[2009] Westin Kaanapali Maintenance Fee complaints -- see here [+contact info.]

[timeos2]

There is a conflict it seems

I expect that the Starwood loan would be a first mortgage and I don't know where the MF lien would fall, either before the first mortgage, or subordinate to the first mortgage.

If Starwood were to foreclose on a purchase loan, then Starwood would become the owner of record, and responsible for any past due MFs, if any. If the HOA does the foreclosure, then we all become owners of the unit, and we all responsible for the MFs.

So there is a big difference between who starts a foreclosure on a unit, the HOA or Starwood.

Greg

The HOA claim always falls second to any outstanding mortgage. So if the HOA forecloses on a unit that has a mortgage they get nothing (no right to resell) until that mortgage is satisfied. Thus there is no value, only more cost, to an Association foreclosure in that situation.

If Starwood or a subsidiary holds the mortgage then there is indeed a big appearance of conflict of interest as the management side should be pushing for foreclosure thus pushing responsibility for the annual fees over to Starwood as the owner after foreclosure. But the mortgage holder may not want that cost so they don't take action leaving the other owners to cover the fees uncollected.

Not a good situation and one far too many developer managed resorts find themselves in. Add in an automatic and guaranteed percentage for the management on every dollar collected, rather than a fixed management fee, and the possibility for abuse is obvious. The rapidly rising fees seem to be proof that the system works for the developer but not the individual owners. It is not a pretty picture and unlikely to change given the horrible thresholds for management change that have been written into the documents. Those might not hold up in a legal challenge (in fact they most likely wouldn't) BUT the cost to make that challenge would be prohibitive and tough for the owners to come up with. I wouldn't want to be an owner caught in this costly mess.

 

[jarta]

"If Starwood or a subsidiary holds the mortgage then there is indeed a big appearance of conflict of interest as the management side should be pushing for foreclosure thus pushing responsibility for the annual fees over to Starwood as the owner after foreclosure. But the mortgage holder may not want that cost so they don't take action leaving the other owners to cover the fees uncollected."

I doubt any association would be pushing a bank to foreclose if the mortgage was in default on a home.

In these days of securitized mortgages, wouldn't the lender to Starwood be the one that should be more concerned? An "appearance of a conflict of interest" may be in the eye of the beholder. There may be no actual conflict of interest in having a unit in default on the mortgage and not foreclosing and still being the property manager.

The association interest is being paid the MF. There would, IMO, only be an actual conflict of interest if the MF was unpaid and the the property manager says do not file the lien.

The association lien for MF and late fees must be cleared when the property is sold. No payment, no good title. The "enforcer" at Starwood for the association lien is Jose Pagan. If the MF remain unpaid, he will not change the official list of association members from the seller to the buyer and the week cannot be used by the new owner. That's why an estoppel letter should be a requirement before the buyer sends any money to the transfer company.

So, for any Starwood resort's association, it's mainly a timing of collection problem for the MF. But, it can be a big problem. ... eom

 

[kylo77]

count us in....

My wife and I bought into the hype while vacationing in Maui back in 2005. We have not been back there for various reason but use our points elsewhere. The recent increase in the MF is cost prohibitive at this point. If there is a class action in the works here please contact us.

Does anyone know what the resale is for 1 week, annual, 2 bedroom lockouts?

 

[DeniseM]

Hi and welcome to TUG!

Are you saying you own a fixed week 1, or that you own a floating week, deeded week 1?

What is your deeded view?

Someone saw a 2 bdm. ocean front unit on eBay for $15K recently.

 

[gregb]

I am not a lawyer, so my thoughts may be out of line. But I believe that a second or subordinate lien on a property can start foreclosure on the property. What the first lien holder does at that point is up to the first lien holder. My guess is that they would also start foreclosure to protect their interests. But I do believe that the HOA could force the first lien holder's hand if they wanted to start foreclosure for delinquent MF.

I understand some of the financial ramifications that can affect the first lien holders desire to start foreclosure. I know that many banks that have delinquent loans on regular Condos have delayed starting foreclosure because they don't want to be responsible for the HOA fees. I guess I don't see why Starwood and/or the folks they sold the paper to, should react any different from the banks?

Greg

 

[gregb]

If Starwood or a subsidiary holds the mortgage then there is indeed a big appearance of conflict of interest as the management side should be pushing for foreclosure thus pushing responsibility for the annual fees over to Starwood as the owner after foreclosure. But the mortgage holder may not want that cost so they don't take action leaving the other owners to cover the fees uncollected.

I think there is a mixing of who is responsible for running the resort. Yes, Starwood manages the resort, but it is under the agreement from the HOA. So it would not be up to Starwood management to decide about foreclosure on delinquent MF's. It is up to the HOA. So I don't see a conflict of interest here.

