• The TUGBBS forums are completely free and open to the public and exist as the absolute best place for owners to get help and advice about their timeshares for more than 30 years!

    Join Tens of Thousands of other Owners just like you here to get any and all Timeshare questions answered 24 hours a day!
  • TUG started 30 years ago in October 1993 as a group of regular Timeshare owners just like you!

    Read about our 30th anniversary: Happy 30th Birthday TUG!
  • TUG has a YouTube Channel to produce weekly short informative videos on popular Timeshare topics!

    Free memberships for every 50 subscribers!

    Visit TUG on Youtube!
  • TUG has now saved timeshare owners more than $21,000,000 dollars just by finding us in time to rescind a new Timeshare purchase! A truly incredible milestone!

    Read more here: TUG saves owners more than $21 Million dollars
  • Sign up to get the TUG Newsletter for free!

    60,000+ subscribing owners! A weekly recap of the best Timeshare resort reviews and the most popular topics discussed by owners!
  • Our official "end my sales presentation early" T-shirts are available again! Also come with the option for a free membership extension with purchase to offset the cost!

    All T-shirt options here!
  • A few of the most common links here on the forums for newbies and guests!

[2016 - Lennen v. Marriott]

bogey21

TUG Member
Joined
Jun 8, 2005
Messages
9,455
Reaction score
4,662
Points
649
Location
Fort Worth, Texas
What I think would benefit both Developers and Purchasers is a system where Purchasers would purchase Weeks or Points with something like a 10 year right to use (and have the obligation to pay annual fees during this period). The contract could include renewal provisions where Purchasers could pay to extend the deal for additional years if they so chose. These contracts could also be assumable with the consent of (and probably a fee to) the Developer and/or could be terminated early with a pre-established fee to the Developer...Just thinking out loud...

George
 

CalGalTraveler

TUG Review Crew: Veteran
TUG Member
Joined
Dec 21, 2014
Messages
9,749
Reaction score
8,274
Points
498
Location
California
Resorts Owned
HGVC, MVC Vistana
Although the Florida courts may be friendly to this case, a lawsuit claiming that MVC (and other TS companies selling points-based real estate trusts) are selling REITs without SEC compliance is a federal court matter - especially when it involves consumers from other states. I am not a lawyer but it seems that without the appropriate SEC disclosures, prospectuses and compliance as to the underlying assets in the TS trust portfolio they are selling to trust points owners (aka shareholders), this could be considered investor fraud which is a big deal.

I agree with @bogey21. Developers should pivot and sell vacation RTUs with 10 year exits. This would be an optimal solution to clean up the entire industry. And could be a positive outcome for consumers and the exit mess they created.
 
Last edited:

DannyTS

TUG Member
Joined
Mar 24, 2018
Messages
5,753
Reaction score
3,076
Points
348
What has always mystified me about these trusts is that they can change the composition of the underlying trust without explicit owner approval thus affecting maintenance fees. That is like saying, "I am going to automatically add this parcel of land into your property deed and then you will have to pay the real estate taxes and maintenance on this new parcel without gaining your permission."
The issue may be even more problematic with the Vistana flex programs from this points of view. Because most Vistana's properties do not have ROFR, i suspect that most of the weeks that are in default are in the low season, those that cannot be sold at all in the secondary market. Those weeks may eventually make their way in the trusts. The more low season weeks you have in the mix the higher the maintenance fees per point.
 

CalGalTraveler

TUG Review Crew: Veteran
TUG Member
Joined
Dec 21, 2014
Messages
9,749
Reaction score
8,274
Points
498
Location
California
Resorts Owned
HGVC, MVC Vistana
The issue may be even more problematic with the Vistana flex programs from this points of view. Because most Vistana's properties do not have ROFR, i suspect that most of the weeks that are in default are in the low season, those that cannot be sold at all in the secondary market. Those weeks may eventually make their way in the trusts. The more low season weeks you have in the mix the higher the maintenance fees per point.

This is why these points trusts seem to be managed like a REIT or mutual fund where management can change the composition of the underlying assets in the portfolio. However what has not happened is the underlying SEC mandated disclosure of underlying assets and investment risks to shareholders and the ability for shareholders to sell easily if they disagree with what management is doing.
 
