What to say in an ROFR challenge letter?

[BMWguynw]

Okay Tuggers,

I recently won an eBay auction for a PAHIO Kauai Beach Villas ocean view unit. The price was ridiculously low. The seller and I discussed ROFR, and since his deed was dated 2001, we decided to go ahead and start the escrow.

Today I learned PAHIO is trying to exercise ROFR on the sale. I explained to the escrow agent, (a very nice woman who is trying to remain neutral), about PAHIO not having ROFR for deeds dated prior to July 1, 2005, and how the only reason I got this for so little money was I happened to be the only eBay bidder. She has invited me to write a letter to PAHIO, that she will forward to them, so we can try and get this deal to go forward.

Problem is, what do I say? Other than stating the obvious, (deed date prior to 2005, PAHIO doesn't have ROFR on this unit, I *really* want to own the interval, seller agreed to sell it to me for this price), what do I want to tell them? I've written as professional and business-like a letter as I can, but I'm not sure what to put in there that will seal the deal. I need to send this off tomorrow. (Sorry for the short notice. I only learned of this today, when I happened to call the escrow company.)

Can anyone help?

Thanks,
Dave

[Mydogs2big]

Other people would be more experienced in this I'm sure.

But I would first say that you intentionally sat out to purchase a timeshare that was sold prior to the ROFR being included in these sales.

You believe this is one of those timeshares as does the original owner.

The original owner can find no paperwork to the contrary and if this contract was sold subject to Right of First Refusal, you would request that that dated documentation be forwarded in the event that they intend to exercise such right.

And if they do indeed have that right, but are able to use it with their discretion, you would ask (no, beg) that they would let you keep your coveted prize.

[bobcat]

Originally Posted by Mydogs2big

Other people would be more experienced in this I'm sure.

But I would first say that you intentionally sat out to purchase a timeshare that was sold prior to the ROFR being included in these sales.

You believe this is one of those timeshares as does the original owner.

The original owner can find no paperwork to the contrary and if this contract was sold subject to Right of First Refusal, you would request that that dated documentation be forwarded in the event that they intend to exercise such right.

And if they do indeed have that right, but are able to use it with their discretion, you would ask (no, beg) that they would let you keep your coveted prize.

I would send a copy of all paper work that states the Rofr date and explain that you purchased this unit because of it.

[timeos2]

Originally Posted by jeepguynw

Problem is, what do I say? Other than stating the obvious, (deed date prior to 2005, PAHIO doesn't have ROFR on this unit, I *really* want to own the interval, seller agreed to sell it to me for this price), what do I want to tell them? I've written as professional and business-like a letter as I can, but I'm not sure what to put in there that will seal the deal. I need to send this off tomorrow. (Sorry for the short notice. I only learned of this today, when I happened to call the escrow company.)

Can anyone help?

Thanks,
Dave

Ask them to show exactly where in the POS documentation, any other legally binding documentation and/or deed restrictions dated in 2001, filed with the State and given to the original owner (hopefully they still have their copy which, at sale, should be forwarded to you the new owner) it has a provision for ROFR. If they cannot do so they have no claim to such right. Go get 'em tiger!

[BMWguynw]

Thanks, John. That was what I needed. Will keep TUG posted.

Dave

[BMWguynw]

Wow, that was FAST! I Faxed my ROFR challenge letter on Friday morning to the escrow company in Hawaii. They sent it on to PAHIO, and I received notice today that PAHIO has waived their ROFR, and the sale will go forward.

I don't know if it was the letter I wrote, but I'd like to think so. They referenced my letter in their waiver, and have "reconsidered" things. Their exact wording was this:

"The Developer, PAHIO Vacation Ownership, Inc., has reviewed the request dated January 4, 2008 and information submitted for its Right of First Refusal on the above-referenced interval. PAHIO Vacation Ownership, Inc. will not be purchasing the interval and waives its right of first refusal."

I'm really stoked over this. Great thanks to Timeos John for his concise verbiage, which was the kicker I needed. If anyone needs a ROFR challenge letter for PAHIO, I'll be happy to provide the core text of what I wrote.

Once again, my TUG membership has paid for itself. You guys rock!

Dave

[rickandcindy23]

That's because they don't have it. So how can they waive what they don't have?

[timeos2]

Originally Posted by jeepguynw

Wow, that was FAST! I Faxed my ROFR challenge letter on Friday morning to the escrow company in Hawaii. They sent it on to PAHIO, and I received notice today that PAHIO has waived their ROFR, and the sale will go forward.

