"Timeshare Transparency Act" new proposed bill

[ScoopKona]

One thing I would love to see it it being required that all timeshare transactions be completed by Real Estate lawyers. It protects both buyer and seller plus better ensures full disclosures. Afterall, timeshares are Real Estate transactions and filed as such.

I used to tell them, "I'll tell you right now what your lawyer is going to say. He's going to say 'don't sign this.'"

The big picture problem with timeshares is the same as the opening sentence of A Tale of Two Cities. It is the best of times, the worst of times.

I love my timeshare. My wife and I have traveled all over the world on this silly little toy we bought before we even got married. I used to trade my single week for a full month of vacations. But they monkeyed with the program and now I only get two or three weeks. Totally happy with my purchase. And if I put it down and walk away, I feel I got my money's worth.

Most people can't say that because they never do their homework. They buy in built-out places with no real trading power. And they don't get value from their purchase. And then they get angry with everyone in "the rotten industry" but never try a little reflection.

There are people buying weeks right now at the Hyatt Kaanapali, and flying home feeling good about the tens of thousands of dollars they spent. That's the difference between buying a good week and buying at the Leaky Lake Lodge in Branson or Massanutten.

Timesharing was invented by Hapimag in Europe. They had a ski resort hotel that was so popular that guests asked if they could reserve for life. "No, but we'll sell you a lifetime reservation." And timesharing was born. Then Conrad Hilton heard about it and brought the concept to the US.

 

[LannyPC]

There should be no time limit as to when a time share can be canceled.

A TS can't be "cancelled". It's deeded property. It's just like you can't cancel your car or house if you own it but no longer want it. If you own a TS but no longer want it, then you sell it or give it away, and there is no time limit to this.

 

[LannyPC]

The big picture problem with timeshares is the same as the opening sentence of A Tale of Two Cities. It is the best of times, the worst of times.

I agree, and the major problem is that for 90+% of the TSs out there, it is "the worst of times". The reason being is that for these mud intervals, they are worth zero or fewer dollars because (IMHUO) the MFs exceed what can easily be fetched for a rental.

 

[easyrider]

A TS can't be "cancelled". It's deeded property. It's just like you can't cancel your car or house if you own it but no longer want it. If you own a TS but no longer want it, then you sell it or give it away, and there is no time limit to this.

This is why vacation club memberships are so popular. All of the intervals in the property are held in a trust or other legal entity and not by individual owners.

Bill

 

[TUGBrian]

been a fun topic, and will spend a good bit of time on this tonight on the livestream!

I think this can be summed up by "a great idea, but terrible execution"

as with most things in todays political spectrum, its hard to argue with the headline....everyone wants to right the wrongs in the big bad timeshare industry (me included)....and the IDEAS in this bill arent terrible at face value especially

1. increasing the rescission period.
2. a single page summarizing all fees (both current and future) the owner could be liable for.

I dont think anyone anywhere (including the states themselves) are the least bit interested in having the FTC dip their toes into this in any way shape or form.

for me a better solution would be to start holding states accountable for enforcing their OWN laws that apply to how timeshares are sold, most of which would fall under real estate laws. or even better, have the industry itself propose a similar solution to get all states/developers/etc on board with a 14 day rescission period and the single page fact sheet for owners to read and sign! can we make it happen? eh...i wont hold my breath...but even a partial implementation of a good solution is better than doing nothing...and WAY better than implementing a bad solution.

 

[dioxide45]

It would be interesting to know the rescission rates by state. Do the rates increase a certain amount for each additional day to a rescission period? I doubt we can get such answers, but I suspect the developers and ARDA know the answer. Thus why they fight hard against longer rescission periods.

 

[TUGBrian]

i am pretty sure the pushback is due to it being a much longer period in europe and that has had a huge impact on retail sales!

while im not 100% sure, I believe the law there is already 14 days...and can be up to 1 full year depending on the situation.

while I do see the argument that at some point, you have to call a sale a sale....and its not like you can just cancel your house purchase if you find out later you moved in next to the manson family/etc. but that same argument excludes a number of protections that DO exist for purchases where important things were not disclosed at the sale or similar (flood damage for instance)

for me, i have not heard a single valid argument against a 14 day rescission period that holds a lick of water, so for states that still only have 3 or 5 day periods, the industry could do a whole lot of good almost "overnight" if it put forth an effort to bring all those in line.

developers coudl also easily do this themselves without any government involvement (state or federal) by simply instituting a 14 day rescission period in all their contracts/sales offices. there would not be any law that prohibits them from making a state mandated period LONGER.