Last edited:

rthib

TUG Member
Joined
Jun 15, 2005
Messages
1,973
Reaction score
644
Points
473
Location
DFW, TX
The point the lawsuit and bocaboy are making is that they purport to give DC points buyers a deed to real property, but the deed given is not to real property. The properties are owned by the trust, who holds the deeds. You simply have a beneficial interest in the trust, but no direct ownership of the underlying land.

It's like someone selling stock in Microsoft (who owns land) and then issuing a document called a deed to shareholders for the land that Microsoft actually owns.

Some will think this is form over substance, but it's hard to argue that the "deeds" that are given to DC buyers are legitimate.

That's what the lawyers press releases says.
But if you look at the actual ruling by the judge, the only claim that survived is if having a document that points to another document that has the actual property is valid under FL law.
"Plaintiffs allege that the MVC Trust Consumer Deeds are void because they lack valid legal descriptions of the property interests being conveyed"
"Defendants argue that the property descriptions are valid once parol evidence is taken into consideration. Through this string of references, Count I Defendants assert that a surveyor would be able to locate all of the Trust Property that an MVC Trust Owner has a nonspecific, undivided interest in"

That is the only claim that survived. The dispute on if parol evidence can be considered which point to the property.
 

CalGalTraveler

TUG Review Crew: Veteran
TUG Member
Joined
Dec 21, 2014
Messages
9,749
Reaction score
8,274
Points
498
Location
California
Resorts Owned
HGVC, MVC Vistana
That's what the lawyers press releases says.
But if you look at the actual ruling by the judge, the only claim that survived is if having a document that points to another document that has the actual property is valid under FL law.
"Plaintiffs allege that the MVC Trust Consumer Deeds are void because they lack valid legal descriptions of the property interests being conveyed"
"Defendants argue that the property descriptions are valid once parol evidence is taken into consideration. Through this string of references, Count I Defendants assert that a surveyor would be able to locate all of the Trust Property that an MVC Trust Owner has a nonspecific, undivided interest in"

That is the only claim that survived. The dispute on if parol evidence can be considered which point to the property.

No doubt a surveyor could find real property behind it. That's not the issue because REITs have real property in their portfolios too, and no one is claiming fraud.

Biggest question is when does a real estate holding (aka vacation condo with a county recorded deed) cross the line and become a Real Estate Investment Trust (REIT) which invests in a portfolio of vacation condos in which owners hold equity shares of properties in the trust (with oversight and investment disclosure compliance with the SEC)?

What is a big problem for MVC and points only based TS trusts: "nonspecific, undivided interest" together with how the developers are adding units to the TS portfolio is similar to how a mutual fund adds stocks to the portfolio and is how many REIT portfolios operate.

If they said, "1/52 of unit 5xx/5xy at Marriott Grande Vista located at address xyz" in the back-up document which is specific and different for each trust owner, then the MVC "may" be okay. However MVC, Vistana Flex etc are changing the composition of the trust portfolio to add units which suggest that is not what is specified, and they are charging a MF (management fee) based on the changing portfolio composition that is different than what is voted in the MF HOA for each property.

This suggests that there is no specific deeded property at a specific address in the parol evidence back-up documents for each owner.

The fact the equity owners have not been disclosed as to what specific unit they own i.e. "1/52 of unit ..." would also suggest that this is an REIT. (BTW...If MVC or other TS system manipulate the proprietary non-public parol evidence documents in the background after the fact to the property sale to add this specificity for existing DP trust owners, then this could be considered a cover-up which may have legal implications.)

If the Trust is designated as an REIT, the trust shareholders should also be entitled to a share of profits from rentals in the portfolio as dividends. The IRS could get involved because MVC should be issuing 1099-DIVs for any profits from DP equity in the REIT portfolio as well as possibly the value of annual points issued as fixed bartered dividends from equity ownership.

All it will take is one dissatisfied trust owner who cannot exit and has lost money to report this to the SEC and IRS for scrutiny. If there is a case, the feds will go after one large trust to make an example to clean up the rest of the industry.

FWIW...I am not a lawyer nor involved with REITs (but have a deep knowledge of business and have conducted many real estate transactions) so if someone has deep knowledge of REITS or real estate law please feel free to add your thoughts or pour cold water on this.
 
