit, this paragraph tells the buyer that no matter what Bluegreen is not guaranteeing any possible rent returns. BUT, it DOES NOT state specifically that the buyer CANNOT rent their unit.

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Right. But the letter isn't claiming that NO owner rentals are allowed. It's claiming that the ownership documents prohibit rentals if they're done in sufficient numbers to constitute "commercial rental activities," and that BG considers your client's rental activity to be just that. Whether rentals are allowed or not isn't the question; it's how many rentals constitute a commercial venture. That's why I'd involve a lawyer, because s/he'd know how to go about arguing against the vagueness of the commercial activity restriction.

Most systems with multiple resorts and/or points seem to have prohibitions about commercial renting. If it's your home resort the renting is usually OK. Even Wyndham has similar language & used it to shut down points rentals. If I had tons of points & ran any type of highly visible rental programs like Ron P's I'd be very nervous that they may make moves to shut it down & leave me with far too many unwanted points.

But we should read the By-Laws

Jeff,

You asked for it.

In the same Multi-Site referred to earlier, we find the By-Laws of the Bluegreen Vacation Club. In the July 19, 1993 By-Laws we find in Article IV, Section 4.18 the following:

"4.18 Guest Use of Accommodations and Facilities. An Owner Member, including Owner Member, may allow guests, including relatives and friends, to occupy an Accommodation during his or her period of occupancy, by giving written notice of the same to the Vacation Club Managing Entity at least thirty (30) before the start of such occupancy, provided that no Owner Member, including Converting Owner Member may charge any individual, or other entity, for the occupancy of the Accommodations. An Owner Member authorizing occupancy by any guest, shall be liable for any damages caused by, or other charges incurred by, any such guest."

I have checked the Amendments to the By-Laws dated May 5, 1998, December 22, 1999, April 30, 2003, April 18, 2005, and September 26, 2006 and did not find any changes to Section 4.18.

It would appear to me that the statement "provided that no Owner Member, including Converting Owner Member may charge any individual, or other entity, for the occupancy of the Accommodations." is a clear statement of rental policy, ie., you may rent but you may not charge.

Charles

I know for a fact there are atleast 3 other TUG members who own MANY more points in Bluegreen than this person, who have been marketing them for rentals and who use copyrighted materials to do so, and this activity has been going on for years. If Bluegreen was making this action part of their new agenda which includes exercising FROR then why are these other companies which are much more obvious not being informed?

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While this is an interesting question, it's not at all material. The question is wether or not there is a legal basis for Bluegreen to make life difficult (perhaps very difficult) for your client. I'm with Sue---your client should ask his lawyer (assuming that's not you) to look at the letter and any relevant documents.

CharlesS said:

It would appear to me that the statement "provided that no Owner Member, including Converting Owner Member may charge any individual, or other entity, for the occupancy of the Accommodations." is a clear statement of rental policy, ie., you may rent but you may not charge.

Charles

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Charles,
Thank you so much for finding this ( I would've tried but I don't have a copy of the by-laws).

I'm not going to list the other and much larger companies out there that are using Bluegreen for their entire inventory base as I'm sure most of you know them. But, would this individual have a discrimination (or similiar) type lawsuit available to them if BG does not enforce this ruling upon the other companies mega-renting BG points?

That being said, what would you recommend we tell this client? Fight them, try to force them to buy or take back, or dump them like hotcakes in the resale market until they get down to an inventory level that is for personal use?

JeffBrown said:

Charles,
Thank you so much for finding this ( I would've tried but I don't have a copy of the by-laws).

I'm not going to list the other and much larger companies out there that are using Bluegreen for their entire inventory base as I'm sure most of you know them. But, would this individual have a discrimination (or similiar) type lawsuit available to them if BG does not enforce this ruling upon the other companies mega-renting BG points?

That being said, what would you recommend we tell this client? Fight them, try to force them to buy or take back, or dump them like hotcakes in the resale market until they get down to an inventory level that is for personal use?

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I'd tell her to find a qualified attorney immediately and ask him/her whether it appears that BG may have a legitimate action against her activities. If the answer is no and she's satisfied with their reasoning, she can then choose whether or not she wants to hire them to challenge BG's position. If the answer is an unqualified yes, BG is correct here, then she can determine if she wants to hire them to help her be left in as good a standing as possible (especially with respect to her client's existing reservations being left untouched.)

So I guess my simple answer is, tell her to hire a qualified attorney. Admittedly, it's my stock answer when anybody decides to challenge a big company with deep pockets and entrenched legal protection/advisors.