I don't know if it was the letter I wrote, but I'd like to think so. They referenced my letter in their waiver, and have "reconsidered" things. Their exact wording was this:

"The Developer, PAHIO Vacation Ownership, Inc., has reviewed the request dated January 4, 2008 and information submitted for its Right of First Refusal on the above-referenced interval. PAHIO Vacation Ownership, Inc. will not be purchasing the interval and waives its right of first refusal."

I'm really stoked over this. Great thanks to Timeos John for his concise verbiage, which was the kicker I needed. If anyone needs a ROFR challenge letter for PAHIO, I'll be happy to provide the core text of what I wrote.

Once again, my TUG membership has paid for itself. You guys rock!

Dave

Great job! The ROFR is a pox on timesharing and should be assailed at every opportunity. You did your job well & I hope you got a great deal. Enjoy your future vacations.

I hope others take you up on your offer rather than give in to the often unjustified blackmail of ROFR.

Again - congratulations.

[timeos2]

Originally Posted by rickandcindy23

That's because they don't have it. So how can they waive what they don't have?

Never stopped Wastegate! But then again, what are mere laws to that group?

[BMWguynw]

Originally Posted by rickandcindy23

That's because they don't have it. So how can they waive what they don't have?

Cindy, that was the issue I was trying to fight. Without saying anything to either the seller or me, PAHIO sent a letter to the escrow company on December 24th, telling them they were exercising ROFR. (Both the seller and I knew they didn't have it.) They gave explicit purchase instructions to the escrow company to send THEM paperwork so they could buy the unit. (I was faxed a copy of that letter today.) They said David Walters would be the signer.

It was only by coincidence that I happened to call the escrow company last week, and learned that PAHIO was trying to take over the sale. The escrow company hadn't sent the paperwork PAHIO had requested, waiting till after the New Year's holiday to go ahead with things. That was what prompted the urgency of my letter.

What bugs me is that if I hadn't called the escrow company, would PAHIO have eventually been allowed to go ahead with the sale? I think so. And that makes me wonder how many other sales have been derailed or outright stolen in cases like this. If I hadn't called, the deal would have been said and done before I knew anything about it. And the seller was told even less than I was.

I'm glad my deal will go through, and I'll be happy to put the hassle behind me. I just hope my experience will serve as a lesson for others. I think "due diligence" goes further than just up to the point of making an offer to purchase. I think it follows to stay in close touch with the escrow people, too. I'm glad that Old Republic Title in Hawaii was so easy to work with.

And John? You said you hoped I got a good deal after all that. How about this: A 1br/2ba OCEANFRONT biennial at PAHIO Kauai Beach Villas for just $279? I think I got one heck of a deal. And I've also taken full advantage of my eBay good kharma for awhile...

Thanks again for all the help. You folks still amaze me.

Dave

[ladycody]

WOW....ummmmm....if'n ya decide it's just costin' ya too much...let me know and I'll take it off your hands...I'll even throw in an extra hundred or two for your troubles.

[rickandcindy23]

Originally Posted by jeepguynw

And John? You said you hoped I got a good deal after all that. How about this: A 1br/2ba OCEANFRONT biennial at PAHIO Kauai Beach Villas for just $279? I think I got one heck of a deal. And I've also taken full advantage of my eBay good kharma for awhile...

Thanks again for all the help. You folks still amaze me.

Dave

That was a great deal on that week! Too bad two of the PAHIO's were all reduced from Gold Crown to zero rating by RCI, including Kauai Beach Beach Villas and our very own Bali Hai.

Someone pointed out that this could be a very clever way for PAHIO to levy assessments to "get the Gold Crown status back." I think that will be the next thing we will get from PAHIO, a bill for an assessment. How many bad reports did PAHIO really get on Bali Hai and KBV? Maybe not that many, but an arrangment may have been made with RCI to downgrade our units to SCARE us into paying the assessments without balking too terribly much. The sales prices will go down significantly, too.

Cliff's Club kept its rating. How odd!

It amazes me that PAHIO and David Walters would still be pretending to have ROFR on these old contracts. Won't be long before we will be seeing units for sale that have contract dates with ROFR on them, July of 2005. Yes, I do believe that PAHIO gets back about 95% of the resale units. I didn't see anything in their newsletter stating they will buy back units, if you don't want them anymore. That would just be too much of a headache for them, I guess.

[AwayWeGo]

Originally Posted by rickandcindy23

That's because they don't have it. So how can they waive what they don't have?

If it helps save face for the company to "waive" its nonexistent ROFR, then no harm done.

Sure, it would be better for the company response to say, in effect, we were wrong-wrong-wrong, we never-ever had any ROFR on this timeshare, & we are so sorry that we mistakenly tried to invoke a nonexistent clause in this transaction, so please-please-please forgive our most grievous transgression.

