Email from www.communityhealthtraining.org/Timeshares/

[theo]

Stating the obvious...

Yes, IRS only mandates an appraisal if over $5K, but it can and will demand proof of any deduction it challenges. Comps or formal appraisals are generally based on current sales, such as last 12 months. Of course, a unique sale will be thrown out. Developers selling price years ago mean nothing! <snip>

I'm no CPA, but still think it's safe to say that in regard to the specific "donation" topic under discussion, the true fair market value (FMV) of any timeshare that one has to pay someone else $599 just to take off their hands is likely exactly zero. That same non-figure would seem to accordingly be the tax deductible amount.

 

[SeniorDirector]

Rebuttal to assertions

Several people have raised opinions as affirmative statements without backing them up.

The first is that a resort can somehow block, prevent or reverse a deed transfer. Legally, anyone can do this if they can prove it was fraudulent. However, to be fraudulent it has to be dependent on real estate law. Such conditions are spelled out clearly. I won't quote several statues here, but the basic premise is if either party to the deed transfer doesn't know about it or if it's done to avoid CURRENT financial bills such as mortgages, liens, tax requirements or current pending law suits. None of these concern the resort. Any current debts must be paid off before the deed is transferred. Therefore, irregardless of what some think, the resorts have no legal right to question the deed transfer. Ask any real estate attorney or do a little research on the Internet.

In connection with that, if a resort ignores or simply refused to acknowledge a legal deed transfer and attempts to collect future bills from an old owner, they are subject to severe legal ramifications themselves. Frankly, I would LOVE to have some resort try that one on one of our donors. Ask any resort attorney that one. As for refusing to allow use for non-payment, that's what they do all the time. As for us, we don't ever use it so it's a moot point. As for simply proving that the new "buyer" doesn't intend to pay has no legal consequence and can not be grounds for such action. Of course, if someone can actually show legal documentation in the form of legislation or law I'd be happy to read it.

As for the legality of the donation, I've covered that extensively with copious quotes of IRS regulations and publications elsewhere. Unless someone specifically asks for it here AND the moderator will allow me to do so, I won't burden this thread with it again.

As for an evaluation above $5,000 it does require a licensed appraiser's report. There are really only a few that are licensed AND accepted by the IRS to provide such appraisals. I would suggest whoever insists on claiming timeshares can't be valued highly do a search for "Timeshare appraiser" and talk to a few. What you'll find is that the $1 eBay sales don't qualify for comparables while CURRENT resort sales (not 4 years ago) do qualify. That's why the IRS accepts much higher evaluations than just the $5,000 limit.

Please, before anyone who makes or believes any assertions, including mine, do a little research on your own and find out what the real legality is.

As for the issue of Wyndham's (and others) points, you must understand that they are subject to contractual law, not real estate law. As such we do not deal with them.

 

[DeniseM]

In connection with that, if a resort ignores or simply refused to acknowledge a legal deed transfer and attempts to collect future bills from an old owner, they are subject to severe legal ramifications themselves.

"Severe legal ramifications" Gee, that sounds scary, but aren't you really saying that the owner will have to hire an attorney and take the HOA to court to force them to recognize the transfer of their timeshare to you?

You seem to be unaware that there are a number of resorts who are already refusing to recognize the transfer of deeds to companies like yours...or charging a high transfer fee.

As far as your tax info., our in-house CPA who formerly worked for one of the largest firms in the world has already stated in other threads that your tax advice is incorrect.

Lastly - Can you please tell us what percentage of your total earnings goes to a legitimate charity, and provide a link to your public report?

 

[pacodemountainside]

Interesting to note you do not deal with Wyndham and its Trust arrangement.

FMV is what a willing buyer will pay and a willing owner sell for. On an older resort where there are a couple of Developer foreclosure sales and say 20 ebay $1.00 I think a competent appraiser would have to go with the flow.

