Reply to Northwynd CC
Thanks Northwynd CC for your reply, and allow me to respond.
I am disappointed that you could not have provided something more substantive for the purpose of providing clarity than a list of what amounts to little more than talking points or public relations statements. (TUG Canada site Misconception #1 to Misconception #22). For the most part you gave only examples of fringe “misconceptions” that serious owners may have heard in the general scuttlebutt but are not really serious issues on which to dispute the claims. Some are little more that strawman issues where you take a fringe statement, build it up into something big, and then spend a lot of time tearing it apart, thus questioning the credibility of the resisting TS owners. You did not comment on one substantive issue such as might be found in affidavits owners lodged with the court in disputing the two fees.
An example is Misconception #1 where you describe a conspiracy theory allegedly believed by TS owners that involves eleven different major organizations. Well, cool it. No responsible TS owner is seriously alleging a conspiracy of that magnitude, and you wasted about two pages of ink debunking it. Which is not to minimize the possibility of malfeasance, but that is a different issue.
I will reply within the context of two premises:
1. That my comments refer to my type of contract which is a Vacation Villa Lease signed in year 2000. This is important because as you know there are two classes of contract, the original lease contract where the TS owners are lessees or tenants, and the later or the conversions to Legacy for Life contracts where the TS owners are co-owners or owners in fee-simple. Strangely, Justice Loo in her decision noted the two types of contracts and then proceeded to treat them as synonomous. In fact they are far from equals as tenants have quite different rights and obligations than do owners.
As you are aware, all the early TS owners were lessees or tenants. The agreement was pretty much a basic lease arrangement and operated well for the first ten years or so. We got what we bargained for, which was a one or two week vacation at a quality resort, and we paid our proportionate share of operating expenses. The lease was for fourty years, which seemed safe enough because well constructed buildings should easily last sixty years with only routine maintenance. As tenants we were entitled to the standard right of quiet enjoyment and the implied warranty of habitability (the units must meet a certain standard of livability). Then things started to unravel. Buildings that should have lasted 60 years were showing major deficiencies after only nine to twenty-three years. Between 2005 to 2007, $41.5 million of funds disappeared, and shortly after in 2009 Fairmont defaulted and went into bankruptcy. Not to worry - not our problem. We’re tenants and not responsible for building construction or building re-construction. We’ll let the lawyers and the investors fight over ownership because we have our timeshare leases to protect our rights. Furthermore, the lease agreement specifies we are responsible only for maintenance or operating expenses. There are no references to capital costs or costs to restore capital structure. If we were responsible for capital costs, such a major item would not have been left to chance in the lease or buried in with a long list of operating expenses. It would have been very clearly stated and probably given separate paragraph status.
We can only assume that in about 2009 Northmont, wondering how they can saddle the TS owners with reconstruction of a failing resort and reward the REIT investors for a bad investment, realized they were on shaky grounds in asking tenants for capital funds to restore the resort for the benefit of the real owners. So they cleverly blitzed the TS owners to convert lease agreements to co-ownership agreements to which they added the phrase to Paragraph 11 “.....and to pay the costs of capital improvements that may from time to time be required.” That wording would not have been added if capital costs were clearly included in the original lease agreements. To add insult to injury, the new co-owners were charged something in the vicinity of $6,000 to $9,000 for the privilege of being owners and responsible for capital reconstruction.
Bottom line, there are two distinct classes of TS owners - lessees or tenants, and lessors or co-owners. How Justice Loo could lump them together in one decision is one of the mysteries of the Special Case hearing. But it certainly seems like it’s a point that could be contested. Or perhaps you could shed some light on the matter.
2. My second premise is that my lease is a valid contract from inception of the agreement to the present. Timeshare owners don’t really care if there were one or fifteen owners of the resort for the term of the lease. A contract is a contract and the rights and responsibilities pass from one lessor to the next. I know, Wyndy, you will claim that as part of the CCAA proceedings, Justice Romaine transferred all the assets including the VIA agreements to Northwynd free of liability. But me residing our here in Logicville, I’ll say two things about that. One is that another judge at another court level might see it differently. Two is that even if we concede on the “free of liability,” that could be interpreted to mean we are unable to sue for damages, but does not preclude us from voiding the contracts for numerous breaches of contract and misrepresentations. In other words we simply hand back the timeshare and walk away from a breached contract. TS owners are having a hard time understanding how rights and protection provided under the contract can be voided by the CCAA, but the obligation to pay maintenance and special assessments remain intact. Perhaps you can explain that slight of hand to we the dullard TS owners.
To cut to the chase, I’d be pleased if you would comment specifically on these issues:
1. How can you justify the lessees or tenants being responsible for capital costs? To use an analogy, if you were a tenant in an apartment block and the owner came to you for funds to replace the foundation, what would you tell him? Right, your answer would be a short and sweet negative. On the other hand if you were residing in a condominium in which you have ownership in fee simple, you would be obligated to contribute toward the capital cost of replacing the foundation. And that basically is the difference between being a lessee and being a co-owner.