Since that is not going to happen, I'd say it's OK to settle for waiver of the ROFR the company never had -- in effect letting'm do the right thing for the wrong reason.

-- Alan Cole, McLean (Fairfax County), Virginia, USA.

[T_R_Oglodyte]

Their "waiver" of ROFR (vs. conceding there was no ROFR on the property) is just legal related - that's all.

If they admit there was no ROFR on this unit, it undercuts their ability to ever argue that they do have a legitimate claim to ROFR. By "waiving" the ROFR they allow the sale to proceed with conceding the argument.

This kind of stuff happens all of the time when someone backs down during a negotiation.

[AwayWeGo]

No smoking and no lying.

They told the staff No More Smoking.

Unfortunately they didn't say No More Blowing Smoke.

-- Alan Cole, McLean (Fairfax County), Virginia, USA.

[BMWguynw]

Originally Posted by rickandcindy23

That was a great deal on that week! Too bad two of the PAHIO's were all reduced from Gold Crown to zero rating by RCI, including Kauai Beach Beach Villas and our very own Bali Hai.

I was initially concerned about the reduction in RCI rating, too. But I figure that only comes into play if I want to exchange the unit with RCI. My primary reason for purchasing is to use the week. Given the inconsistencies in RCI's rating system, and the potential favoritism that seems to happen with some resorts, I don't know if anyone takes RCI's ratings too seriously. Those "in the know" will think of KBV as being exactly what it is. Once the new pool is built, and people start having a reason to be happy (and less reason to complain) I expect the RCI rating will imrpove.

It'll be interesting to see whether an assessment comes up to get the GC rating back. Given my investment to date, (two weeks at KBV purchased on eBay for a total cost of $849), I figure I can give quite a bit before it starts to become a burden. Time will tell.

Dave

[rickandcindy23]

Dave, that is true and well said.

It will hurt the pocketbook a bit if the assessments are $1,000 each for all of our units or something--all at once.

[T_R_Oglodyte]

Originally Posted by jeepguynw

I was initially concerned about the reduction in RCI rating, too. But I figure that only comes into play if I want to exchange the unit with RCI. My primary reason for purchasing is to use the week. Given the inconsistencies in RCI's rating system, and the potential favoritism that seems to happen with some resorts, I don't know if anyone takes RCI's ratings too seriously. Those "in the know" will think of KBV as being exactly what it is. Once the new pool is built, and people start having a reason to be happy (and less reason to complain) I expect the RCI rating will imrpove.

It'll be interesting to see whether an assessment comes up to get the GC rating back. Given my investment to date, (two weeks at KBV purchased on eBay for a total cost of $849), I figure I can give quite a bit before it starts to become a burden. Time will tell.

Dave

I would be more concerned if SFX stopped accepting Pahio units.

[rickandcindy23]

Steve, SFX doesn't seem to pay that much attention to resort ratings. They have French Ridge in Breck listed as one they accept, and that place is not nice at all, at least not in my opinion.

Sure, it's a great area, but the units are nothing special, and I don't think that resort is even rated Silver Crown with RCI.

If these new ratings are a clever ruse to get us to willingly open our pocketbooks and say, "here, take what you need...." then my hats off to them because it is an excellent plan. It will work, but I guarantee the resorts didn't really have such bad resort report cards that they dropped from Gold Crown to nothing in one year. Something is UP, that's for sure.

I am very suspicious of this drop in ratings. I wonder if SFX sends out report cards and what are the results of those? That would be an excellent question for Mark on Forums.

[rflowers]

I own 2 one-bedroom units and am purchasing 2 two-bedroom units at KBV. Wyndham just ROFR'd one of them and I am still waiting on the other. I sent a letter describing how my family enjoys visiting KBV and really wants two bedroom units. While this is all true, it is going to result in them waiving the ROFR?

I figured I would play nice at first with the letter. If that doesn't work, I will get a attorney to review the preliminary title report and see if ROFR even exists. Any tips or suggestions on content for future letters would be appreciated.

[rickandcindy23]

Your letter should work. A shmoozy letter always works! Just tell David Walters how wonderful the resort is, that you love the area and everything about it, so your family would like to own this week.

Walters is doing his best to ROFR everything out there. I am actually getting pretty angry about the process and am dreading going through it with my most recent purchase of 2 two-bedroom EOY units at Bali Hai.

I am actually working myself into such a "mad" right now, that I have drafted a letter to the Hawaii Real Estate Commission that I am thinking of sending. Claiming a ROFR that doesn't exist is fraudulent, bordering on criminal. Being a Realtor myself, I know that real estate commissions take all complaints seriously, and they will see this process as blatantly dishonest.

