I had a long conversation with the person at Vacation Services who had no clue on the questions that I was asking so I was passed on to someone at Project Developments who previously worked at Royal Host.
Firstly, I questioned where in my contract a capital expenditure such that they are proposing would be allowed. Under the clause of Special Assessments it is not covered and in the clause Operating Costs and Reserve for Refurbishing they believe this expenditure is covered. Quite frankly a reserve is something that is created over a period of time. They are funds that are earmarked by a firm from its retained earnings for future use. The clause talks about the refurbishment of the villas but no specific mention to capital expenditures as suggested. Seems to me that there should be a capital expenditure clause and it does not exist. They are confusing operating costs which are short term in nature along with a reserve that is established over some period of time. This capital expenditure is neither.
I did not convert to RCI as I was concerned that there was some underlying premise why they wanted the unit holders to change. I challenged the individual on the phone that they had a conversion because the existing contract that they had was not sufficient enough to cover Sunchaser in an event such as this. This is a company that went through CCAA and the owner just inherited the existing arrangement. She first said that the two contracts were the same then later mentioned that there were some changes but she would not get into the specifics. Seemed to me there are some deficiencies in the old contract but I am not a lawyer.
I then asked what happens if I decide to pay my amount and they are not successful on having their forecasted amount of unit holders pay (they just decide to go into default). Obviously that becomes an increased liability to the existing unit holders so the number they are providing is not a firm number and could be substantially higher. I asked what they forecasted for the take up and she suggested that she had done this once before with Royal Host and the take up was around 80%. She would not provide what they have forecasted for Sunchaser and not sure why she wouldn't. Perhaps it is higher which is just another risk.
I asked about the trading power at Interval and noticed lately that requests that I was able to the get in the past I no longer could get. The response was that was because of negative customer reviews and even after the renovation is complete it is going to take a couple of years for the trading power to return. Not that comforting.
Lastly, being a little difficult I asked why a unit holder with X amount of years would pay the same amount as another unit holder that converted to a deeded title. If this business is run properly an annual reserve should be put aside for the next renovation that takes place. So if that is the case, all the unit holders are funding the next renovation for the unit holders who are now deeded or hold the units into perpetuity. That means I am paying for a renovation in the future that I may never get any use out of as my time lapses. Why would one contribute to this kind of arrangement.
I thought I would post the information that I found out for others to see. I am going to have this document reviewed and get a legal opinion on my rights as a unit holder because at the end of the day one can speculate forever what is right and what is wrong. I am concerned what I will hear back is that contract will be open to interpretation which is neither black and white. If I knew the amount they were asking for was the amount and nothing more I may consider but that is something they can't guarantee. So the amount may between $3-4,000 now but may fall out substantially higher. Who makes an additional investment into something that is a continuing liability with no upside?
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