# Buy Diamond?



## mitchandjeanette (Jun 16, 2011)

Some friends of mine are at a Diamond property (AZ) and are thinking of buying.   I own Starwood and am not that familiar with Diamond.  They called me, looking for my opinion on what they should do.  I told them buy resale, and not from the developer, but do not know how Diamond resales work.  They seem to really like the Diamond point system and being able to go for 2 days or 20 days.  I think they are going to buy a sampler package to "test it out".  All I know is I wish someone had told me not to buy from Starwood and buy resale before I bought mine, but live and learn...   
Any suggestions on what I should tell them would be greatly appreciated.
Thanks,
Mitch


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## timeos2 (Jun 16, 2011)

mitchandjeanette said:


> Some friends of mine are at a Diamond property (AZ) and are thinking of buying.   I own Starwood and am not that familiar with Diamond.  They called me, looking for my opinion on what they should do.  I told them buy resale, and not from the developer, but do not know how Diamond resales work.  They seem to really like the Diamond point system and being able to go for 2 days or 20 days.  I think they are going to buy a sampler package to "test it out".  All I know is I wish someone had told me not to buy from Starwood and buy resale before I bought mine, but live and learn...
> Any suggestions on what I should tell them would be greatly appreciated.
> Thanks,
> Mitch



Diamond resales are not as straight forward as some others are. You can buy the base ownership rights - can be at the resort you want as your "home" - but that will NOT include the membership to the Club/Points as part of the transfer (Diamond does not allow resale of the Club membership). Once you own the base resort you can, at your option, add the Club/Points for around $2999 (I think thats the current rate).  We actually prefer this method over buying directly into one of the Trusts as the fees tend to be lower than the Trusts (although sold as being lower the Trust adds an overhead expense that tends to actually make higher priced than the resort + Club option tends to be both to purchase and in ongoing fees).  

We have really enjoyed our DRI (Sunterra when we bought in) Club membership & the Corporate II membership it includes.  But we would never give up our deeded week to get it as by doing so you give up your voting rights at the resort and we never want that.  Plus we've found the resort annual fees plus the club membership to be noticeably lower in total cost than any of the Trusts are.  Buying DRI resale can be a great deal.


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## craigrow (Jun 17, 2011)

I always find the argument about retaining your right to vote in your HOA interesting. Each owner in the HOA gets a vote. If a company such as Diamond buys into a resort they likely own a very large portion of the units. If they own say 30% of the units they effectively control the HOA. If they get to 50% they have complete control. Other HOA member's votes are meaningless.

So, if you hold a deed and vote in the HOA you might not have any say in how your resort is run. If you are a member of the trust you elect the board of the trust and at least have some say indiret influence on the HOA.


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## T_R_Oglodyte (Jun 17, 2011)

craigrow said:


> I always find the argument about retaining your right to vote in your HOA interesting. Each owner in the HOA gets a vote. If a company such as Diamond buys into a resort they likely own a very large portion of the units. If they own say 30% of the units they effectively control the HOA. If they get to 50% they have complete control. Other HOA member's votes are meaningless.
> 
> So, if you hold a deed and vote in the HOA you might not have any say in how your resort is run. If you are a member of the trust you elect the board of the trust and at least have some say indiret influence on the HOA.


At the Diamond Resorts the trusts vote their ownerships one massive vote.  Given the dynamics I figure that 10% ownership of the resort by a trust is probably enough to assure that the Trust will effectively have full control of the resort. At 20% trust ownership the Trust position is probably close to impregnable.

I've long felt that one of the reasons that Sunterra let the Embassy Vacation Resort name go away from those properties and brought them into Club Sunterra was to assure that they would be able to maintain control of the resorts (and thus assure themselves of the lucrative management contract) after the resorts were sold out.


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## timeos2 (Jun 17, 2011)

craigrow said:


> I always find the argument about retaining your right to vote in your HOA interesting. Each owner in the HOA gets a vote. If a company such as Diamond buys into a resort they likely own a very large portion of the units. If they own say 30% of the units they effectively control the HOA. If they get to 50% they have complete control. Other HOA member's votes are meaningless.
> 
> So, if you hold a deed and vote in the HOA you might not have any say in how your resort is run. If you are a member of the trust you elect the board of the trust and at least have some say indiret influence on the HOA.



That is true if Diamond isn't the original Developer but if they (or Sunterra or whoever preceded them in building the resort) are the Developer of record or subsequent Developer then usually the docs require that they turn over control to the individual owners and cannot have the majority of the Board Members.  That is done to ensure that a corporation or developer can't overrule the individual owners once turnover has occurred.  

It is a real pet peeve of mine that some Developers - like Marriott and Wastegate for example - seem to flaunt those rules and never properly turn over control.  I know our resorts had to fight to get it but it was well worth the effort and cost.  I also have to compliment DRI for honoring that rule.  Unlike some others they have worked to be a good partner and supported the independent Board since they took over Sunterra at one of our resorts.  It is a good working partnership and the results benefit every owner.  We may have our disagreements but both sides work to reach a fair resolution and so far it has gone very well.  