If your assertion is correct why did Tax assessor reduce value of my condo to some $20K less than I paid about 4 years ago to current FMV!. Yes, he did throw out trashed foreclosure and very high sale where naive buyer wanted a top floor corner unit with fantastic views and way over paid.

Lastly, like legitimate tax preparers will you send licensed person to audit and pay additional taxes assessed when IRS auditor puts it to your victim. Everything I have read indicates if one claims a big charitible deduction and charity sells for a couple bucks that is your legal tax deduction especially cars and timeshares.

 

[BocaBum99]

Hmmm...sounds like a Viking Ship LLC to me. This means they deed the timeshares to an LLC and then bankrupt the LLC and abandon the timeshares. Otherwise their claim that they can ignore the bills doesn't make any sense. Note that some resorts are catching on to this scheme and they refusing to accept deeds transferred to companies like this. Also note that creating an LLC for this purpose is illegal.

Wrong. He has no intention of bankrupting the corporation. He is just saying that he will not be paying the maintenance fees. The HOA must either sue the corporation or take back the timeshare. I see nothing wrong with that.

 

[BocaBum99]

I think there is a lot of misinformation being thrown around on this thread.

1) I think the primary purpose of this corporation is ethical. He states clearly his intentions and carries it out with full integrity. If HOAs will not take something back for free, they are the ones acting unethically.

2) I think the HOA can create rules that make it difficult or impossible for transfers to be made to this corporation.

3) I think the IRS rules are pretty clear. He is right about the 3 year rule which means the seller is less likely to be audited. However, if the client is audited, they have to present to the IRS their methodology for determining Fair Market Value. They will fail the test.

 

[theo]

Interesting Logic...

<snip> I think the primary purpose of this corporation is ethical. He states clearly his intentions and carries it out with full integrity. If HOAs will not take something back for free, they are the ones acting unethically.<snip>

I certainly respect that everyone is entitled to harbor and express an opinion.
I also agree that HOA's generally should accept "deedbacks" from owners.

That said, I reject summarily your odd reasoning that this particular form of ownership abandonment / denial is somehow "ethical" just because KR has openly and assertively proclaimed in advance an intention to ignore any and all resort correspondence and to never pay any maintenance fees once his outfit becomes owner.
How that constitutes "full integrity" is something on which we will certainly just have to "agree to disagree"...

 

[BocaBum99]

I certainly respect that everyone is entitled to harbor and express an opinion.
I also agree that HOA's generally should accept "deedbacks" from owners.

That said, I reject summarily your odd reasoning that this particular form of ownership abandonment / denial is somehow "ethical" just because KR has openly and assertively proclaimed in advance an intention to ignore any and all resort correspondence and to never pay any maintenance fees once his outfit becomes owner.
How that constitutes "full integrity" is something on which we will surely just have to "agree to disagree"...

My logic is simple. I believe it is unethical for an HOA to hold an owner in prison with their timeshare. If the owner no longer wants it, the HOA should take it back. I am okay with a transfer fee and even one or two year's maintenance fees. I believe it because if the resort has ZERO value, then it is the fault of the HOA for having maintenance fees so high that their units cannot rent for 30-50% more than the MF. If an HOA is so incompetent that they cannot create a resort experience where the ownership is worth more than zero, then they should resign in disgrace and recommend that they elect a new board member and/or recommend that the owners vote to terminate the timeshare plan, sell off the property and distribute proceeds to the remaining owners. There is no excuse for allowing a resort to drop to zero value under their watch.

All Ken Rich is doing is taking over the ownership and fighting the HOA on behalf of the original owner to force them to take it back. I find that to be a very valuable service. I don't think he is doing anything illegal. I am interested in seeing a legal challenge to his business model. Then, we will know one way or another.

As I mentioned above, I would not take a tax deduction using his model. I wouldn't be able to prove to the IRS that my timeshare has a FMV of $5000. No proof = failed audit. I am sure some will try it and get away with it. I wouldn't do it though.