Last edited:

Dean

TUG Review Crew
TUG Member
Joined
Jun 7, 2005
Messages
9,909
Reaction score
3,583
Points
648
It's very true that the lack of exit options is one of the biggest issues with timeshares. Having said that, I wonder if it is really the responsibility of the developer to offer the exit options. When you buy a house from Pulte, Lennar, or Toll Brothers, you are obligating yourself to the costs of maintaining that house until you sell it, and none of those companies offer an exit plan. The exit alternative for homes is the robust resale market. The real problem with timeshares, in my opinion, is the lack of an organized and well-known resale marketplace.
The reasons for the lack of exit options is a few threads unto itself but IMO it's largely for 2 reasons. One is it's a specialty product not that much different than a collectible and the other is that they aren't worth what they sell for retail for most situations. Requiring a developer to assume the additional risk of a guaranteed exit means either the prices go up dramatically retail or the industry is out of business (or some combination).
 

bogey21

TUG Member
Joined
Jun 8, 2005
Messages
9,455
Reaction score
4,662
Points
649
Location
Fort Worth, Texas
Requiring a developer to assume the additional risk of a guaranteed exit means either the prices go up dramatically retail or the industry is out of business (or some combination).

You would think they could price options into the product in way that would ensure the Developer ongoing cash flows. For example they sell you a RTU Week or a Point Systerm with 10 year sunsets. I would think they could build in buy outs (for fees of course) based on how much of the original 10 years remains and options (again for fees) to extend after the original 10 year term. Annual usage charges (call them MFs would continue to apply). After original purchasers got out either at term or by paying for the privilege the Developer could then resell the product to the next purchaser. I'll bet the "bean counters" could figure this out to the advantage of the Developer...

George
 

Dean

TUG Review Crew
TUG Member
Joined
Jun 7, 2005
Messages
9,909
Reaction score
3,583
Points
648
You would think they could price options into the product in way that would ensure the Developer ongoing cash flows. For example they sell you a RTU Week or a Point Systerm with 10 year sunsets. I would think they could build in buy outs (for fees of course) based on how much of the original 10 years remains and options (again for fees) to extend after the original 10 year term. Annual usage charges (call them MFs would continue to apply). After original purchasers got out either at term or by paying for the privilege the Developer could then resell the product to the next purchaser. I'll bet the "bean counters" could figure this out to the advantage of the Developer...

George
Sure they could, that's what I alluded to for pricing but we're likely talking 30-50% on the dollar at the top options and almost nothing otherwise. Remember these resale would be in competition with active sales as well. But it's not an easy marginal increase and for properties not worth much (actually most of them) the fair market value is actually close to what they sell for now in all likelihood which just emphasizes how over priced they are now. In reality it'd likely kill the industry though a few might survive. Would you pay an extra $10K for the guarantee of a 50% buy out down the road? Remember the real property value day 1 is in the range of 50% since the rest is marketing, commissions and overhead that's non resort related.
 

mbstn6254

TUG Member
Joined
Dec 17, 2018
Messages
167
Reaction score
66
Points
89
Location
Atltanta
Resorts Owned
Mariott Vacation Club
Sure they could, that's what I alluded to for pricing but we're likely talking 30-50% on the dollar at the top options and almost nothing otherwise. Remember these resale would be in competition with active sales as well. But it's not an easy marginal increase and for properties not worth much (actually most of them) the fair market value is actually close to what they sell for now in all likelihood which just emphasizes how over priced they are now. In reality it'd likely kill the industry though a few might survive. Would you pay an extra $10K for the guarantee of a 50% buy out down the road? Remember the real property value day 1 is in the range of 50% since the rest is marketing, commissions and overhead that's non resort related.

What is interesting about your proposal is that is precisely what the sales rep. told me would be my out. Sell back to Marriott at retail cost minus fees which would equate to about 50%. That seemed reasonable as a speculation to see if I enjoyed what I was buying. Of course I was soon to realize, after the rescission period, that his representation was nothing more than a lie.

Moreover, when I asked if that provision was in writing he showed it to me. Of course, not in the actual offering memorandum but on his I Pad.
 

CalGalTraveler

TUG Review Crew: Veteran
TUG Member
Joined
Dec 21, 2014
Messages
9,749
Reaction score
8,274
Points
498
Location
California
Resorts Owned
HGVC, MVC Vistana
IMO...This case with MVC has me scratching my head. MVC and other TS companies seem to be playing an elaborate legal shell game with points only trusts.