As for the importance of holding the voting rights I put that near the top of my list after location and time covered by any ownership we have. In fact I actually sold off all of our holdings at any resort/system that didn't have Owner control. After 15 years of ownership we know that not having that is a major flaw in the whole ownership package.  Too much power in the hands of the "top dog" leaves the individual owner with no voice and that is never good.  So we said goodbye to DVC, Wyndham and Wastegate as it was clear they would never allow proper owner input and control.


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## dougp26364 (Jun 17, 2011)

The problem with DRI and buying resale is DRI puts in a lot of poison pills for resale buyers. 

If I understand the system correctly for trust based owners (strictly points, no deeded week), resale buyers get the use of the trust resorts but, can't particpate fully with the base club program and, there's no provision that allows them to exchange through I.I. There was a thread on this site some time back about a resale buyer who was not able to find a way to exchane their trust point with I.I. I still assume that a resale trust owner could reserve a week using their trust points, then deposit that reserved unit with an exchange company. The thing to remember is that DRI attempts to keep tight control of their inventory and you may have issues getting them to release the reserved unit for deposit. 

In the past, resale buyers have been able to buy their way into full membership by just paying a joiner fee. We paid $2,995 a few years ago to join THE Club (we had purchased direct from DRI before THE Club). We could have purchased a minimum number of trust points and THE Club membership would have been included automatically. It has been over a year since I last read of anyone successfully just paying the joiner fee to join. The last I had read, DRI was requiring the purchase of at least 5,000 points directly from the developer to bring any resale weeks into the program. 

In the past, it use to be you could purchase direct from DRI and get a clause written into the contract that any resale weeks purchased within a set timeframe could be brought into THE Club without paying a joiner fee or buying additional points. I have not read about anyone being successful with that in a long time so, I don't know if that option is open anymore. 

DRI seems to have tightened down on allowing resale units and/or resale trust points into their internal system or THE Club. They are considerably trickier than others and, it seems that you won't get the same answer twice from DRI when you call to talk to them. Resale buyers are definately not a high priority with DRI. Sunterra, who was the predessor to DRI, used resales as a way to get those buyers to purchase additional inventory direct from the developer. DRI appears less inclined to do this or, at the very least, doesn't advertise they'll do this and doesn't make it clear exactly what the process is or the cost of the process.


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## pgnewarkboy (Jun 18, 2011)

To answer the original question.  We are DRI Club owners.  We like the point system, and find the DRI offerings in to be excellent.  It appears to us that DRI is in the timeshare game to stay - unlike Marriott that bailed a short time ago out of timeshares.

It is hard to tell your friends what to do because we don't know anything about them and how they like to travel.  The most I can say is that my wife and I and our entire family including children and grandkids have enjoyed and benefited from our DRI membership.


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## mitchandjeanette (Jun 22, 2011)

pgnewarkboy said:


> To answer the original question.  We are DRI Club owners.  We like the point system, and find the DRI offerings in to be excellent.  It appears to us that DRI is in the timeshare game to stay - unlike Marriott that bailed a short time ago out of timeshares.
> 
> It is hard to tell your friends what to do because we don't know anything about them and how they like to travel.  The most I can say is that my wife and I and our entire family including children and grandkids have enjoyed and benefited from our DRI membership.



Thanks for your help...  I know them and I'm scared to suggest anything...  I'll tell them, before they decide to buy, make sure they will USE it, and they will need to plan ahead to get the best bang for your buck...


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## T_R_Oglodyte (Jun 23, 2011)

timeos2 said:


> That is true if Diamond isn't the original Developer but if they (or Sunterra or whoever preceded them in building the resort) are the Developer of record or subsequent Developer then usually the docs require that they turn over control to the individual owners and cannot have the majority of the Board Members.  That is done to ensure that a corporation or developer can't overrule the individual owners once turnover has occurred.  ...



I don't recall in the Point at Poipu documents any mention of turning the resort over to owners. It simply says that owners elect the Board of Directors, so when the resort is sold out, the developer no longer has any votes.

By creating the trust and inserting the trust into the ownership structure, Sunterra ensured that the trust would be able to control the operation of the resort.  Not surprisingly the Trustees selected by Sunterra happened to be the Trust department at financial institutions with which Sunterra had business relationships.  So they made sure that trust management was in friendly hands.  There's also the implicit threat that should the Trustee not do what Sunterra (now Diamond) wanted (such as by voting for a non-DRI approved member of the Board of Directors), the business relationships with the parent financial institution (which are likely quite profitable by themselves) would be jeopardized.

By also making it procedurally difficult for trust owners to replace the Trustee, Sunterra (Diamond) assured that for all practical purposes they could continue to control the resort long after the resort was sold out.

******

As far as I can deduce, the only real leverage that Diamond resort and trust owners have is to mount a credible argument with the Trustee that voting with DRI on a particular issue would be a breach  of fiduciary responsibility.  At that point a Trustee would be motivated to break with DRI because they would then be on the hook for financial damages.


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