If a resort will not allow a transfer to Ken Rich's corporation, then he would just give the money back. The transfer is not complete until the resort acknowledges the transfer. Despite what Mr. Rich says, I would not be comfortable as an owner with a timeshare that is recorded to someone else and not acknowledged by the resort. There are some real limits to what resorts can do to make it difficult to transfer to corporations.

 

[BocaBum99]

I certainly respect that everyone is entitled to harbor and express an opinion.
I also agree that HOA's generally should accept "deedbacks" from owners.

That said, I reject summarily your odd reasoning that this particular form of ownership abandonment / denial is somehow "ethical" just because KR has openly and assertively proclaimed in advance an intention to ignore any and all resort correspondence and to never pay any maintenance fees once his outfit becomes owner.
How that constitutes "full integrity" is something on which we will certainly just have to "agree to disagree"...

I forgot to mention that Dr Rich is not abandoning the timeshares. He is offering to give them back to the resort for free. Deed in lieu of foreclosure saves the HOA a ton of money.

I do disagree that he should hold it for 3 years if the resort will take it back immediately. However, if the resort will not take it back, then what Dr Rich does is very valuable to owners who want out and cannot get out because the HOA destroyed the value of the resort with its high maintenance fees.

You want to see these deeds sell on the open market? Easy. Have the HOA subsidize the maintenance fees for all of these deeds to the new buyers by paying 50% of the maintenance fees for as long as they own it.
When that proves that there is value in the deeds, then reduce the HOA budget to half of what it is today.

 

[ronparise]

This discussion of ethics in regard to timeshares and Community Health Services confuses me.. I think any discussion of ethics needs the word "situation" attached to it

For example...I was walking around the lake here at the Bonnet Creek resort yesterday. The grounds here are well kept and quite beautiful....I spotted piece of trash in the grass a few feet off the sidewalk... I faced a decision here...should I pick it up and take it to a trash can or should I just walk by ...I walked by. I know someone else will get it, probably an employee. So I know that my inaction will cost the HOA money. and that expense passed through to all the owners. So was this a decision to be tagged as either ethical, or un ethical? I dont think so..I dont think ethics enters into this at all.

Bur what about the guy that dropped that trash in the first place....Did he act ethically or un ethically....I dont think Im qualified to say...I didnt see the act, I dont know the situation. Perhaps it was the guy in the wheel chair I saw motoring about yesterday; his chair wont make it on the grass,. or perhaps it was the young mother with a bag over her shoulder and a kid in her arms and another holding her hand. The bottle may have fallen out of the bag and she didnt see it.....Or did someone just carelessly toss it on purpose? I dont know the situation so I cant comment


I dont think any of us can comment on the ethics of someone that dumps their timeshare and I certainly dont think that the guy that provides a way to get the timeshare back to the HOA is acting unethical

 

[LannyPC]

If a resort will not allow a transfer to Ken Rich's corporation.... There are some real limits to what resorts can do to make it difficult to transfer to corporations.

Not to split hairs here because this isn't the real issue of this thread and, not that it should really matter but technically it's not a corporation, it's a charity.

 

[LannyPC]

That said, I reject summarily your odd reasoning that this particular form of ownership abandonment / denial is somehow "ethical" just because KR has openly and assertively proclaimed in advance an intention to ignore any and all resort correspondence and to never pay any maintenance fees once his outfit becomes owner.
How that constitutes "full integrity" is something on which we will certainly just have to "agree to disagree"...

I'll agree with Theo on this one because (as far as I know), when you sign the document accepting ownership, the document states that you agree to pay all the accompanying MFs and SAs. One signing these documents with the full intention of not paying...well, draw your own conclusions.

 

[timeos2]

I'll agree with Theo on this one because (as far as I know), when you sign the document accepting ownership, the document states that you agree to pay all the accompanying MFs and SAs. One signing these documents with the full intention of not paying...well, draw your own conclusions.

