# Assessments



## rosebud5 (Feb 28, 2009)

At some point in the future, if I'm not scared away, I would like to buy 3-4 consecutive weeks on the beach in Florida, during the months of January - February. I have a location in mind. A small resort, owned by a small management group. Given we are very close to retirement and live in the cold north, spending a month or so in Florida during winter is very appealing to us.

What scares me are special assessments. I obviously would ask before I bought anything, but are assessments written into the purchase contract.  How are assessments determined and how often can they be assessed. Short of a hurricane or other natural disasters, I'm curious if some of the management companies are abusive and how does a buyer protect himself/herself?


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## DeniseM (Feb 28, 2009)

Assessments are not written into the purchase contracts.  Unless, of course, there is a current  assessment due, and then the seller may ask you to pay it into escrow.  Or the seller may pay it, or you may agree to pay the assessment when you take possession.  If there is a current  assessment, the seller is required to disclose that info.  If you use a reputable closing/escrow company, any assessments should be also be revealed in closing. If the seller did not disclose an assessment, that would be grounds for you to withdraw from the purchase.  Of course, the seller is not responsible for any new assessments that occur after you take possession.

The need for an assessment is determined by the board of directors, which in theory represents the owners.  Some states have law regulating assessments, but based the reaction from the state to complaints regarding Starwood's recent high assessments at Sheraton Vistana Resort in Orlando, I wouldn't expect any protection in Florida.

There is no real way to protect yourself, but to put an assessment off as long as possible, you could buy at a brand new resort, or buy at a resort that had just had a special assessment.


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## rosebud5 (Feb 28, 2009)

What options do you have if the assessment is too high? Also, other than damge due to things like hurricanes, etc., why are assessments needed. Is it to paint the rooms, buy new furniture or could it be to ensure that the management company doesn't lose money because rooms are empty.

The few I have read about seem to be large resorts. BTW: Dont you run into the same dilema when you buy a condo outright?

For those that have more experience with TS, am I overly worrying about assessments?


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## DeniseM (Feb 28, 2009)

rosebud5 said:


> What options do you have if the assessment is too high?



You don't really have any options - as an owner, you are obligated to pay it or be turned over to collections and lose the use of your TS.



> Also, other than damge due to things like hurricanes, etc., why are assessments needed. Is it to paint the rooms, buy new furniture or could it be to ensure that the management company doesn't lose money because rooms are empty.



The assessment may be because of something like a hurricane, but more often it's use to renovate, remodel, and/or redecorate an aging resort.  I'm not sure what you mean by the 2nd statement about rooms being empty.  TS owners have to pay their maintenance fees whether or not they use their ownership.



> The few I have read about seem to be large resorts. BTW: Dont you run into the same dilema when you buy a condo outright?



Not so much, because when you buy a condo outright, management is not responsible for the interior and such things as remodeling, redecorating, painting, and replacing carpet, furniture, and appliances.



> For those that have more experience with TS, am I overly worrying about assessments?



I think it is something you need to look into, especially if you are looking at older resorts on the beach.


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## AwayWeGo (Feb 28, 2009)

*What's So Special About A Special Assessment ?*




rosebud5 said:


> What options do you have if the assessment is too high? Also, other than damge due to things like hurricanes, etc., why are assessments needed. Is it to paint the rooms, buy new furniture or could it be to ensure that the management company doesn't lose money because rooms are empty.
> 
> The few I have read about seem to be large resorts. BTW: Dont you run into the same dilema when you buy a condo outright?
> 
> For those that have more experience with TS, am I overly worrying about assessments?


Click here for some recent TUG-BBS commentary about maintenance fees as viewed by timeshare companies on the 1 hand & on the other hand as viewed by independent timeshare homeowner associations. 

If the timeshare company, while it still controls the HOA-BOD, shorts the Reserve Fund too severely for too many years, then it's not only possible but likely that the independent, owner-controlled HOA-BOD that takes over once the company-controlled HOA-BOD is voted out will find that there's not enough money in the Reserve Fund to pay for badly needed resort maintenance & renovations & upgrades.  In that case, the HOA-BOD has no choice but to swallow hard & impose a Special Assessment.  They may have no choice -- their mandatory responsibility as stewards of the property may dictate imposing a Special Assessment if no other means is available & sufficient to keep up the property, as the HOA-BOD is obligated to do.  

If a Special Assessment is "too high," that's tough.  Every owner has to pay, no _ifs_ & no _ands_ & no _buts_.  

