Anyone ever try to back out of Marriott's exercise of ROFR?

[vacationtime1]

I don’t practice in Florida, but would worry about this one:

Chapter 817 Section 03 - 2024 Florida Statutes - The Florida Senate

flsenate.gov

Fraudulent statements are generally illegal after all. It would likely be possible to draft a purchase agreement that would work to allow satisfaction of a transaction using other than cash or cash equivalents, of course. There could be additional issues to think about like the tax implications to the seller given the existence of a contract saying they are getting a specific value of consideration for the TS; unlikely to trigger capital gains unless it started out resale, but could be an issue in some cases.

If the ROFR request is sent by email, there is also the issue of wire fraud under federal law. That isn’t to say that it’s likely “they” would look to prosecute someone for a false statement to a TS developer to avoid ROFR, but that doesn’t mean it wouldn’t be fraud. YMMV on whether the legal risk is worth the reward or is properly mitigated by exchanging something of sufficient value, forgiving a debt, or just never getting around to collecting the proceeds. They can all have consequences, of course.

18 U.S. Code § 1343 - Fraud by wire, radio, or television

www.law.cornell.edu

The Florida statute cited does not appear to apply to this situation (on its face it prohibits someone from making false statements about his financial condition in order to obtain credit, money, or property). I'm not licensed to practice in Florida either, but the language is not even close.

I agree that the federal wire fraud statute would apply to the transmission of the contract to Marriott to seek the ROFR waiver. However, if the transaction is done properly (see my example in post #24), the contract would show the actual purchase price and the property would be sold at that price. Hence, no fraud.

 

[Eric B]

False statements about assets or liabilities would seem to be a broad enough term to include the consideration for a contract.

 

[vacationtime1]

False statements about assets or liabilities would seem to be a broad enough term to include the consideration for a contract.

We're going to have to disagree about this one, but please re-read my hypothetical in post #24. The contract that would be submitted to Marriott would be completely accurate -- the $10K timeshare would be sold for $10K and there would be a documented escrow in which $10K would be transferred from the buyer to the seller.

 

[Eric B]

It might work but could be read as an inducement to have MVW give you $10k. I would be cautious.

 

[Dean]

Let's suppose I own a timeshare worth $10K that I wish to transfer to my nephew for free and which my nephew actually wants. My goal is to make a gift worth $10K. We know that if I write a contract to transfer the timeshare for free, Marriott will step in and exercise ROFR, voiding my gift.

So instead, I gift my nephew $10K in cash and enter into a contract to sell him my timeshare for $10K. I admit that the intent is to circumvent ROFR, but there is nothing about either the cash gift or the timeshare purchase for $10K that is "illegal" (or even lacking in honesty or integrity).

It's all about how the transaction is structured.

There probably are ways to structure the deal that would be honest and legal even if clearly intending to secure ROFR without violating statutes, however, a side deal would not be none of them. If you don't make the gift conditional in ANY way, that would be different. That's the very intent of ROFR, to protect the developer. And clearly to do so secretly to bypass ROFR would be dishonest, it'b be lying about the deal on paper. I don't believe in situational ethics.

On a side note, someone mentioned adding another party to the contract. I wonder how that would works with points. I wonder if they're require a new $3 PP fee? Marriott (Owner Modification or Owner Services not sales) has stated to me a couple of years ago that WEEKS would become unenrolled at some point with name changes. I don't recall if this was when a non qualified owner was added or a qualified owner was later removed but it was one or the other. Whether it would happen or not I can't say. I've seen this option mentioned many times but don't recall an example where a name change was done adding someone who was not in direct lineage for an enrolled week.

 

[Dean]

We're going to have to disagree about this one, but please re-read my hypothetical in post #24. The contract that would be submitted to Marriott would be completely accurate -- the $10K timeshare would be sold for $10K and there would be a documented escrow in which $10K would be transferred from the buyer to the seller.

I predict MVC just refuses to provide ROFR and refuses to recognize the new owner in that situation if you proceed without ROFR. They'd just send it back for different wording I suspect. I can't see a closing company being willing to send it in either so you're have to do so on your own. LIfe's too short.

 

[jellen613]

Sure but still far cheaper than buying direct.

Agreed, the OP originally had not mentioned this cost in their analysis of the situation.