Greg

 

[timeos2]

They can't have it both ways

I think there is a mixing of who is responsible for running the resort. Yes, Starwood manages the resort, but it is under the agreement from the HOA. So it would not be up to Starwood management to decide about foreclosure on delinquent MF's. It is up to the HOA. So I don't see a conflict of interest here.

Greg

Operation of the HOA and resort IS management. Has the management recommended to the Board that whatever action makes sense regarding delinquent accounts be taken or have they held off as that would impact another of the Starwood controlled companies? A key to running any resort is the timely collection of the fees. Ignoring that critical function is not good management and not in the best interest of the owners. If (and it is an "if") that is happening then it would be a conflict of interest for Starwood to have a stake on both sides. Careful looks at other similar situations at other resorts has come to the conclusion that the management was in fact playing both sides and had failed to meet its responsibilities. That could be happening here as well.

 

[gregb]

Operation of the HOA and resort IS management. Has the management recommended to the Board that whatever action makes sense regarding delinquent accounts be taken or have they held off as that would impact another of the Starwood controlled companies? A key to running any resort is the timely collection of the fees. Ignoring that critical function is not good management and not in the best interest of the owners. If (and it is an "if") that is happening then it would be a conflict of interest for Starwood to have a stake on both sides. Careful looks at other similar situations at other resorts has come to the conclusion that the management was in fact playing both sides and had failed to meet its responsibilities. That could be happening here as well.

It depends on how much influence you believe Starwood has on the HOA. I really believe that if the HOA wanted to start foreclosure for delinquent MF, they can and would do it. Starwood management might not like it, but they would have to play along if the HOA says to.

Greg

 

[timeos2]

I am not a lawyer, so my thoughts may be out of line. But I believe that a second or subordinate lien on a property can start foreclosure on the property. What the first lien holder does at that point is up to the first lien holder. My guess is that they would also start foreclosure to protect their interests. But I do believe that the HOA could force the first lien holder's hand if they wanted to start foreclosure for delinquent MF.

Greg

No, they can't "force the lien holders hand" since it is clear in the law that the mortgage holder takes precedence over any claim by the HOA for fees. It would be money thrown away if the HOA acted to foreclose when they know there is an outstanding mortgage.

I understand some of the financial ramifications that can affect the first lien holders desire to start foreclosure. I know that many banks that have delinquent loans on regular Condos have delayed starting foreclosure because they don't want to be responsible for the HOA fees. I guess I don't see why Starwood and/or the folks they sold the paper to, should react any different from the banks?

And there is the problem. The same company that should be protecting the owners by taking action to collect or foreclose on delinquent accounts may be instead holding off on foreclosure to prevent having the fee obligation fall to another branch of their own company. It is easy to see how this can be a serious conflict of interest. Yes they may be acting just as a bank would but a bank isn't asking to be paid to operate the resort at the same time. It is a can of worms and clearly not good for the owners.

 

[gregb]

And there is the problem. The same company that should be protecting the owners by taking action to collect or foreclose on delinquent accounts may be instead holding off on foreclosure to prevent having the fee obligation fall to another branch of their own company. It is easy to see how this can be a serious conflict of interest. Yes they may be acting just as a bank would but a bank isn't asking to be paid to operate the resort at the same time. It is a can of worms and clearly not good for the owners.

OK, I guess I finally get your point. That is, that Starwood has little incentive to start foreclosure on a delinquent mortgage and because they would be responsible for the MF. And that the HOA is not really able to start foreclosure on a unit that has an outstanding mortgage. Is that it?

Greg

 

[timeos2]

OK, I guess I finally get your point. That is, that Starwood has little incentive to start foreclosure on a delinquent mortgage and because they would be responsible for the MF. And that the HOA is not really able to start foreclosure on a unit that has an outstanding mortgage. Is that it?

Greg

Yes. That's it in a nutshell.

 

[jarta]

timeos2, ... "Yes they may be acting just as a bank would but a bank isn't asking to be paid to operate the resort at the same time. It is a can of worms and clearly not good for the owners."

Then, would you have all the branded timeshares kicked out of management of the resorts they developed? All SVO resorts should fire Starwood. All Marriott resorts should fire Marriott? All Disney resorts should fire Disney?

And wouldn't the branded resorts take their brand with them and cause all developer resorts to be rebranded?

Or, would you have all the mortgages sold off in this environment?

But, this is essentially what happens now when a mortgage is securitized. The value of a future mortgage income stream is sold as bonds with the mortgage stream guaranteeing repayment of the bonds. The mortgage payments end up being held by a trustee for the benefit of the bondholders - to redeem the bonds when they become due.