If a Special Assessment is too low -- i.e., doesn't generate enough cash to pay for what absolutely needs to be paid for -- then it might just lead to another follow-up Special Assessment & another & another.  The HOA-BOD mustn't use Special Assessments simply as band-aids on budget shortfalls.  If the HOA-BOD resorts to a Special Assessment, then to do its job the assessment has to be accompanied by a solid, realistic, detailed plan for getting the timeshare on a solid financial footing & keeping it that way.  

For painting rooms & buying furniture, etc., the regular maintenance budget should be used, along with planned-for reserve-funded periodic major renovations. 

_Mox nix_ if units at the timeshare are empty.  Each unit is owned by somebody -- regular, walking-around timeshare owners in some if not most cases.  The timeshare company owns the units it hasn't sold yet -- maybe a few, maybe lots & lots, depending on how good the company is at selling timeshares & how long the company has been at it.  Come annual fee time, each owner of each unit has to pony up -- individuals & timeshare companies alike.  Same goes for Special Assessments.  

I don't know if our experience is typical.  We bought our 1st timeshare (resale) right after a special assessment had been completed.  We sold it right before another, larger special assessment was laid on.  We bought back in again after that larger assessment was completed.  All that was due to sheer blind luck rather than to any special shrewdness on our part. 

Meanwhile, at our other (resale) timeshare right across the street, we got nicked early in our ownership for 1 of those too-small Special Assessments that didn't do the job.  The HOA-BOD muddled along for a few years, then bit the bullet last year & hit everybody with a substantial Special Assessment (i.e., just short of a year's maintenance fees).  No fun to pay, but acceptable if it gets the timeshare on solid financial ground & keeps it there. 

Our dinky (resale) points timeshare in the USA heartland hit everybody with a middling Special Assessment -- more like a nuisance fee than a big hit.  Meanwhile, annual fees out there have been soaring way out of proportion.  I don't know what's up with that. 

Our fixed-week 2BR _el cheapo_ timeshare in a far-off distant land overseas, which we bought in 2003 or so, has not hit us with a Special Assessment & fees have not risen dramatically. 

I try not to worry too much about Special Assessments.  Nobody likes'm.  But sometimes they're a necessary evil.  What's _really_ evil, though, is a Special Assessment that merely kicks the can down the road instead of permanently solving the timeshare resort's financial problem that led to the Special Assessment. 

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


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## Idahodude (Mar 1, 2009)

Possibly the best way to protect yourself against assessments due to things other than natural disasters is to purchase a resort with good management who does the following things:

1.  Puts money aside for renovations as part of your maintenance fees.
2.  Otherwise, tries to keep costs as low as possible.
3.  Does a good job with ongoing maintenance to keep the resorts as close to "like new" as possible.
4.  Possibly has a few other resorts in other locations so that they won't go under without major assessments if something happens at the resort you've purchased at.

That said, there's no way to completely protect yourself from special assessments, just as there's no way to completely protect yourself from having to make repairs on your home due to neglect, poor maintenance, or natural disasters.  Certainly, insurance can protect from some things, but then if they occur, your insurance rates go up.


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## hsimpson (Mar 4, 2010)

*Mid-year Special Assessments?*

I am considering trying to sell my timeshare sometime this year since we (my wife and I) don't expect to be using it much anymore due to health reasons.
Since we just paid maintenance fees in December, I felt that I have plenty of time to consider various options before the next fees are due, but one of the places I talked to warned against mid-year special assessments that could be levied.
So my 2 questions are:
Can this happen (theoretically)? and
Are there any examples of this actually happening?
I thought special assessments were always billed together with maintenance fees.   Am I mistaken?


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## aliikai2 (Mar 5, 2010)

*Any resort can have a special assessment*

after the BOD has voted and in some cases the ownerships also needs to approve. So, can it happen mid year? Yes, I don't keep track of examples, but I have read where it does occur. 
My question to you, is what difference will this make ? If you price the unit correctly, it will sell. If they have a Special assessment before you close escrow, you will need to pay it, if it announced after it is in the new owners names, it will be their problem.

I get concerned when I read 


> but one of the places I talked to warned against mid-year special assessments that could be levied.



Are you getting advise from a company that charges to list you unit for sale?

If you would like to know the value of a week , email me, I will research it and give you a real sales value. 