Time and actions will tell the true tale of the sustainability, legality and ethics of the actions and statements of the so called non-profit in question. The likely outcome is that in within a year it will somehow disappear....

 

[AwayWeGo]

Ethics, Shmethics.

Time and actions will tell the true tale of the sustainability, legality and ethics of the actions and statements of the so called non-profit in question.

Ethics aside, there's something fundamentally unwholesome about any organization whose stated M.O. from the outset is getting over on timeshare HOAs, threatening the resorts' financial underpinnings by systematically flouting the obligations that go with timeshare ownership, no matter how that ownership is acquired, & doing so in a premeditated way.

As I glance over these various contrived rationalizations & justifications for sticking it to the timeshare HOAs for fun & profit, I hear a little voice way in the back faintly whispering, "RICO."

Just imagine if an aggressive prosecutor or district attorney somewhere starts looking at ways to go after some of the various Viking Funeral Ship operations using provisions of state or federal RICO laws.

Wouldn't that be something ?

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

 

[gnorth16]

Time and actions will tell the true tale of the sustainability, legality and ethics of the actions and statements of the so called non-profit in question. The likely outcome is that in within a year it will somehow disappear....

An then most likely reappear under a different name.

IMO Ken Rich's idea is better than most. If resorts would accept deed backs with 2-3 years MF's paid, I think this discussion would be a non issue. There are too many timeshares, especially those with a glut of blue weeks to be profitable as timeshares or even rental properties. If resorts offered owners an option to rent their unit to cover MF's, people would not be rushing to LLC's to take their units for a fee.

 

[pacodemountainside]

Maybe I am missing something here, but I do not understand why HOAs are the bad guys.

Since I only own Wyndham my experience is limited to them. I know they are the biggest and probably have worst reputation with WestGate a close second but have not seen any formal ranking by ARDA or similar source. Of course, excluding those real pros down Mexico way.

Wyndham's sales tactics are well documented here, Wyndham Forum and other Internet sites and by "F" BBB rating. If interested in reading gory details on how Wyndham legally financially maimed its owners read Bill Spearman article in TS Today from April 2009.

Clearly Wyndham has sold(scammed) to people who cannot afford and have to do something to just to keep car running to get to job to buy food.

The real estate and stock market crash 3+ years ago brought things to a head. Had economy chugged along then would not have such a big problem today.
But would have come to a head later on. Keynes, et. al. explained it all many years ago.

Also, 10-15 years ago Developers found they could take a $400K condo and simply slicing into 52 Intervals could sell for about $2 million and after paying a million in selling expense which added NO value and make a $500K profit. Everyone jumped on band wagon and the market got saturated. Tax assessors were in hogger's heaven.

Now throw in people like myself that are slowing down and want to get rid of their TSs, there is no market for Wyndham. However, there is active ROFR for Disney and Marriot. Why? Developer values his reputation, knows what he is doing and does not have wild sales force "pushing the envelope". Get it out the door today and worry about tomorrow next week.

The HOAs are us owners. Why should we be stiffed for Developers misdeeds? It is not the 3/4/5% inflation increase in MF that are wiping people out, it is they got scammed into buying something they could not afford. I am pragmatic enough to recognize it is better for us owners to eat a small loss today and readily take back a timeshare rather than it disappear for three years and all MF income lost. Since owner is giving the Viking Director $500 why not the HOA? Like the post here where seller is willing to give PCC $2K+, but not offer to pay closing costs if he sold here! Where is the common sense God gave a new born jackass?

Wyndham does have a separate Corp., EH that does rent its properties and some resorts use it to rent foreclosures until they can get rid of.

Also, keep in mind Developer creates HOA and signs lucurative long term management agreements new owners Board is stuck with. Also, under estimates reserve requirements to facilate sales. This leaves new BOD up******** creek. Either raise HOA fee or SA.

To me the main culprit is Developer, not HOA. We are all victims!

