Timeshare "Sunset" or Self-Destruct clause - 2020! Every timeshare owner should read!

While I had heard the term before, until the recent presentation I attended I had not had it explained to me in great detail to a point where I believed it was as bad as everyone said it was.

I am now convinced this is an extremely real issue that will impact many many resorts in florida where most have no idea it even exists, much less the ramifications of it going into effect on the scheduled date (which should start in 2020...and thats only 5 years away)

This in essence, was written into most Timeshare governing documents as a way to ensure the timeshare was not a "for life" issue and set dates in the ranges of 25-50 years for the timeshare to completely terminate unless a vote was passed from the owners to have it continue to operate.

While this sounds very simple, why wouldnt owners vote to keep it going if it was a perfectly sound timeshare? As you have seen in the past, some timeshare governing documents state that in order to pass votes like these, an overwhelming majority of owners must participate int he vote and vote yes.

This is simply not only unreasonable, but in most cases impossible to get these high percentages due to a wide variety of reasons. Heck in most cases resorts claim its impossible to even contact 90% of its members, much less get them to not only read a letter to vote, but send it back in time to have the vote counted.

What does this mean if this clause is in your Timeshares governing documents? This means your timeshare will BY DEFAULT cease to operate as a timeshare when this kicks in and for legal/insurance/etc reasons...cannot be allowed to operate any longer as a Timeshare.

As it was explained to me, this particular clause was thought up in the late 60s, and continued to be included in most documents well into the 90s. The gentleman explaining this said that he has yet to see the documents for a florida Timeshare built between 1980 and 1990 that does NOT have this clause in it.

So for those of you that own resorts in florida, its time to dig out or request the governing documents and start asking your HOA what their plan is to address it (and cross your fingers they dont look at you with confusion).

I am also hoping the gentleman who spoke about this issue at the presentation will chime in here on the discussion should it pick up.



List of Resorts owners have confirmed this Clause to exist in:

1. Foxrun/Fairway of the Mountains in Lake Lure, NC
2. Wyndham Kingsgate - Williamsburg VA
3. Barrier Island Station-Duck Resort - Duck NC

Does this mean the timeshare company would have to resell everything? Or that it would be converted to residential units? What happens to the buildings? Wouldn't this be a good way for owners to know they will eventually be free of the burden of their maintenance fees? I am not understanding....

Brian, this is also included on the deed for Foxrun/Fairway of the Mountains in Lake Lure, North. Carolina.

I remember commenting on it when I first purchased there in 2003 (I no longer own there) from Jerry Wright at Redden Realty (now Lake Lure Realty)

Still have several friends and family that DO own there....wonder what the ramifications will be?

One of my timeshares in North Carolina mentioned our resort has this clause.

At our HOA meeting this past November, the Board discussed that this was something that needed to be dealt with starting now (for the same reasons mentioned by Brian). I believe our resort has 10 years to get this figured out and the Board/Resort Management are actively looking into how this can be resolved. As stated, it's ultimately impossible to get the needed votes necessary to make changes to the documents with the high percentage of owner votes needed. While in another 10 years, I may not be a timeshare owner there or anywhere else, it's good that this is being looked into now since I'm sure many owners will not want to see this timeshare entity go away.

As questioned by mpumilia, what happens to the resort and property if it is dissolved.

How many resorts have this clause and how many of those resorts are attempting to address this issue now?

well, the biggest issue that I understood (there were many more in real estate-ese that I did not, but I do seem to recall it immediately converted to residential use)...is that the moment these clauses take effect, the timeshare must cease to operate period. (believe most say within 30 days of the clause taking effect).

so with that...noone will be able to check in or stay there.

Id really like to start a list when folks can confirm the clause exists...so at least owners can begin to query their HOA/BOD!

This is an example of how messy a timeshare termination can get:

http://www.tstoday.com/members/magazine/issue119/issue119.pdf

"At about the same time as the Board’s
letter to owners, its attorney notified owners
that he would be recording a document
which would terminate the condominium
and the timeshare program. When that
was done, all of the unit owners became
tenants-in-common (co-owners) of the
property. In order to sell the property,
every owner would have had to sign the
contract of sale and the deed."

The termination was due to hurricane damage, but owners who have a sunset termination clause in their governing documents will face the same issues.

As tenants-in-common, they would still own the property and be responsible for property taxes and other costs, but they would no longer have their occupancy rights.

it was also important to mention that the voting period in most of these clauses was very very short...(ie you cant just wait for owners to vote yes or no over the next 6 years)...thus exponentially increasing the difficulty of getting these high % of votes required.