And I won't charge you for my help.

fwiw,

Greg


hsimpson said:


> I am considering trying to sell my timeshare sometime this year since we (my wife and I) don't expect to be using it much anymore due to health reasons.
> Since we just paid maintenance fees in December, I felt that I have plenty of time to consider various options before the next fees are due, but one of the places I talked to warned against mid-year special assessments that could be levied.
> So my 2 questions are:
> Can this happen (theoretically)? and
> ...


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## Mel (Mar 8, 2010)

rosebud5 said:


> At some point in the future, if I'm not scared away, I would like to buy 3-4 consecutive weeks on the beach in Florida, during the months of January - February. I have a location in mind. A small resort, owned by a small management group. Given we are very close to retirement and live in the cold north, spending a month or so in Florida during winter is very appealing to us.
> 
> What scares me are special assessments. I obviously would ask before I bought anything, but are assessments written into the purchase contract.  How are assessments determined and how often can they be assessed. Short of a hurricane or other natural disasters, I'm curious if some of the management companies are abusive and how does a buyer protect himself/herself?


Think of your own home, and how you maintain it.  Some maintenance is done on a regular basis - you replace light bulbs as they burn out, replace fuses if you still have a fuse box, do your weekly (or monthly or whatever schedule you use) cleaning.  But some maintenance is done far less frequently.  Your hot water heater has a leak, and needs to be replaced... The paint is chipping... the driveway needs to be resurfaced... or maybe you need to replace the roof.  Those are costly maintenance items, something you generally plan and save for, because you know you will eventually need to pay for them.  Or I should say, many of us save for them.  Other people finance them when the bill comes due, and pay for them over several years on the back end, often using a home equity line or otherwise using the home as collateral.  But the HOA can't do that with your timeshare, because the HOA (at least in good times) doesn't own anything.  Instead, all owners should be funding the reserve account, so that the money is in the account when the roof needs replacing.  If not, the HOA plans a special assessment.

As already mentioned, sometimes this is because the developer controlled HOA purposely kept fees low, and didn't fund the reserve account.  Sometimes, the HOA just isn't paying attention.  In a few cases, an SA may be to upgrade the resort - add features that will improve the resort, but were not part of the original plan.  Kind of like adding a deck or sunroom to your home.  Again, with your home you can finance this improvement, but the HOA doesn't have that option.

Finally, you will have those natural disaster situation.  If you're looking at a beach resort, ask about insurance.  The HOA should have insurance to cover the costs of rebuilding after a hurricane.  If the insurance isn't adequate.... you guessed -time for SA.

The best plan for avoiding a special assessment is to research the management at any resort you are considering.  A single SA isn't necessarily a bad sign, and a lack of SA isn't always a good sign.  Look for a well-maintained resort with reasonable fees, but not unusually low.  Ask about the reserve fund, and insurance (if you can get hold of an annual report, you should be able to find this information).  If there was a recent SA, find out about the HOA - was it recently taken over from the developer, prior to the SA, and does the new HOA have a plan in place to control costs?

Ask other owners here about the resort - not opinions, so much as facts.  Many owners, even knowledgeable TUG members, have high opinions of their own, so opinions may or may not be helpful, but hard facts are.


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## Carl D (Mar 9, 2010)

Don't most reputable places budget for these items? I know they can't budget for every possible situation, but I'm looking at my DVC budget and it looks pretty thorough.


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## rickandcindy23 (Mar 9, 2010)

I don't own at the Resort on Cocoa Beach, but I have been tempted to buy because it is managed by VRI, and VRI is very good at advising the BOD to keep a reserve and not ever do SA's.  I would feel good about owning there.  BUT there are lots of great management companies out there that do the same thing.   

I say this because we own six weeks at Foxrun, and if they had a SA of even $600, it would be devastating to our budget.  Compare this to Vistana resort, which assessed owners aroun $2K for a week.  Ouch.   Foxrun is a resort that was getting old, and the units were looking it, so the board, wise people that they are, planned for a slower refurbishment of units, increased our fees gradually (some would say they are too high now), and now they are remodeling kitchens and replacing furniture that was in sore need, etc.  I would rather be boiled slowly with higher fees than have to suffer the sudden shock of special assessments.   

Remember, it isn't the management company that makes these decisions, once the developer is gone, it is the owners, and being on the board is a huge responsibility.