2. How can you justify attributing ownership responsibility to the TS owners, but the TS owners never having had a voice in management. Paragraph 19 spells out creating a Lessee’s association, yet one was never established, which is just one more breach of contract. The result being that TS owners never had a voice or an ear in management deliberations. Again, using the condo analogy, if I was an owner in a condo complex I would have the opportunity to sit on the board of directors and attend all directors and annual meetings.
3. Why does Northwynd think they have the right to ignore Paragraph 13 of the lease which provides a formula in the event of default. As you know, basically the formula says that after a period of default the lessor can take back the timeshare and reimburse the lessee at 25% (or 50%) of the original cost for the remaining time on the lease. The formula weighs the numbers in favour of the lessor, which is to be expected, but at least there is a fair and logical way of settling a default. I know, you will say that the clause is permissive and that the lessor doesn’t have to accept the “deemed offer” of giving back the remaining timeshare. But in fact you ARE accepting the deemed offer. You are accepting the deemed offer once you agree to take back the timeshare as does happen in your cancellation proposal. Its just that you don’t want to pay up according to the terms of the lease. I have to believe that paragraph 13 was included in the lease for a reason. In fact there are consumer protection laws that prohibit the use of deceptive marketing practices and misleading contracts that could lull prospective purchasers into a false sense of security and have them think they have some protection when in fact the one party to the agreement can just arbitrarily change the rules to suit their interests.
The cancellation fee agreement you have devised results in the ridiculous situation that I pay about $16,000 to acquire the timeshare, then I pay you another about $4,000 to take it back from me, plus another year of maintenance for which I get no value, for a total cost of about $21,000 and I am conned out of about 27 years of timeshare. It would be like if I bought a car for $16,000 cash and for some reason I have to return it to the dealer. But I not only have to return the car for no reimbursement, I also have to hand over $4,000 as well. But we’re not done yet. I also have to pay $1,000 for the next year’s gas, oil, and repairs on the car I no longer have. Tell me, if someone offered you that deal, what would be your response? Yeah, me too.
4. Why do you think the Fairmont CCAA proceedings have voided the TS owners rights under the lease agreement as it relates to breaches of contract, such as “to manage and maintain the Project in a prudent and workmanlike manner,” but retained the responsibility to pay maintenance and special assessments? I touched on this question above and I would like your response, as it seems to me that you are wanting your cake and eating it too. I don’t want a response that amounts to “because it is in our best financial interest and Justice Loo said we could.” Greed doesn’t count. I’m looking for logical principles to justify me shelling out hard earned money.
5. Am I right that funds from the cancellation fee go to the REIT investors and the RPM funds less management fee go toward resort renovations?
6. Miscon #3: Okay, there are several levels of breach of contract. I’ll say minor, material, repudiatory, and anticipatory. Why do you think that modifying the interpretation of a simple lease agreement into Northwynd’s and the REIT investors personal money machine is not a repudiatory breach? Seems to me that is right up there with your example of the hairdresser reopening as a massage parlor.
7. Miscon #11: You say that whether or not Northwynd lives or dies, the resort will survive. Even if Northwynd goes bankrupt, the resort carries on and the judge transfers the contracts and management of the resort to a new property manager and life goes on. I presume you are also saying the courts would have extinguished the lessees right of legal recourse for breaches of contract (free of liability), but have retained the lessee’s obligation to pay maintenance and special assessments. In other words, no matter how egregious the breaches, no matter how badly we are treated, we are obliged to send in our money on demand by the owners for evermore or 40 years, whichever comes first. You say that even if we win, we lose. I find that not only strange but bizarre. If that were true, no person in their right mind would ever enter into a contract with a timeshare resort owner. Or for that matter enter into any contract. Parties to contracts should not have their rights legally extinguished so easily. You’d better rethink that “misconception.”
8. Your three-legged stool includes approval of the renovation fee, the cancellation fee, and downsizing the resort. Justice Loo approved the two fees but no mention of the downsizing. Where does downsizing stand? If your answer is that approval for downsizing is included in the renovation agreement, my next question is - how many TS owners have agreed to the renovation fee to date?
9. The British Columbia Real Estate Association requires that its members complete a Property Disclosure Statement for real estate transactions. Among the questions are the following:
G. Are you aware of any structural problems with any of the buildings?
J. Are you aware of any problems with the heating and/or central air
conditioning system?
K. Are you aware of any moisture and/or water problems in the walls, basement
or crawl space?
L. Are you aware of any damage due to wind, fire or water?
M. Are you aware of any roof leakage or unrepaired roof damage? (Age of roof
if known: ____________ years)
O. Are you aware of any problems with the plumbing system?
Was a Property Disclosure Statement completed for all Vacation Villa Leases, Vacation Interval Agreements (co-ownership agreements), and conversion to Legacy for Life Agreements?
Thanks in advance for your response.
GypsyOne
yayyyyy
man is it 5:00 yet.... lol