 

[jp10558]

But we know the developers like the current systems because they work for them. And like alluded to before - the longer someone has time to rethink the purchase, the more likely they are to rescind. I think this is generally true TBH, for about anything. You just have more chances to be like "I don't think this was really a good idea".

 

[TUGBrian]

oh i agree completely!

there should be a remedy/solution for anyone who was a victim of the typical "sales presentation" tactics. I dont think 14 days is going to add all that many cancellations to the pot. 30-90 days would be a much more significant figure! at some point more of the blame has to shift to the buyer for doing little to no research on what is a very expensive and usually lifetime financial obligation.

where do you draw that line?

I hear alot of pushback from the industry relating to extending rescission periods when it comes to the tangible costs of reversing a purchase (and sales commissions etc)....so if thats the case then perhaps after the "100% refund guaranteed" rescission period ends...a longer one kicks in for the next few months that if exercised still allows you to exit your ownership but comes with a financial penalty to cover those costs that would have otherwise been eaten by the developer. they get made whole, and free to sell that item to another owner.

 

[easyrider]

Home equity loans only required a three day rescission period.

With a primary or secondary home mortgage loan, a person has no right of rescission once the closing docs are signed. Home equity loans have a three day rescission period.

With a timeshare, the five day rescission period is beyond the original Federal " Truth in Lending " law intended for consumer mortgage protection and is a result of State Laws.

The protections that the " Transparancy Act" can provide is a minimal Federal Law, so it supersedes State Laws ,unless the State Law provides additional protections.

Bill

 

[TUGBrian]

generally dont apply for and sign a heloc while on vacation at a resort though!

you can also immediately pay back the heloc(if its instead a 2nd mortgage) if you change your mind, or choose to not even use it at all as a heloc is a line of credit vs a loan.

 

[Irene Parker]

The Bill can be revised so please post your comments on the Senator Curtis website, Contact Us, Share Your Opinion. His office is closed until Jan 5

CURTIS, SCHIFF INTRODUCE BILL TO PROTECT CONSUMERS FROM PREDATORY TIMESHARE PRACTICES

Senators Curtis and Schiff introduced the Timeshare Pricing Transparency Act, bipartisan legislation to protect consumers from confusing contracts, hidden fees, and unclear exit options in the timeshare industry.

www.curtis.senate.gov

I forwarded my concerns:

● Not disclosing the meeting or “update” is a solicitation.

A common comment concerns the branded hotels like Hilton/Marriott soliciting with the caller not disclosing the invitation is about timeshare. Instead, the loyalty member is invited to hear about our “vacation program.” Existing members are often told that what they will be attending is informational or an orientation, when in actuality, it is an attempt to sell more points.

● The recorded closing used as an entrapment.

Diamond Resorts started recording the closing in 2017, after the Arizona Attorney General issued an Assurance of Discontinuance. The purchaser is not allowed to record the sales session. We have received many reports of agents coaching what to say or not say on the recording closing, like, “I used to work in finance/sales/rent and can help you later, but don’t say anything at closing.” So you don’t. The response to your complaint is, “If this was important to you, you should have brought it up on the recorded closing.” If a buyer asks a question, the recording is stopped, the deception confirmed, and the recording device turned back on. The purchaser cannot listen to the recording without a subpoena. If the recorded closing can be used against the purchaser, the purchaser should be allowed to record the sales session.

● A timeshare loan should not be defined as a mortgage

A timeshare loan should be categorized as an installment loan, not a mortgage. One of our greatest concerns is the number of active duty service members who have reported finding their security clearances in jeopardy because of unfair and deceptive timeshare marketing, sales and lending practices. The 11th Circuit Court of Appeals, in Steines vs Westgate, upheld the lower Florida court ruling that a timeshare loan is not the same as a home mortgage. The Military Lending Act (MLA) exempts home mortgages. FNMA and the NCUA state on their websites that a timeshare loan is not a mortgage loan. In spite of this, developers call a timeshare loan a mortgage. Timeshare contracts are financed at 12% to 19%, with little to no resale value. Commissions are not disclosed. Selling and marketing expenses run as high as 50% or more, including the “free” gifts.