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## theo (Mar 10, 2010)

*A few thoughts...*



rosebud5 said:


> At some point in the future, if I'm not scared away, I would like to buy 3-4 consecutive weeks on the beach in Florida, during the months of January - February. I have a location in mind. A small resort, owned by a small management group. Given we are very close to retirement and live in the cold north, spending a month or so in Florida during winter is very appealing to us.



When was Virginia moved to "the cold north"?  Last *I* knew, VA was well south of the Mason-Dixon line...  

Seriously, there is some sound input among some of the input provided above, but you should perhaps be realisitic and accept and acknowledge that any coastal Florida location (your specified area of interest) is potentially prone to hurricanes. Charley in 2005, for just one example, inflicted millions of dollars in damages --- several resorts in and around Pompano Beach alone were closed down outright for several years (with owners still paying annual fees) and then still subsequently hit with substantial special assessments. Insurance isn't the whole answer for repairs either when there is a huge deductible involved; the shortfall has to come from somewhere --- guess where?

You make reference to an unidentified "small management group". An important piece of information you'd be well advised to determine and confirm before purchasing several consecutive "beach" weeks is whether this "small management group" has historically maintained adequate reserves. if not, then you're rolling loaded dice if / when storm damage inevitably occurs. Just food for thought...


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## e.bram (Mar 10, 2010)

Another reason to put your Tses in a corp, LLC or trust.Then you can easily bail(as in parachute, not boat).


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## timeos2 (Mar 10, 2010)

*Follow the laws. Follow the docs. Follow the rules.*



e.bram said:


> Another reason to put your Tses in a corp, LLC or trust.Then you can easily bail(as in parachute, not boat).



And an important time to note that if you create a corporation, LLC or Trust simply to avoid legitimate fees/cost it is likely to be considered fraudulent and you will be "protected" from nothing but even more costs and legal hassles. Take a look at the numerous requests for proof that the suggestion has been successfully used and is really an answer to find zero replies or examples. 

Assume that if you buy you are taking on a legally binding commitment and will have to deal with it until you properly transfer it to another willing owner. That is the way SOC (Shared Occupancy Community) law has been written and enforced now for decades. While it evolved mostly from condominiums, timeshares are also treated with the same rules, regulations and laws despite the 1/52 ownership vs full time occupancy. Flaunt them at your own risk.


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## e.bram (Mar 10, 2010)

timeos2:
According to you we should abolish all limited liability entities. The only reason for their existance is to avoid personal liability. Governments know this when they allow their existance(one of the major legal advances). I don't understand your point of view, except to throw ownership concepts back to the middle ages.


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## Mel (Mar 15, 2010)

ebram,

LLC's exist to limit liability, yes.  But they act as a buffer between a business and its owners - the business should be liable, but not necessarily the owners on a personal level.

What you are suggesting with the timeshares is purposely setting up an entity to own your timeshares.  But is the purpose of that entity to do some sort of business with those timeshares, or is it solely for the purpose of avoiding responsibility for any associated obligations, such as maintenance fees or taxes.

Most TUG members probably do not want to deal with filing an extra tax return every year for their trust or LLC (and if they pay someone else to do it, it kind of defeats the whole purpose).  Further, I'm not sure how effective your plan would be at avoiding the obligation to pay.  I suspect any good HOA would still go after you to try to recover the fees.  Even if a court did eventually rule that you are not liable for those fees, you end up sinking your trust.  Do you plan on an individual trust for each ownership?  If not, what happens when youstop paying one resort and the HOA decides to try to seize the trust's assets - including your other timeshares?

Several of us have asked repeatedly - if you think this is such a great plan, why haven't you implemented it yourself?


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## e.bram (Mar 15, 2010)

It seems to me all the naysayers are BOD members wanting to keep the money spigots on even as they mismanage the TS.
Suppose the TS buyer thinks he might want to rent or flip his(her) TS then a limited liability entity would be OK(legit)?

ps:I know Timeos2 is and [deleted]

[e.bram - Please attack the issues and not other posters - you have been warned before - DeniseM Moderator]


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## T_R_Oglodyte (Mar 15, 2010)

e.bram said:


> timeos2:
> According to you we should abolish all limited liability entities. The only reason for their existance is to avoid personal liability. Governments know this when they allow their existance(one of the major legal advances). I don't understand your point of view, except to throw ownership concepts back to the middle ages.



You have often proclaimed how people should go do their own legal research so they can be as knowledgeable as lawyers.