Egret1986 said:

At our HOA meeting this past November, the Board discussed that this was something that needed to be dealt with starting now (for the same reasons mentioned by Brian). I believe our resort has 10 years to get this figured out and the Board/Resort Management are actively looking into how this can be resolved. As stated, it's ultimately impossible to get the needed votes necessary to make changes to the documents with the high percentage of owner votes needed. While in another 10 years, I may not be a timeshare owner there or anywhere else, it's good that this is being looked into now since I'm sure many owners will not want to see this timeshare entity go away.

As questioned by mpumilia, what happens to the resort and property if it is dissolved.

How many resorts have this clause and how many of those resorts are attempting to address this issue now?

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which resort, so I can add it to the list!

How does this impact Wyndham VIP owners if points associated with the VIP ownership are in Florida? I need to look at my Florida deeds.

This will be the new sales tactic Wyndham sales weasels will use to talk Florida owners into CWA...

is a great question, and one I actually asked.

it does not matter ONE BIT what club/system/etc the resort belongs to...this clause exists in the underlying documents for the individual resort itself.

this will most certainly impact resorts that were incorporated or purchased into large developer clubs/chains.

Wyndham Kingsgate deed includes this:

nice find!

has there been any discussion by the owners/hoa at that resort about the clause?

spackler said:

Wyndham Kingsgate deed includes this:

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Oh great, my Wyndham Points are deeded at this property

edited the title, as its clear this is a far larger issue than just in florida. Im guessing the focus is on florida as it contains a huge number of resorts all built in the early years of timesharing and will contain this clause.

Barrier Island Station Duck, NC

TUGBrian said:

which resort, so I can add it to the list!

Click to expand...

I just got a Newsletter from the resort after I previously posted and there was inclusion about this issue, which I have noted below.

John Gaw, Attorney-at-Law, was invited to attend the meeting in order to address owners on the timeshare termination clause written in the Master Deed and By-laws. Mr. Gaw reported that according to the documents, some timeshare regimes would end in 2024 and some would end in 2027. Mr. Gaw explained that he was hired by the Board of Directors to help amend the declarations which would abolish the termination clause.

Termination Provision Update: In the coming months, a proposal of an amendment of the Declaration and Condominium Interval Ownership will be presented to our owners. The amendment will delete the Timeshare Interval Ownership termination date of all the various condominium regimes at the Barrier Island Station-Duck Resort. In lieu, thereof, a provision will be added that the timeshare interval ownership weeks and ownership interest will not terminate unless and until the timeshare/interval ownership form of ownership has been terminated by vote of the Owners. Owners will receive a packet in the mail containing information regarding this proposal. All Owners will be encouraged to vote “yes” for this amendment.

great they are at least aware of it and taking steps! I am curious as to what the % of votes have to be to pass the amendment.

Which Florida timeshares? Are Orange Lake and Summer Bay included?

My understanding is that these "escape clauses" give the timeshares a one time opportunity to end the timeshare at the date specified with a simple majority rather than the super majority. Most timeshares address it about 5 years before the date.

I own more than one that I wish would have taken advantage of it or at least let the owners have a real discussion about what it means. Instead along with requests for proxies for that years meeting 8 weeks in the future, it was mentioned that this issue was on the agenda and it was very important that owners send back the proxies because if they did not vote the timeshare would cease in 20whatever. There wasn't a way to reach out to other owners other than those who came to the meeting (never many) and even then the HOA and the happy summer owners had more than enough to pass with a simple majority. This at a resort with a high amount of seasonal defaults. 3 months a year a room can be rented for 3-4X's MF's. Another 2 months can be rented for 1.25X MF's. Another 2 months at MF's and 5 months of the year, you can get the room through RCI for half of the MF"s. Almost half of the owners have no incentive other than the fact that the HOA aggressively goes after non payers, up to and including reports of HOA threatening to put lien's on your primary residence if you don't pay.

This is definitely one of many resorts that instead of the HOA steamrolling the amendment to make the Time share perpetual, should have at least had a year long conversation with owners to see if ending in 2018 or whatever the date was would be the more beneficial path to take.

My $0.02 worth...

TUGBrian said:

well, the biggest issue that I understood <snip> ....is that the moment these clauses take effect, the timeshare must cease to operate period.

so with that...noone will be able to check in or stay there.

Id really like to start a list when folks can confirm the clause exists...so at least owners can begin to query their HOA/BOD!

Click to expand...