And that is what bugs me the most--the process:

1. Owner wants to get rid of a timeshare, but PAHIO doesn't offer owners a way out.

2. Owner finds someone to list the week on eBay or elsewhere (or perhaps lists it himself/ herself).

3. Buyer comes along and a price is negotiated and accepted (or the auction just ends).

4. The full price is put into escrow, along with PAHIO transfer fees of $250 and closing costs.

5. Estoppel goes to PAHIO with full purchase price and all closing costs included in the price, as if that is the price agreed upon (the seller wasn't going to get closing costs and the PAHIO transfer fee, but now they will, if David Walters buys the week back).

6. PAHIO exercises ROFR and agrees to pay the seller (often a postcard company, mind you) the full price in escrow for the week.

7. Seller willingly goes along with PAHIO on the matter, and tells buyer that PAHIO exercised their ROFR, which they don't have.

8. Seller makes more money. PAHIO gets another week to resell at a price of at least 6 times more, basically reselling some weeks over and over again. How many times should they make that much money for a single investment in constructing 1/52 of a unit?

Who is wronged here? Well, the buyer does suffer damages. Jack (jacknsara is his TUG username) talked about this in a post a while back. He felt he was being hurt by the process. I wholeheartedly agree. PAHIO didn't exercise their "ROFR" until about two years ago, probably about the same time they included it in their new contracts.

There is a clause in their older contracts that Walters likes to tout as his ability to use as ROFR. It is basically a clause asking owners to contact PAHIO before selling a unit. That isn't ROFR. If they offered the current owners a specific price, like $4,000 for a two bedroom annual week (about the going eBay rate right now), I would be all for that decision. So why don't they do that for owners? They want to get the properties as cheaply as possible, is my opinion. So they wait for the esptoppel letters to come in and rejoice when they can buffalo a buyer into believing they have the ROFR. The closing companies should know better, but most of the closing companies on eBay are in cahoots with the postcard companies, so why would they care about you?

Some here would argue that ROFR is keeping resale prices higher, but that isn't true with PAHIO. Because sellers put the possibility of PAHIO exercising ROFR in their ads, people aren't bidding on them, so PAHIO is getting weeks back for cheaper prices than a year ago. People don't want to bid up a week, especially knowing that the developer may take it back, so it is HURTING resales.

The goal of the real estate commission is fair business dealings as they pertain to real estate, so the buyer is the person that the commission will side with in this. Timeshare has a bad enough reputation, I expect this to go in favor of the buyers every time.

The decision is yours as a person affected by this ROFR process. Do you want to write the nice letter, outlining how much you love the resort you are purchasing? Or, do you want to affect real change by writing directly to the real estate commission (or just hire a lawyer)? The decision is a tough one for me because the shmoozy letter always works.

[jacknsara]

Originally Posted by rflowers

I own 2 one-bedroom units and am purchasing 2 two-bedroom units at KBV. Wyndham just ROFR'd one of them and I am still waiting on the other. I sent a letter describing how my family enjoys visiting KBV and really wants two bedroom units. While this is all true, it is going to result in them waiving the ROFR?

I figured I would play nice at first with the letter. If that doesn't work, I will get a attorney to review the preliminary title report and see if ROFR even exists. Any tips or suggestions on content for future letters would be appreciated.

Aloha,
What was the Interval Control Number (ICN) on the deed?
Depending on what it is, I may be able to tell that it is very unlikely that it was originally sold with ROFR or that it is very possible that it did have ROFR.
Jack

[BMWguynw]

Reviving this thread is very timely. The escrow in question that I successfully fought the ROFR closed last week. The interval is mine, and I made a reservation today for Thanksgiving week. So all is well.

As for the ROFR, my offer stands to share what I said in my challenge letter, if anyone needs it. Send me a PM with your email address and I'll send it to you.

Dave

[West Coast J]

Hello All,
Pahio is exercising their ROFR, or non-existant ROFR as the case may be, like crazy right now. We are challenging their right on a couple of weeks purchased at KBV and we will keep you posted. JW

[rickandcindy23]

Good luck to you! Be sure to address your letter to Lori Nishimoto. She is very kind, we met her in person just about two-and-a-half weeks ago, as a matter of fact. We have had our share of battles with ROFR, but we met with her this time and she had the decision to reverse our most recent ROFR within two hours. It was very painless.

You just have to bring into the conversation "a little spirit of aloha." That was in one of Jack's posts a while back, when he advised us during our first resale purchase. We need a hula girl smilie!

I hope all goes well. Please do report back, because we would love to know what success you had, and I do expect you to have success.