Simple solution, have HOA access all owners say $10 a year for self insurance reserve to deal with foreclosures. Since cannot buy an insurance policy like for fire, flood, etc. just self insure!

With a home or condo, mortgage company and its stockholders eat the loss. But then who are the stock holders, your IRA, 401K, pension plan, etc. Likewise credit card companies simply charge outrageous interest and other fees to compensate for losses. These are easy to avoid by paying in full each month!

Could you imagine buying a supersudser and financing for ten years, then after driving the Hell out of it for 5 and putting on 200K miles telling the car dealer I am tired of using this, just take it back and forget my loan. Like telling HOA it is "wored" out take it back.

 

[SeniorDirector]

This thread is getting very interesting! I'll try to clear up a few misunderstandings here.

1. A charity IS a corporation. It MUST BE a corporation or it will not qualify for status with the IRS. To do so it must meet some qualifications, and based on those qualifications there are different types of charities. The real difference between a charity and any other corporation is that there is no stock ownership by individuals. If the corporation is dissolved for any reason all assets become the property of the state of incorporation. Thus there are no personal assets in the charity/corporation.

2. As a charity receiving any non-cash donation the IRS sets an upper limit on the donation credit that can be granted by the charity without an appraisal. For real estate (deeded timeshares, not point contracts) that limit is $5,000. That doesn't establish the actual value of the timeshare up or down. It is up to the donor to determine how much of that $5,000 they want to claim as a deduction. Some choose to pay a licensed appraiser to determine a higher value. Some choose to ignore all of the deduction since they only wanted freedom. Anywhere in between is solely the decision of the donor. As far as the initial $5,000 credit, the IRS simply says that can be granted without any regard to any appraised, estimated, or opined value irregardless of what else is actually selling on the open market.

3. The issue of 36 months is an IRS regulation. Simply put the deed can not be resold during that 36 months or the new resale value can be used to determine the actual value of that specific donation. Without that resale the $5,000 limit holds.

4. Since a foreclosure or deed in lieu of a foreclosure is NOT a resale since it is by force of law, it is not considered by the IRS as a resale and doesn't jeopardize the 36 month regulation. We offer and are more than willing to deed the timeshare back to the resort much earlier if they wish. Only one or two have felt they wanted and have sent us the deed in lieu of foreclosure to process (which we do process).

5. If the timeshare is paid current with no outstanding debt, the only "right" the resort has is to honor the right of use of the timeshare. That has nothing to do with financial obligations that evolve AFTER the deed recording date. So, any resort assessing fees for transfer, trying to create roadblocks or prevent any such deed transfer is illegal - and the resorts know it. Ask any resort. They do have the right to refuse use. So be it. We accept their right. Just as they accept our right to refuse paying new financial obligations. They then have the right to process it according to the law which is to send it to collections and ultimately ruin the current owner's (our) credit and then foreclose or right off the loss if they wish.

6. Since we have the donor only work through a licensed title escrow company of their choice, we NEVER get anything until the whole thing is completed. By law, if the deed is not legally transferred, the donor is refunded their money, not by us, but by the title escrow company they chose and who is holding their deposited funds. That's the law.

As for the questions about RICO, ethics, what an in-house accountant would say, I will ask that specific legal references with quoted sources be given so others can review them.

One last point, however small. We only charge $500 not $599. Please at least read what is presented here before you get it wrong.

 

[DeniseM]

As for the questions about RICO, ethics, what an in-house accountant would say, I will ask that specific legal references with quoted sources be given so others can review them.

It has been posted many times - if you want to look it up, look for posts by DaveM.

Are you going to answer this question that I posted above?

What percentage of your total earnings goes to a legitimate charity, and please provide a link to your public report.

 

[AwayWeGo]

No, No. You Don't Understand.

I will ask that specific legal references with quoted sources be given so others can review them

It's the other way round -- the ball is in your court, not ours.