Brian:

I know (and I have actually known for years now) that such a clause does indeed exist in the CC&R's at several different facilities in SW FL at which we own multiple weeks. In those instances, the places were built in the early 1980's and the magic "end date" year is clearly identified as 40 years later --- in 2022, to be precise. Being on the Board at one of these particular facilities, I can truthfully state that we are already acutely aware and already discussing among ourselves how to best clearly and plainly present the issue, the pertinent information, details and the future available options and required actions to the ownership at large in such a way as to clarify rather than confuse. For that very reason, I must respectfully decline to specifically identify any of those facilities by name here in these TUG forums, in order to not facilitate or encourage a premature, untimely and unwelcome onslaught of misinformed and / or panicked owner inquiries to our (volunteer, unpaid) Board members.

The issue is indeed real. I believe that it is more relevant to smaller, independent facilities than it might be to "big chains" with their various trusts and assorted other creations, sub-entities and other legal machinations which are all all well beyond my ken (...or my interest, quite frankly).

I can and will tell you what the BOD has very recently done (...maybe wisely, maybe not) to address this very issue at another facility where we briefly owned --- but from which we decided last year to bail out. That facility is Caribbean Beach Club in Fort Myers Beach, FL. What the Board there has done within about the past 6 months has been to pre-emptively initiate (...maybe I should instead say "steamroll" or "force feed") a hasty ownership vote to legally change the status of the property to be a "timeshare in perpetuity". That process is apparently now a "done deal" there --- for better or for worse. I will not express my personal opinion as to whether that particular (hastily adopted with too little analysis, IMnsHO) approach and decision will ultimately prove to be either prudent or beneficial, but the fact that I chose to simply bail out of our interval ownership there probably speaks for itself. We're out! In fairness, there are also other issues there that troubled me, including a decade long (...yet still ongoing and unresolved) 7 figure insurance case / settlement and an old and very tired section of the facility in dire need of serious upgrading just to become fully code-complaint. Although we really liked the Gulf-front location of the facility and our particular newer unit in a prime week, we ultimately chose to just bid the place "adieu" rather than "enjoy" all of the ongoing drama, uncertainty and questionable Board decisions of hasty and dubious (...questionable, hasty and dubious in my personal opinion, anyhow) analysis and / or merit.

It may not be a universal issue or applicable to all facilities, but it is certainly an issue that is very real and very plainly expressed in black and white within some CC&R documents, including those at several coastal SW FL facilities built in the 1980's and with which I am personally very familiar. Owners would be well advised to do their own CC&R homework regarding their own specific, individual facilities.

Wyndham Ocean Walk

I went through my 6 Wyndham Ocean Walk deeds and there is no mention of a sunset or escape clause, or any wording pertaining to it in any of them. My VIP Platinum ownership has a deed associated with Ocean Walk and I don't want to lose it. The VIP membership alone has value, not to mention the location for rentals during high demand events/timeframes.

Thanks for the post theo, great info!

in the 2nd resort example you mention they were able to obtain a majority vote...was this just 50%+1? or did that resort have an extremly high (say 90%) requirement? if so how did the resort succeed in getting all those votes from owners?

I honestly dont believe the issue is so much the clause in itself, but in getting the owners notified...and actually voting on the matter in enough numbers to get the CCRs changed!

thanks again!

I guess another good reason to only acquire free timeshares- if something like this occurs you can walk away as you have no investment in it other than the weeks you already used.

I am fairly certain that even if this clause exists and takes effect, it does not immediately rid you of your ownership.

It pretty much means that it ceases as a timeshare and along with ending it hopefully the HOA has looked into selling the property, paying any remaining bills and dividing up any proceeds to the owners at the time the TS ceased.

It would be a mess if the HOA ignored the end date and did nothing to proactively facilitate the ending or amend and continue. To me the most important part is for the ownership as a whole to have an honest conversation about what it means to continue a 20+ year old timeshare. In some cases it does make sense but not in others. The "escape clause" is like the rescission law. It is a one chance only for the owners to have a meeting of the minds to make a meaningful decision. To end outside of the escape clause is almost going to be impossible.

morrisjim said:

I went through my 6 Wyndham Ocean Walk deeds and there is no mention of a sunset or escape clause, or any wording pertaining to it in any of them. <snip>

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That info is often not actually found described in deeds anyhow. If it exists at all, it's found within the original, underlying CC&R (Condo Covenants & Restrictions) documents associated with the establishment of the property as a timeshare facility in the first place. It ain't often gonna be found overtly and openly described in detail in deed content, except by reference (i.e., a book and pages number reference to the underlying recorded CC&R documents --- which are often 20+ pages long, btw).