You might want to do a bit of legal research on the nature of liability limitations for corporations, the conditions and precedents under which corporate veils of liability can be pierced, the differences in personal liability for owners between a corporation and a LLC and a parntership.

You might be surprised to learn that if a legal entity is set up with the intent of creating fraud, the action can and will be reversed by a court and the owners made personally liable.  Further, should that happen the owners will often have joint and several liability, meaning that any single can end up bearing the entire liability for the entire group.

++++++++

Despite what you so clearly want to believe, the concept of limited liability did not arise because courts decided a mechanism was needed to allow people to avoid paying their debts.  

Rather it was created so that several people could get together and create an entity to conduct business activity that could stand on its own as an independent concern.  

Without the existence of limited liability corporations, business activities that were larger than what one person could handle could only be conducted as a partnership.  There are many issues involved with running a partnership among individuals that make partnerships unwieldy instruments to conduct larger commercial activities, such as what happens when a partner dies or drops out, how are the other partners protected if one partner goes bankrupt, how does a partnership remove a member who isn't performing or who is obstructing operations of the partnership.  

++++++

Courts developed the concept of corporations to address those significant limitations of partnerships.  The notion was to create a new type of entity that could stand, with it's own assets and it's own liabilities.  That is, an entity with an existence under law the same as an individual.

That is the purpose for which limited liability was established.  Not to enable people to evade debts, but to allow corporations to exist as independent entities under the law capable of conducting commercial activities without the operating limitations inherent to partnerships.  

+++++

Over the years the nature of corporate and business has changed and evolved.  But I think if you do a even a modest bit of legal research you will find that one constant is that if a limited liability entity is created with the specific intent of shirking a mandatory legal obligation (whether that be paying bills, cleaning up contaminated property, making pension payments) the courts will allow the limited liability veil to be pierced.

++++++++

It's simply nonsense to think that the only reason the concept of limited liability entities was established was to make it possible for people to walk away from their legal obligations.


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## e.bram (Mar 15, 2010)

If what you say is true then how can you legally have sole ownership of a corp or LLC?(which I know you can)
The cost for an action to pierce a corp vail would be an order of magnitude greater than the possible debt obligation of an individual to a TS, unless he(she) had many in which case they could invoke the business intent which you maintain is a requirement to form a legitamate impenetratable corp. 

ps: How could LegalZoom stay in business?


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## T_R_Oglodyte (Mar 15, 2010)

e.bram said:


> If what you say is true then how can you legally have sole ownership of a corp or LLC?(which I know you can)
> The cost for an action to pierce a corp vail would be an order of magnitude greater than the possible debt obligation of an individual to a TS, unless he(she) had many in which case they could invoke the business intent which you maintain is a requirement to form a legitamate impenetratable corp.



It's very simple and straightforward.  If youere unclear on the concepts I suggest to you take your own advice and go do some legal research.  

+++++

This is a note to readers new to TUG who might be stumbling into this thread.  I'm adding this comment because what I might post here makes absolutely no difference to e.bram.

e.bram likes to post his "legal advice" here.  This is just one in a long series of "conclusions" he has reached and touted that push, and sometimes exceed, the bounds of credibility. (Another fine one was when e.bram, in all seriousness, suggested that people should own timeshares as "tenants in common" because that would make it easier to get rid of the timeshare when someone wanted out.)


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## DeniseM (Mar 15, 2010)

Is e.bram an attorney?


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## e.bram (Mar 15, 2010)

T_R_Oglodyte's advise roll over and play dead. I am from New York. We don't do that here.

ps: I never recommended TIC for ownership. always corp, LLc or trust. You must have me confused.with someone else or you are just confused.


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## DeniseM (Mar 15, 2010)

e.bram said:


> T_R_Oglodyte's advise roll over and play dead. I am from New York. We don't do that here.



So you are sharing your own personal experience with setting up an LLC or trust for your timeshares.  Can you please walk us through it?


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## T_R_Oglodyte (Mar 15, 2010)

e.bram said:


> T_R_Oglodyte's advise roll over and play dead. I am from New York. We don't do that here.
> 
> ps: I never recommended TIC for ownership, only corp, LLC or trust. You must have me confused withe somebody else or you are just confused.


I'm confused???  I beg your pardon!

One minute of search is all it takes: http://www.tugbbs.com/forums/showthread.php?p=608414.:



e.bram said:


> With TSes the spouse is better off with tenants in common anyway.