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

 

[ronparise]

It's the other way round -- the ball is in your court, not ours.

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

No the ball is not in the doctors court

The prosecutor always goes first...The defense doesnt have to say a thing

If I say the doctor is doing something wrong, its up to me to prove it, not him

 

[BocaBum99]

The Dr may be in for a surprising turn of events before long. Resorts can & do refuse to accept verified fraudulent transfers - he may not have run into an informed/proactive one yet but keep it up & he will soon.

To owners: Unless you plan to be involved in an unwanted potential legal battle, still be responsible for the fees you paid to get out of and, if you are stupid enough to try the "tax deduction" - a long discredited ploy - then plan on wasting $500 with this group/guy. DON'T DO IT. This is a fraudulent operation on every level & they admit it openly. They won't be around much longer in all likelihood. Use at your own very large risk.

You keep posting this garbage. You can post your opinion, but you can't get away with posting factually incorrect content.

First, it is true that a resort can refuse to accept verified fraudulent transfers. However, you don't define them. I just called a friend who is a licensed and bonded title agent in Florida. I read your statement and she said it was the stupidest thing she has ever heard.

Here are examples of fraudulent transfers:

1) grantor records a deed into the name of a grantee without grantee knowing about it.

2) grantor records a deed in the name of their dog.

3) grantor records a deed in the name of a minor in violation of their rights as minors.

If grantor and grantee agree upon a transfer and consideration and the check list of items on the resorts standard transfer checklist are satisfied, it is valid. Items on checklist include things like paying all past dues and providing for right of first refusal. Those check list items must be reasonable and applicable to everyone.

If you have specific laws, attorneys, title agents or brokers and/or cases which support your opinions, please cite them [unnecessary - deleted]

 

[BocaBum99]

Please, can someone cite a law that Dr Rich's corporation is violating? I see no law being violated.

 

[BocaBum99]

Maybe I am missing something here, but I do not understand why HOAs are the bad guys.

It is simple. The HOA controls the budget. If they mismanage owner's funds, the maintenance fees are too high. When maintenance fees are higher than what units will rent for, then the resort has zero value. The HOA must take dramatic action to cut costs to make the resort viable. If that is not possible, they need to forward a proposal to terminate the timeshare plan and put it up for vote. Any HOA that attempts the above is doing their job.

If timeshare units have value, then the HOA will be delighted to take back deeds. They can offer them up for rent or to other owners and the excess profit can go right toward the resort budget. Everyone wins. If the timeshare units do not have value, then the HOA is not doing their job unless they take the steps I have outlined above and failed.

The only entity that can take action to solve the problem is the HOA board. I find it offensive that an HOA board can hold an owner hostage when it is their actions or lack thereof that prevents the owner from liquidating their position in the first place. If the HOA won't take action, then Dr. Rich is a solution that I can support to level the playing field for the owner.

 

[BocaBum99]

Not to split hairs here because this isn't the real issue of this thread and, not that it should really matter but technically it's not a corporation, it's a charity.

So, let me see if I get this straight. You believe that NONE of the charities in the United States are corporations? Really?

Do you know what defines a corporation and a charity?

A corporation is a legal entity. A charity is a tax designation.

Here is content directly from the IRS website from publication 557.

3. Section 501(c)(3) Organizations:

An organization may qualify for exemption from federal income tax if it is organized and operated exclusively for one or more of the following purposes.

Religious.

Charitable.

Scientific.

Testing for public safety.

Literary.

Educational.

Fostering national or international amateur sports competition (but only if none of its activities involve providing athletic facilities or equipment; however, see Amateur Athletic Organizations , later in this chapter).

The prevention of cruelty to children or animals.

To qualify, the organization must be a corporation, community chest, fund, articles of association, or foundation. A trust is a fund or foundation and will qualify. However, an individual or a partnership will not qualify.

Care to withdraw your statement?

 

[DeniseM]

Dr. Rich - what is your doctorate in?