 

[Eric B]

There probably are ways to structure the deal that would be honest and legal even if clearly intending to secure ROFR without violating statutes, however, a side deal would not be hone of them. If you don't make the gift conditional in ANY way, that would be different. That's the very intent of ROFR, to protect the developer. And clearly to do so secretly to bypass ROFR would be dishonest, it'b be lying about the deal on paper. I don't believe in situational ethics.

The issue of whether the "gift" is conditional in the hypothetical from @vacationtime1 is a problematic thing for me. In the hypothetical, there was no indication that the "buyer" would be funding the "escrow" with the $10K or any discussion of a prior gift as the source of the funds, which could also trigger money laundering concerns if done in a slipshod manner. The one way I can think of to structure an honest and legal way to obtain an ROFR waiver from a developer is to agree to sell the ownership for an amount above the level they are willing to exercise ROFR at. I've got to agree that deceptive ROFR submittals are not ethical.

 

[TolmiePeak]

I've got to agree that deceptive ROFR submittals are not ethical.

Trying to find ethical people in the timeshare industry is about as difficult to find virgins in the maternity ward.

 

[Eric B]

Trying to find ethical people in the timeshare industry is about as difficult to find virgins in the maternity ward.

A maternity ward is one of the few places you can find virgins if you think about it. You might not be looking at the right individuals.

As with many things in life, it’s a matter of perspective. I also note that TS developers can and do hire legal counsel, which is something one should take into consideration when making false representation to them in contracts.

 

[5finny]

I have never sold a Marriott week so I have never asked them to waive their ROFR.
Do they have a form they require?
Do they ask for a copy of the sales agreement?

Ok so I did a google search that took me back to TUG
Looks like Marriott has a form that they will give you
Not clear whether your actual purchase agreement needs to be attached to the form--anyone know?

 

[TolmiePeak]

I have never sold a Marriott week so I have never asked them to waive their ROFR.
Do they have a form they require?
Do they ask for a copy of the sales agreement?

Ok so I did a google search that took me back to TUG
Looks like Marriott has a form that they will give you
Not clear whether your actual purchase agreement needs to be attached to the form--anyone know?

I just worked with LT Transfers. Highly recommended on this site. Let them handle the legal stuff.

 

[dioxide45]

These threads tend to pop up about once a year or so, always interesting to read about the hypotheticals that no one ever seems to come back and say they've actually tried.

 

[TolmiePeak]

These threads tend to pop up about once a year or so, always interesting to read about the hypotheticals that no one ever seems to come back and say they've actually tried.

Well even if they did try it, I would hope they would keep their mouths shut. Even without names it isn't impossible to figure out who people are.

 

[Dean]

These threads tend to pop up about once a year or so, always interesting to read about the hypotheticals that no one ever seems to come back and say they've actually tried.

I've seen at least one mention of someone submitting a contract to MVC with a barter situation. As presented, MVC simply asked for a dollar value for each item but I don't have details. I know of several examples with DVC and in every case, DVC did the same including one I submitted. My situation was a trade of a fixed timeshare week for DVC points on an even swap. DVC required values for each in order to move forward. In our situation the true value was roughly the same and was sufficient to pass ROFR so we were able to proceed and close without issue.

 

[bnoble]

I'm not sure an escalator clause will work. ROFR allows the developer to buy the property on the agreed-upon terms. It is not a competing bid, it is an assumption of an existing bid.

IANAL and IANAREA (Real Estate Agent)

 

[callwill]

Trying to find ethical people in the timeshare industry is about as difficult to find virgins in the maternity ward.

to find one would be miraculous!

 

[Eric B]

I'm not sure an escalator clause will work. ROFR allows the developer to buy the property on the agreed-upon terms. It is not a competing bid, it is an assumption of an existing bid.

IANAL and IANAREA (Real Estate Agent)

The way I would look at it is not really that it is an assumption of an existing bid but instead that the right of first refusal is a contractual right to purchase the item at the same price and under the agreed-upon terms of the contract presented. It might be an angels dancing on the head of a pin kind of question, but looking at it this way, the terms of the contract include the escalation clause for the exercise of the right of first refusal but the trigger for escalation (exercise of ROFR) would not have happened with respect to the contract between the developer (holder of the right of first refusal) and the seller so the price would be the pre-escalation price. The escalation clause would continue to exist in the contract but be a bit meaningless unless there were another party that has the contractual right.