To which I responded:


T_R_Oglodyte said:


> Why so?  I see zero advantages of having title in common tenancy.



prompting this reply from e.bram:


e.bram said:


> The most the suviving spouse could get stuck for is 1/2.



The absurdity of those statements is discussed subsequently in the thread.  I guess the absurdity is so manifest that even e.bram wants to pretend he never made those statements.

++++++

I'm not sure what New York has to do with anything.  I guess that's another difference between e.bram and me. I don't believe that where a person lives has any bearing on the logic (or lack thereof) of what a person posts.


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## Mel (Mar 24, 2010)

e.bram said:


> It seems to me all the naysayers are BOD members wanting to keep the money spigots on even as they mismanage the TS.
> Suppose the TS buyer thinks he might want to rent or flip his(her) TS then a limited liability entity would be OK(legit)?
> 
> ps:I know Timeos2 is and [deleted]


Way off base.  Most of us who argue against your craxzy ideas are not in fact BOD members.  We are simply owners who understand that when we sign a contract to purchase a piece of real estate, that we also incur certain obligations.

By your reasoning, I should place my home in an LLC and rent from it, so I can bail on the property taxes when I decide they have risen too high.  You accuse BOD members of mismanagement, when in fact the BOD members here have done their best to gain control of their resorts after years of developer mismanagement.  Yes, the fees at some resorts rise too high because of mismanagement, but allowing owners to walk away doesn't solve the problem.  If you don't like the way your resort is managed, and think they are wasting money, perhaps you should attend the BOD meetings, or maybe even run for a seat on the BOD.  See if you can do a better job.  

I don't care for the picture you paint of New Yorkers.  I would guess that most New Yorkers have a sense of responsibility, and don't in fact walk away from their legal obligations.

BTW, where exactly do you get your "legal expertise."  Is there any case law to justify your assertion that an LLC would protect you from an obligation to pay TS fees?  Have you tried this yourself?


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## e.bram (Mar 24, 2010)

Mel:
LLC stands for LIMITED liability compamy. What is your defination of limited? And why do you think that type of entity was ceated?


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## e.bram (Mar 24, 2010)

To paraphrase a fpmous quote. "contracts are like eggs, made to be broken". And a lot must be, the courts seem to be busy all the time.


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## Mel (Mar 24, 2010)

e.bram said:


> Mel:
> LLC stands for LIMITED liability compamy. What is your defination of limited? And why do you think that type of entity was ceated?


It was created to LIMIT the personal liability of an individual (or partners) who owns a business.  The idea of the LLC was created because not all small companies need to incorporate, but should be able to gain from certain benefits of a corporation.   But for anyone considering this approach, there are several factors that should be taken into account:

1 - Not all states give the LLC separate legal status from the owner/members.

2 - Where will you register your LLC?  If you register in a state other than the location of your timeshare, your LLC will also need to register to do business as a "foreign entity" in the state where the timeshare is located.  (And will likely incur fees to both that state and the "home" state each year).

3 - If you want joint ownership of the LLC with a spouse, you will need to file a tax return for the LLC, and K-1 forms for both spouses.  Alternately you can include the "income" on a schedule C, but then your spouse will have no rights to use the timeshare (or trade it through your exchange company).

There's also the issue of transferring the membership to your LLC, and getting the resort to recognize the LLC as the owner.  Most resorts have a process by which membership is transferred, and it is quite possible that the resort could require that the original member guarantee and debt of the LLC (much like a co-signer on a loan) which would defeat the purpose of the LLC.

Seems like a lot of work, and cost in order to avoid liability for maintenance fees in the future.  And there is no guarantee that is will effectively shield you anyway.

When are you going to tell us about your experience tranferring your timeshares into you LLC?


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## e.bram (Mar 24, 2010)

Mel:
suppose you were buying TSes with the idea of renting or reselling them. Would they they then qualify for being held in an LLC. Some HOAs allows point trusts(w/o personal guarentee) to hold title to hte deeds. How could they exclude anyone wanting to do the same?


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## Mel (Mar 25, 2010)

If you purchase the TS for the purpose of renting or selling them, you are engaged in a legitimate business.  Putting them into an LLC for personal use is not a legitimate business use.  If you default on your fees with personal use, the courts are more likely to hold you personally liable.