● The oral representation/non-reliance clause does not belong in a timeshare contract.

If it is, it should be disclosed at or prior to the presentation, not buried in volumes of fine print.

 

[dioxide45]

Home equity loans only required a three day rescission period.

With a primary or secondary home mortgage loan, a person has no right of rescission once the closing docs are signed. Home equity loans have a three day rescission period.

With a timeshare, the five day rescission period is beyond the original Federal " Truth in Lending " law intended for consumer mortgage protection and is a result of State Laws.

The protections that the " Transparancy Act" can provide is a minimal Federal Law, so it supersedes State Laws ,unless the State Law provides additional protections.

Bill

But that just applies to refinancing transactions on home loans. They don't disburse the funds on a refinance until after the rescission period is over. You already own the house on a HELOC or refinance. This is far different than purchasing a timeshare.

 

[dioxide45]

oh i agree completely!

there should be a remedy/solution for anyone who was a victim of the typical "sales presentation" tactics. I dont think 14 days is going to add all that many cancellations to the pot. 30-90 days would be a much more significant figure! at some point more of the blame has to shift to the buyer for doing little to no research on what is a very expensive and usually lifetime financial obligation.

where do you draw that line?

I hear alot of pushback from the industry relating to extending rescission periods when it comes to the tangible costs of reversing a purchase (and sales commissions etc)....so if thats the case then perhaps after the "100% refund guaranteed" rescission period ends...a longer one kicks in for the next few months that if exercised still allows you to exit your ownership but comes with a financial penalty to cover those costs that would have otherwise been eaten by the developer. they get made whole, and free to sell that item to another owner.

Perhaps the industry could make more money just churning cancellations at a few thousand each time than actually selling timeshares? As for extending the time, I think it was mentioned that 15% of buyers rescind. For some states 14 days almost triples the rescission period. What does that do to the industry numbers? For Florida, it increases the time by 40%. While it may not increase it significantly, I am sure the industry sees even an additional 25% increase in the number of rescissions as a bad thing.

I think rescission periods should also exclude non business days or days when USPS doesn't pickup or deliver mail. i.e. Sundays and federal holidays.

The problem is that in many cases, the rescission period won't solve the problem of sales lying to buyers during the presentation. Most people find out the deficiencies in what they were told and what they were sold long after their purchase.

The main problem is that the industry can't really sustain itself outside the current model. I don't think any amount of legislation can fix that. Timeshares aren't something most people want to buy. I also think the spinoff of timeshare companies into independently traded public companies has caused problems. They have to increase sales prices and fees to feed growth.

 

[easyrider]

generally dont apply for and sign a heloc while on vacation at a resort though!

That is true. I only bring it up because a HELOC has a three day rescission period because of Federal Law. If there is to be a uniform rescission period for timeshare sales across all of the States it would have to be Federal Law. State Law can add to the rescission period but couldn't take away from the minimum set by Federal Law.

Bill

 

[Fido Chuckwagon]

believe we have discovered why the bill is so poorly written...

apparently the two main sources for advisory information to these senators regarding the industry are:

Dave Ramsey and a large exit company (that poses as a law firm)


explains quite a bit!

I’m surprised an exit company would want more protections.

 

[dioxide45]

I’m surprised an exit company would want more protections.

I remember the Coalition for Timeshare Reform. They had a petition and long list of things they wanted changed in the industry. It was led by one of the owners of Timeshare Exit Team. The best many could tell was it was a way for Timeshare Exit Team to get more leads by having timeshare owners endorsing the reform provide their name and email addresses when signing the petition.

 

[jp10558]

The problem is that in many cases, the rescission period won't solve the problem of sales lying to buyers during the presentation. Most people find out the deficiencies in what they were told and what they were sold long after their purchase.

This is actually why I changed my mind and agree that the recession period ought to start once the new owner has access to the online booking portal. But like Brian said above, you can't wait forever for people who never check out what they've bought before or after they bought it and then some time in the future "remember" they have it and try and use it and get mad.

The main problem is that the industry can't really sustain itself outside the current model.

I think this is just speculation. We haven't seen them try other models. They have no reason to try a new model, but even so there are vacation clubs some TUGGers have talked about, some overlay systems that sell you 3 year memberships, and even Hapimag which tells you on the front pages you can buy and sell it resale.