1) For example, one would expect each TS property in the trust would be filed with the respective county where the parcel is located with the trust as the owner e.g.

  • a Grand Chateau unit would be filed in Clark County, NV under the trust name.
  • MOC unit filed in Maui County under the trust name
  • etc.

So if each unit is filed in each county separately, how and why does Orange County, Florida figure into this? The case seems to imply that the deed in Orange County Florida is a "deed of deeds" containing all of these trust owned deeds in each county across the country.

2) So why file a "deed of deeds" with Orange County? Why not simply sell a percentage of the trust which owns the properties in each respective county directly to consumers? Perhaps the "deed of deeds" in Orange County is the way MVC is circumventing selling trust shares directly because it would classify the points trust as an REIT/security So this could make this look like a "real estate transaction" instead of a "trust brokerage transaction" by filing a deed in Orange County and selling shares (aka "points") of the "deed of deeds."

But then this begs the question: Would a deed filed in Orange County specifying real estate holdings under the jurisdiction of other states and counties be considered legit under the law? (in a proprietary backup document held by the seller that not even the County nor owner sees no less)

OTOH, if the points trust owns the deeds you are then buying a share of the trust (aka REIT). i.e. "If it looks and quacks like a duck..."

If you are buying shares directly of the "Deed of deeds" and that owns the trust, then how can one own a percentage of a real estate deed when it includes parcels of land outside Orange County that are not under the county's jurisdiction? i.e. a trust can own a deed, but can a deed filed in a county consist of a trust with parcels outside the county jurisdiction?

3) Lastly, if it were truly a real estate transaction. then you would expect to see salespeople that sell points in the trust licensed to sell in each MVC sales office for ALL states where the trust owns properties. Is this truly the case for all MVC offices where the points are sold? Is the necessary licensing in place?

OTOH if the trust is classified as an REIT or other type of security, you would expect point shares to be sold by a licensed broker with associated SEC disclosures.

Would love to see someone knowledgeable about real estate law or MVC trusts points deeds weigh in on this.
 
Last edited:

DannyTS

TUG Member
Joined
Mar 24, 2018
Messages
5,753
Reaction score
3,076
Points
348
@CalGalTraveler You gave the example before with HGVC where people actually own weeks and those weeks are assigned a number of points. This is the most clear and transparent kind of ownership IMO. But MVC (and others) did not like that. Why did they go this complicated route? Of course not to the benefit of the owners, since they lose even the little amount of control they had before.
 

davidvel

TUG Member
Joined
May 9, 2008
Messages
7,432
Reaction score
4,477
Points
648
Location
No. Cty. San Diego
Resorts Owned
Marriott Shadow Ridge (Villages)
Carlsbad Inn
IMO...This MVC points only trust has me scratching my head and it feels a lot like an elaborate legal shell game.

1) For example, one would expect each TS property in the trust would be filed with the respective county where the parcel is located with the trust as the owner e.g.

  • a Grand Chateau unit would be filed in Clark County, NV under the trust name.
  • MOC unit filed in Maui County under the trust name
  • etc.

So if each unit is filed in each county separately, how and why does Orange County, Florida figure into this? The case seems to imply that the deed in Orange County Florida is a "deed of deeds" containing all of these trust owned deeds in each county across the country.

2) So why file a "deed of deeds" with Orange County? Why not simply sell a percentage of the trust which owns the properties in each respective county directly to consumers? Perhaps the "deed of deeds" in Orange County is the way MVC is circumventing selling trust shares directly because it would classify the points trust as a REIT. So this could make this look like a "real estate transaction" instead of an "REIT brokerage transaction" by filing a deed in Orange County and selling shares (aka "points") of the "deed of deeds."

But then this begs the question: Would a deed filed in Orange County specifying real estate holdings under the jurisdiction of other states and counties be considered legit under the law? (in a proprietary backup document held by the seller that not even the County nor owner sees no less)

OTOH, if the points trust owns the "deed of deeds" you are then buying a share of the trust (aka REIT).

If you are buying shares directly of the "Deed of deeds" and that owns the trust, then how can one own a percentage of a real estate deed when it includes parcels of land outside Orange County that are not under the county's jurisdiction?