In doing this, mortgages generating perhaps 117 percent of the mortgage stream necessary to pay off 100% of the bonds and interest are securitized. But, if the secured mortgages default in large enough numbers, the bonds drop in value because the 17% cushion might not be enough to pay off the bonds and interest. The bonds become more risky and they will sell for less than par on any resale market.

It's the trustee of the paid mortgage payments and/or the bondholders who should scream about a failure to take steps to foreclose a delinquent mortgage.

The HOA members should scream about the defaults on MF.

I still don't see the conflict of interest in running a resort and holding paper that has mostly been securitized. There is a difference between conflict of interest and bad advice. Telling the board not to at least record the lien for MF against the property to ensure eventual payment is bad advice whether or not there is any mortgage.

Of course, there is no evidence whatsoever that SVO resorts are not filing those liens. To the contrary, I've seen county records showing that the liens are being filed.

And, every branded resort has a Jose Pagan acting as enforcer to see that the MFs are brought current when the property is transferred. No MFs; no transfer of ownership on the association records. And, the association controls who gets to make a reservation. ... eom

 

[kylo77]

Hi and welcome to TUG!

Are you saying you own a fixed week 1, or that you own a floating week, deeded week 1?

What is your deeded view?

Someone saw a 2 bdm. ocean front unit on eBay for $15K recently.

Thanks Denise, we have a floating week with an island view. $15k ouch!

 

[DeniseM]

Thanks Denise, we have a floating week with an island view. $15k ouch!

Thn I would say it would probably go for less then $10K.

 

[DavidnRobin]

Thn I would say it would probably go for less then $10K.

Having tracked Westin VOIs on eBay - I have not seen an OF villa WKORV/N for $15K - please supply link (did it not have 'Westin' in auction Title?) - I have seen a VOI that uses the term OF resort (but the villa is not OF) - that is common in eBay auctions.

 

[DeniseM]

David - it was posted here within the last 10 days - I didn't go back and look it up though, so it's possible that I am incorrect. (For the first time ever! )

 

[Fredm]

Our most recent ( past 30 days) KOR-N sold prices:

Annual OF $24,500
Biennial OF $13,000

Annual OF Ultra Premium - week 10 $25,900

Annual IV $14,000
Biennial IV $8,000

 

[DanCali]

Having tracked Westin VOIs on eBay - I have not seen an OF villa WKORV/N for $15K - please supply link (did it not have 'Westin' in auction Title?) - I have seen a VOI that uses the term OF resort (but the villa is not OF) - that is common in eBay auctions.

I haven't seen WKORV OF but have seen WKORVN OF pretty recently:

http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&item=350307161885 ($16800 on 1/26/10). I also posted it on the eBay thread. It's more than $15K, but certainly in the neighborhood...

That is not much more than what recent OV units at WKORV sold for. I looked at the resort map, and this is "borderline" OF (unit 5608). Since you don't get your deeded unit but just a deeded view when you make a reservation, if SVO classifies this as OF then FWIW you will get that type of OF view when you book (maybe a bit better or worse).

I imagine OF at WKORV would sell for more - but at this level of MFs I don't know if the premium would be much higher, especially on eBay.


EDIT: P.S. I just called owner services and confirmed that 5608 is "Ocean Front"...

 

[Fredm]

I haven't seen WKORV OF but have seen WKORVN OF pretty recently:

http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&item=350307161885 ($16800 on 1/26/10). I also posted it on the eBay thread. It's more than $15K, but certainly in the neighborhood...

That is not much more than what recent OV units at WKORV sold for. I looked at the resort map, and this is "borderline" OF (unit 5608). Since you don't get your deeded unit but just a deeded view when you make a reservation, if SVO classifies this as OF then FWIW you will get that type of OF view when you book (maybe a bit better or worse).

I imagine OF at WKORV would sell for more - but at this level of MFs I don't know if the premium would be much higher, especially on eBay.


EDIT: P.S. I just called owner services and confirmed that 5608 is "Ocean Front"...

The seller is redweek4less.
Be careful.
http://www.tugbbs.com/forums/showthread.php?t=114340

.

 

[DavidnRobin]

The seller is redweek4less.
Be careful.
http://www.tugbbs.com/forums/showthread.php?t=114340

.

I agree with FredM - redweek4less is a very poor eBay seller. They are an eBay seller that seems to have a successful auction - only to have an identical property pop-up again on eBay at some point later. I often do not track redweek4less auctions because of issues like these - or ridiculous values being put on the TS in the first place.