Timeshares aren't something most people want to buy.

I think this is at least partially the sales and reputation fault. "Most people" outside of TUG don't know anything about timeshares. Even the people who own TS usually don't talk about it with other people because of the negative stigma, and most of those owners as we know barely know more than the "non-owners".

And what I mean by "don't know anything", I mean they might not know the resorts exist. They're a bit of a hidden world. I've been surprised by how impressed / excited these "regular people" are when they actually get to go to a resort. Most of us on TUG agree the actual product is often of value to people. What I mean by this is - most of the resorts are not actually valueless. IDK if moving to a vacation club, or mostly hotel system, or resale accepting system or something I haven't thought of would work, but I think "people don't want to buy" the current model more than don't want to buy timeshares.

 

[dioxide45]

This is actually why I changed my mind and agree that the recession period ought to start once the new owner has access to the online booking portal. But like Brian said above, you can't wait forever for people who never check out what they've bought before or after they bought it and then some time in the future "remember" they have it and try and use it and get mad.

I think the main issue with changing the rescission period to start when they get online access will just mean they setup their online access much sooner. Perhaps while sitting at the sales table. They want most of the buyer's rescission period to be while they are still on vacation. This is something easy to adjust to and won't necessarily solve the ills of the industry.

I think this is just speculation. We haven't seen them try other models. They have no reason to try a new model, but even so there are vacation clubs some TUGGers have talked about, some overlay systems that sell you 3 year memberships, and even Hapimag which tells you on the front pages you can buy and sell it resale.

This is very possible, but I would think if there was a viable way to make money at the same margins then someone would have certainly tried it in the 50+ years that timeshare has existed. If someone has and it worked, other companies would have caught on. Perhaps they can make it work at lower margins and smaller scale, but the current corporate and investment market just doesn't seem to support a different model.

 

[jp10558]

I think the main issue with changing the rescission period to start when they get online access will just mean they setup their online access much sooner. Perhaps while sitting at the sales table. They want most of the buyer's rescission period to be while they are still on vacation. This is something easy to adjust to and won't necessarily solve the ills of the industry.

Enforcing fraud laws on the outright lies in many sales pitches I think would solve more ills. But I don't think it's reasonable to for instance force you to buy before you can even "test drive" the system. This is almost as if you had to buy a car without being allowed to look at or test drive the car you're buying. Instead you had to try and guess from the top of the line all options installed demo model that the salesperson drives for you to "demonstrate" how it works.

So I think quicker access and actual "drive it yourself" would at least give the purchaser the possibility to "get a feel for the real thing" before being locked in.

This is very possible, but I would think if there was a viable way to make money at the same margins then someone would have certainly tried it in the 50+ years that timeshare has existed. If someone has and it worked, other companies would have caught on. Perhaps they can make it work at lower margins and smaller scale, but the current corporate and investment market just doesn't seem to support a different model.

Oh, yea, the corporate and investment market don't support anyone ever making less margins - the more obscene the better. That doesn't mean that if regulation stopped the current system because of making lying during sales presentations much more difficult that the business would fold - If margins went down from 50% to 20%, that still probably would encourage someone to take over that niche even if the existing companies shut down or left. The real question is if the margins would go down to 1% or something with "honest sales", even if the models are adjusted, then I can see it not working.

 

[TUGBrian]

I’m surprised an exit company would want more protections.

imagine the promotional value of being associated with two sitting senators actively engaged in "cleaning up the industry"

 

[TUGBrian]

and yes, more resources to enforce existing laws or pursue owner complaints would be a far better solution than adding MORE laws that would simply be ignored and or circumvented just like the existing ones are.

 

[easyrider]

imagine the promotional value of being associated with two sitting senators actively engaged in "cleaning up the industry"

Probably good value if you are selling tickets to he double toothpicks, lol. My first thought seeing politicians are involved was how much did they cost ?

Bill

 

[easyrider]

and yes, more resources to enforce existing laws or pursue owner complaints would be a far better solution than adding MORE laws that would simply be ignored and or circumvented just like the existing ones are.

Tug is probably the best resource for any timeshare buyer or timeshare user. It always has been, imo. If a buyer ends up here before going to a presentation they would probably know a thing or two at the least.

Bill

 

[TUGBrian]

id support a federal law that required all owners to know about TUG =)