3) Lastly, if it were truly is a real estate transaction then you would expect to see salespeople that sell points in the trust licensed to sell in each MVC sales office for ALL states where the trust owns properties. Is this truly the case for all MVC offices where the points are sold? Is the necessary licensing in place?

If it were an REIT, you would expect to be sold by a licensed broker with associated SEC disclosures.

Would love to see someone knowledgeable about real estate law or MVC trusts points deeds weigh in on this.
I think you have nailed it here.
 

davidvel

TUG Member
Joined
May 9, 2008
Messages
7,432
Reaction score
4,477
Points
648
Location
No. Cty. San Diego
Resorts Owned
Marriott Shadow Ridge (Villages)
Carlsbad Inn
@CalGalTraveler You gave the example before with HGVC where people actually own weeks and those weeks are assigned a number of points. This is the most clear and transparent kind of ownership IMO. But MVC (and others) did not like that. Why did they go this complicated route? Of course not to the benefit of the owners, since they lose even the little amount of control they had before.
Marriott has this type of system. It's called enrolled weeks. But as you note they want to control the system as a whole, and sell points directly (smoke and mirrors always benefits them).
 

csodjd

TUG Member
Joined
Jul 4, 2017
Messages
2,334
Reaction score
1,986
Points
274
Location
So. California
Resorts Owned
Hilton Hawaiian Village - Lagoon Tower
Marriott Maui Ocean Club
I belong to a country club. It's a corporation. I have a share of stock in the corporation. The corporation owns the land and the golf course and the club house. I have no interest in the land itself. We recently amended the bylaws to make clear that no member/shareholder has any interest in the real property. The concern was, if a shareholder had or was construed to have an interest in the real property, on the sale of a membership the real property could be subject to being reassessed for property tax purposes, which would be a disaster. Yet, if you ask the members, almost 100% would say they "own" a portion of the property. They don't, however.

I see this issue similarly. One possibility is that the trust owns the property and you have an interest in the trust. Much like the country club. Or, the trust owns the property and sells and deeds to you a small portion of its ownership. So now you own a tiny amount of the real property and the trust owns a tiny amount less of the real property. NOT like the country club.

Don't let parol evidence confuse you. The other document may be considered incorporated into the first, or the two may be construed together as a single document (if multiple documents on the same subject are executed contemporaneously they are often construed as a single document).
 

Dean

TUG Review Crew
TUG Member
Joined
Jun 7, 2005
Messages
9,909
Reaction score
3,583
Points
648
What is interesting about your proposal is that is precisely what the sales rep. told me would be my out. Sell back to Marriott at retail cost minus fees which would equate to about 50%. That seemed reasonable as a speculation to see if I enjoyed what I was buying. Of course I was soon to realize, after the rescission period, that his representation was nothing more than a lie.

Moreover, when I asked if that provision was in writing he showed it to me. Of course, not in the actual offering memorandum but on his I Pad.
No doubt you have to be able to hold your nose on the sales side to play in the sandbox but comparatively speaking, Marriott, DVC, Hilton and Hyatt are usually appropriate and reasonable. But if you were shown something with as guaranteed buy back, it was not legit.
 

DannyTS

TUG Member
Joined
Mar 24, 2018
Messages
5,753
Reaction score
3,076
Points
348
I belong to a country club. It's a corporation. I have a share of stock in the corporation. The corporation owns the land and the golf course and the club house. I have no interest in the land itself. We recently amended the bylaws to make clear that no member/shareholder has any interest in the real property. The concern was, if a shareholder had or was construed to have an interest in the real property, on the sale of a membership the real property could be subject to being reassessed for property tax purposes, which would be a disaster. Yet, if you ask the members, almost 100% would say they "own" a portion of the property. They don't, however.

I see this issue similarly. One possibility is that the trust owns the property and you have an interest in the trust. Much like the country club. Or, the trust owns the property and sells and deeds to you a small portion of its ownership. So now you own a tiny amount of the real property and the trust owns a tiny amount less of the real property. NOT like the country club.