As for an HOA allowing a unit to be placed into a point trust, if you're talking about the developers that hold the timeshares in trust in exchange for an alotment of points, again that would be different.  The trusts are not controlled by the beneficiaries of the trusts.   Also, you would need to read the full points trust contract - I bet there is in fact a guarantee from whoever controls the trust.  If not, it may be because the developer still controls the HOA, and the developer also controls the points trust, and doesn't care if there is guarantee (because it is more likely for the developer to lose control of the HOA than of the trust).


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## e.bram (Mar 25, 2010)

Mel:
For the amount of money involved in MFs(even afew years worth), I don't think that the HOA would persue the claim, considering the legal expense involved in the complex ligitagation you indicate, necessary to break the limitation of liability vail. And the worse case senario is you lose which is the same if paid to begin with.


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## AwayWeGo (Mar 25, 2010)

*Worst Case Can Be Even Worse Than That.*




e.bram said:


> And the worse case senario is you lose which is the same if paid to begin with.


The same amount that you were trying to dodge _plus_ interest & collection costs & attorney fees & court expenses -- not to mention potential hits against credit rating scores. 

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


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## e.bram (Mar 25, 2010)

AwayWeGo;
What attorney fees, I would go in to court "pro se". Collect costs and fees are not awarded unless written contract exists(none does), and the courts usually encourage(arm twist) settlement for less than the claimed amount. In my case I pay cash and own everything I have or want to have free and clear, so I don't need or use credit, although I doubt one dispute would do much damage to my credit rating(whatever it is?).


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## Mel (Mar 25, 2010)

I'm not sure where you get the idea that attorney fees for the HOA wouldn't be charged to you.  Your membership in the HOA is governed by a set of documents recorded in the county as part of the timeshare plan.  As an owner you are bound by those document and they are referred to in your deed.  They constitute a contract, and in most cases they do include provisions for collecting back fees plus any costs associated with collecting those fees.

And as for you credit rating, it is used now for far more than just securing credit.  Do you have insurance?  Will you ever need to seek employment?  Your credit rating is likely to come into play in both situations, and a lawsuit of this nature could be far more than a small ding.  If you have be forced to honor an obligations to the HOA, what other obligations are you likely to not honor?


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## e.bram (Mar 25, 2010)

If it so easy to collect MFs and attorney fees why are HOAs complaining about delinquent owners. should not matter a blt, the HOA s you say are collecting MFs plus. They should encourage bailers, if they get the MFs and can rent out the units as well. Why are so many units HOA owned?
ps: I'm a boss and don't have to worry about getting a job.  I am also a big insurance customer and are always solicited by insurance agencies to switch to them. I also get Xmas presents from them even though I don't drink.
pps; Lawyers hate it when I show up pro se.


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## theo (Mar 26, 2010)

*And who else...?*



e.bram said:


> Lawyers hate it when I show up....



Do you find that it's *only* lawyers who feel this way?  :ignore:


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## e.bram (Mar 26, 2010)

theo:
Actually the plaintiffs are not happy either> who else would care?


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## Mel (Mar 26, 2010)

e.bram said:


> If it so easy to collect MFs and attorney fees why are HOAs complaining about delinquent owners. should not matter a blt, the HOA s you say are collecting MFs plus. They should encourage bailers, if they get the MFs and can rent out the units as well. Why are so many units HOA owned?


It is a cashflow issue.  If you don't pay your fees, the HOA has to rent out your unit.  In most cases, they legally have to credit the rental minus reasonable fees to your account, so the HOA isn't making money off delinquent owners.  Plus, they have to float your account until they can rent your unit.  Those lawyer fees being collected are paid to the lawyers, so again, no monetary benefit to the HOA.

Why are so many units HOA owned?  Maybe because people like you suggest that people should just walk away from their obligations.  In some cases the HOA weeks are the final few weeks the developer didn't sell, and doesn't want to be bothered with.  In others it is weeks that were deeded to the HOA either by willing owners, or through forclosure.

Since you're in business for yourself - what do you do if a client doesn't pay the bills?


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## e.bram (Mar 26, 2010)

I am in a cash(now also credit cards) business.


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## brigechols (Mar 26, 2010)

theo said:


> Do you find that it's *only* lawyers who feel this way?  :ignore:



That's a good one!:rofl:


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## kagnew64 (Apr 2, 2010)

*Special assessments*

When it comes to hijacking a thread yo'all are the best. Rosebud5; I only have
owned one TS for about ten years. We have had two special assessments. The
first one four or five years ago was to rebuild our beaches in Puerto Vallarta and
Cancun. This year it was to change out furniture, add WiFi, and make other general improvements. Total special assessments in ten years--$1500.00
Was it worth the money? I will find out when the up-grades are finished.