We love our OF WKORV Dlx villa - however, the ridiculous MFs are getting very difficult to swallow.

 

[DanCali]

The seller is redweek4less.
Be careful.
http://www.tugbbs.com/forums/showthread.php?t=114340

.

Oh - I'm not loking to buy...

Are you saying the price may be depressed because it's this particular seller? It could be - I'm aware of their reputation on TUG but have also seen people who said it worked out for them. It's hard to give them negative feedback if deals take longer than 60 days to close. The reality is that they have 97% positive feedback which doesn't look bad. All it takes is 2 bidders to drive the price up to a competitive eBay price. This auction had 15 different bidders. Generally speaking, I haven't seen much evidence that this eBay seller gets lower resale prices than other more reputable ones.

Overall, I'm pretty sure purchasing from this seller is accompanied with worries and headaches. On the other hand, if this is indeed unit 5608 (and I see no reason why it would have been mislisted given that the unit and view are consistent), the buyer got a good deal...

 

[Fredm]

There are many TUG threads about redweek4less.

Here's another that sums it up:
http://www.tugbbs.com/forums/showthread.php?t=89675

 

[Fredm]

Oh - I'm not loking to buy...

Are you saying the price may be depressed because it's this particular seller? It could be - I'm aware of their reputation on TUG but have also seen people who said it worked out for them. It's hard to give them negative feedback if deals take longer than 60 days to close. The reality is that they have 97% positive feedback which doesn't look bad. All it takes is 2 bidders to drive the price up to a competitive eBay price. This auction had 15 different bidders. Generally speaking, I haven't seen much evidence that this eBay seller gets lower resale prices than other more reputable ones.

Overall, I'm pretty sure purchasing from this seller is accompanied with worries and headaches. On the other hand, if this is indeed unit 5608 (and I see no reason why it would have been mislisted given that the unit and view are consistent), the buyer got a good deal...

Dan, most of the positive feedback is on the buying end of small ebay items.

If past reports here are accurate what is likely occurring is that the seller does not really control the inventory. That is why closed auctions often reappear. The real owner will not agree to sell at the "closed" price.
Of course, that is also the reason these ebay sellers insist on their own unlicensed closing company. A reputable, independent, and licensed escrow agent will not touch the transaction.

If in fact true, the activity is illegal on several fronts.
Then again, this kind of stuff is typical for ebay timeshares.

 

[DanCali]

There are many TUG threads about redweek4less.

Here's another that sums it up:
http://www.tugbbs.com/forums/showthread.php?t=89675

I've seen the negative TUG feedback. I've also seen how they inflate their positive feedback by selling baseball cards...

On the other hand, here are a couple of posts from someone we trust attesting to their experience regarding purchasing actual timeshares from this seller:

http://www.tugbbs.com/forums/showpost.php?p=613463
http://www.tugbbs.com/forums/showpost.php?p=552054

The tuggers with bad experiences (and there are quite a few) tend to be the more vocal ones, but there are also tuggers who say it was ok.

Personally, I would think twice before using them but if it saved me thousands of dollars on an item that is pretty rare on eBay (like an OF unit or WKV Platinum) and I could see the estoppel before bidding I might risk it...

 

[Fredm]

Personally, I would think twice before using them but if it saved me thousands of dollars on an item that is pretty rare on eBay (like an OF unit or WKV Platinum) and I could see the estoppel before bidding I might risk it...

Fine. Informed risk is everyone's choice.

Several points to be made:

- Just because the auction is closed does not mean the sale will happen. In fact, probably won't.
It is a grossly inaccurate representation of the timeshares value in the marketplace.

- Of course some transactions will happen successfully. If they were not getting away with it, they would not do it. That's not a good reason to do do business with them.

- The estopple offers you no protection. Neither does a title insurance policy in certain circumstances that may be applicable to this, or other similarly represented ebay auctions.
This may come as a surprise to you.

- What we here on TUG should not be doing is encouraging others to do business with those engaged in illegal activity.

What's illegal?
- Transacting (brokering) real estate without a license.
- Obtaining a power of attorney to represent a sale, under duress (what most PC's do).
- Licensed or otherwise, representing the sale of a property without a written agreement from the owner to do so.

Now, I am not making a blanket accusation against any specific ebay "reseller". But, many engage in one or more of the above.

Pragmatically, the problem for the ebay buyer who transacts with such "resellers" is that the real owner can have the sale invalidated at any time (if a poa was signed). Title insurance will not protect the buyer in such circumstances. Admittedly, not likely in most cases, but possible.

The overriding issue is what should "informed" buyers do?
Most will turn a blind eye in the name of a "good deal".
Well, that makes them part of the problem, IMO.