Someone might be able to get really creative and lease their TS ownership to a third party with a contractual right of refusal that could trigger the escalation clause in the contract between the developer and the seller. It could get interesting if the lease specified the need for any purchaser of the TS submit a waiver request with a fee for the review on the part of the tenant set at an appropriate level, similar to the review fees the developer charges for their contractual right but perhaps somewhat higher (at or near the escalation amount of the original purchase agreement, maybe). I'm not sure it would be worth the effort or cost to set up a lease and purchase agreement in a legally binding way but one might be able to do so.

 

[Dean]

to find one would be miraculous!

I don't think it's quite that bad, if I did, I wouldn't be involved. If I thought it was that bad and continued to play, that'd be on me. Certainly there are challenges, especially with sales, but even in sales I know a few that are honest and honorable.

 

[davidvel]

thank you all for your input. we will use LT transfer and write up the sale at $1/point and an escalation clause. we will have to pay the $6k re education fee the transfer fee, the closing. so it will still cost us about 7k without paying them anything. there is extreme trust so we can work out the financials to work with marriott and be legal. then we have to hang out on this forum to learn how to use the marriott club points. this will put us up at the top level since we already own about 450k vistana points. we actually don't end up using all the vistana so hoping with marriott points we can get more stays at places we actually want to go to. i will hang out here and learn. my husband is the reluctant P2 who just asks me where we are going when we get to the airport

This is all fun banter and hypotheticals but assuming you feel confident in your relationship, I am taking the comments in your OP at face value: "they don't want money from us and they don't want marriott to get their points. we have agreed to take their 2000 points off their hands and if they want to go somewhere in the future we would gift them their stay."

So write up a contract that says you will pay them $3.50 a point, with the intent of buying at this price. No escrow, no need to show MVC money is transferred, you don't even need LT transfers.

Once they decline ROFR they will never look back. If you trust your close friends, they will never ask you for the money, but will sign the deed. Send to MVC with transfer/education fees. Done.

Then take them on a few nice vacations that you both value at 3.50/pt. if worried about ethics, integrity, etc.

 

[jadejar]

I have never sold a Marriott week so I have never asked them to waive their ROFR.
Do they have a form they require?
Do they ask for a copy of the sales agreement?

Ok so I did a google search that took me back to TUG
Looks like Marriott has a form that they will give you
Not clear whether your actual purchase agreement needs to be attached to the form--anyone know?

Yes, Marriott requires that you send your signed purchase agreement to them along with their form requesting the ROFR decision.

 

[TXTortoise]

I've seen at least one mention of someone submitting a contract to MVC with a barter situation. As presented, MVC simply asked for a dollar value for each item but I don't have details. I know of several examples with DVC and in every case, DVC did the same including one I submitted. My situation was a trade of a fixed timeshare week for DVC points on an even swap. DVC required values for each in order to move forward. In our situation the true value was roughly the same and was sufficient to pass ROFR so we were able to proceed and close without issue.

Did the same when swapping Maui Ocean Club fixed weeks with another owner. My Week 9 for his Week 7. Contact MVC and they confirmed no issue/risk. ROFR was waived.

 

[SteveinHNL]

I would just insert some customized terms into the deal that a developer is unlikely to be willing to swallow.

 

[lorenmd]

all great suggestions. thank you. yes we can do that. all would work out. we are now wondering if we should just rent what we need in the future and tell them we are just going to pass. running out of vacations life. we already have almost 500k star options. have never rented but also have never used marriott club points. i guess we have time. we will send in the countract for ROFR and if it passes we will just need to sign the deed. don't need anyone else. that part is nice. we have bought and sold houses without an agent but with escrow. we would not even need a title company like LT transfer. jsut sidn the deed and file with marriott?

 

[SteveinHNL]

all great suggestions. thank you. yes we can do that. all would work out. we are now wondering if we should just rent what we need in the future and tell them we are just going to pass. running out of vacations life. we already have almost 500k star options. have never rented but also have never used marriott club points. i guess we have time. we will send in the countract for ROFR and if it passes we will just need to sign the deed. don't need anyone else. that part is nice. we have bought and sold houses without an agent but with escrow. we would not even need a title company like LT transfer. jsut sidn the deed and file with marriott?

LT Transfer is not a title company. LT Transfer handles the ROFR process, drafts the deed, records it, and handles the transfer with Marriott from the former owner/seller to the new owner/buyer. Their fees are obscenely reasonable, I'm a lawyer and I could draft my own deed cheaper (based on time spent) than they charge for the whole process.