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## Mel (Apr 4, 2010)

kagnew64 said:


> When it comes to hijacking a thread yo'all are the best. Rosebud5; I only have
> owned one TS for about ten years. We have had two special assessments. The
> first one four or five years ago was to rebuild our beaches in Puerto Vallarta and
> Cancun. This year it was to change out furniture, add WiFi, and make other general improvements. Total special assessments in ten years--$1500.00
> Was it worth the money? I will find out when the up-grades are finished.


Rebuilding the beaches may have been a reasonable use of a Special Assessment - if there is not a history of erosion in the area over time.  Otherwise, this should have been part of the reserve

Changing our the furniture should definitely have been part of the reserves, but many resorts don't include it in the reserves as a way of keeping annual fees down.

Wifi and other upgrades, if they increase the value of the units/resort are reasonable to do with a special assessment.  The way I look at it, if it is something the would increase the value of the resort or your home, if might be fair game.  Is it a capital improvement - is it something the IRS would consider as adding to your basis?


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## kagnew64 (Apr 5, 2010)

*Special assessments*

Mel, I totally agree with you. The beach erosion was a domino effect as I understand it. A property far up the coast built a jetty to save their beach. That jetty changed the current and the adjacent property built a jetty to save
their beach, etc. Club Regina was the last property, then, before the entrance to the marine terminal and marina. Club Regina and/or Westin hotel built two
jetties and trucked in sand to double the width of their beaches. As soon as they had finished, hurricane Kenna passed the mouth of the bay and sucked most of the sand out to sea. They have replaced the sand and have a decent beach.
The question of reserve monies for improvements is a sticky subject and I don't
know all of the answers. From what I have been told CR and Westin had a management agreement whereby most of the maintenance money would go to
the Westin and they would keep the property in good repair. Two or so years ago CR sued Westin and won a monetary settlement plus the right to keep more
of the maintenance money.
Westin has now erected the infamous fence through the common garden/pool
area. Hopefully all of this will be resolved soon and the fence removed.
Now that CR is keeping more of the maintenance money it is collecting, I hope
they can modernize the furnishings. Last trip we noticed all new linens, but
attributed it to Westin taking back theirs.
If anyone knows more about this situation and how it pertains to the special
assessment, please post.


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## djs (Apr 11, 2010)

I'm going to use Massachusetts procedures in my response as that's what I'm most familiar with.  To file an LLC it costs $500 (State fees), then EVERY year an "annual report" must be filed which also costs $500.  So in 10 years, one will have paid Massachusetts $5,000 in formation/annual fees.  I don't know about the rest of you, but to me paying $5,000 to avoid $1,000 in special assessment fees AND walking away from a timeshare just doesn't seem like a great investment.

Sure, one can form their LLC in another State...but if I were to do that, I would then need to pay for a representative in that state as pretty much every state requires what's known as a "Resident Agent and that's probably going to cost a few hundred dollars each year.  

And none of that even begins to address what's been brought up previously about a corporation being formed for fraudulent purposes.


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## JudyS (Apr 11, 2010)

The discussion about LLC is way off-topic from the Original Poster's question, and in my opinion, belongs in a different thread. 

Rosebud5, I own a lot of timeshares, and do worry about special assessments. There are two main factors that I look at regarding assessments.  First, is the board owner controlled?  If not, then they may not act in the owners' interests. Many management companies get extra money if there is a special assessment, since they get to charge for supervising the renovations. So, if the owners are not in control, the management company may do unnecessary renovations to bring in money. I'm not an expert on the Sheraton Vistana, but I suspect that is what happened there. (By the way, I stayed in an "unrenovated" Sheraton Vistana unit a year ago,a nd I thought it was perfectly fine, with no need for major repairs at all. And I'm quite picky on resorts.)

Secondly, I look at the physical condition of the resort. (if I can't go see it in person, I ask owners, and read the resort's reviews.) Does the resort _need_ major repairs? If so, that's a big red flag. On the other hand, if the resort was recently renovated, that's very reassuring

I also call up the resort and talk to the management people there. I ask flat-out what repairs they think need to be done, and whether they know of any special assessments in the works. I suspect this wouldn't work at large resorts, but at small, owner-controlled resorts, I've generally gotten useful answers.


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