I can see the similarities, but the main difference is that, at any point in time, you know what you "own" and that does not change: a small fraction of the golf course and the club house. I think the fluid nature of the MVC trust is the core issue here. As others said, they can add, subtract any property, any season any size to the existing trust and the owners have absolutely no say, it is purely for the interest of the developer.
 

mbstn6254

TUG Member
Joined
Dec 17, 2018
Messages
167
Reaction score
66
Points
89
Location
Atltanta
Resorts Owned
Mariott Vacation Club
No doubt you have to be able to hold your nose on the sales side to play in the sandbox but comparatively speaking, Marriott, DVC, Hilton and Hyatt are usually appropriate and reasonable. But if you were shown something with as guaranteed buy back, it was not legit.
Thank you Danny....I know that now. Thank god....if I decide to just chuck the whole thing and resell back to Marriott at the $1.67 they offered me, it won't change anything for me , other than feeling totally stupid. I feel however, for those that it does.
 

CalGalTraveler

TUG Review Crew: Veteran
TUG Member
Joined
Dec 21, 2014
Messages
9,749
Reaction score
8,274
Points
498
Location
California
Resorts Owned
HGVC, MVC Vistana
@csodjd @DannyTS great points.

It doesn't appear that trust points have been issued stock in the trust (as an REIT or other type of corp) to separate from the land deed in the example given by @csodjd. Perhaps they didn't pursue this option to circumvent having to comply with SEC regulations as a private stock issuer which would have significant regulatory requirements. As a private stock issuer they would only be able to sell such offerings to institutions or accredited investors and have to limit the number of participants in the shareholder pool. https://finance.zacks.com/rules-private-stocks-1384.html

From the lawsuit it appears that trust point owners have been issued deeds from Orange County (would love a trust owner to confirm this). The problem with the deed is that it doesn't specify what properties trust point owners own. That's like the country club saying,

"I will provide you a deed for your purchase, but instead of your piece of the golf course and clubhouse on the deed for this county, the deed refers to a fluid, ever-changing property description document "a deed of deeds" that includes clubhouses and golf courses that we acquire that are located in states outside the county in which this deed is filed.

In addition, you will have no access to this document to know what you own, and you have no say in what goes into your deed that you purchased. The country club can add junk properties and subtract good properties at any time without your consent, and assess you the associated maintenance fees and HOA assessments with these changes."

On top of this, here's what really makes me scratch my head: How does Orange County assess property taxes on trust deeds when they don't have access to the physical property descriptions attached to the deed?

Does an inability to assess the value of the deed place an undue burden on other Orange County landholders who are paying property taxes based on parcel value assessments and unfairly carrying the load for county services?

Alternatively is Orange County, FL assessing the property tax value based on the purchase price of the trust points? In that case, can they legally collect taxes to support county services based on other counties and state properties in the back up "deed of deeds" outside of their jurisdiction? How does Orange County, FL know what properties are inside and outside the county to assess if they don't have access to this document and it is not a public record? Are trust owners over paying taxes by paying Orange County for the trust points value and then having to pay for each deed in the trust to other counties?
 
Last edited:

StevenTing

TUG Member
Joined
May 7, 2009
Messages
1,552
Reaction score
974
Points
323
What's the difference between the MVC Trust and an REIT? Both own shares of a portfolio of real estate holdings that are sold by a management company. Both have risk and rewards with owning real estate holdings to share in the upside and downside. Why shouldn't owners/shareholders be given the same rights to SEC mandated reporting and voting as an REIT owner?

If MVC Trust is designated as a private REIT, they have violated SEC rules because those are only allowed to be sold to institutional or accredited investors.

The big difference is that a REIT is an investment. It's part of the name. The MVC Trust is a holding company, not an investment.

With a REIT, you buy in, and then you have an income stream. Some of this income is offset with trust expenses. You don't have rights to use the assets in the trust.

With MVC Trust, you continue to pay in to cover the expenses of the trust. You are granted access to a certain portion of the assets via the points system.

In my mind, the MVC trust and a REIT are not even close to similar.
 

CalGalTraveler

TUG Review Crew: Veteran
TUG Member
Joined
Dec 21, 2014
Messages
9,749
Reaction score
8,274
Points
498
Location
California
Resorts Owned
HGVC, MVC Vistana
Thanks @StevenTing Perhaps you could shed light on this. Since you seem knowledegable about how the trust works.

FWIW, I wouldn't let the term "Investment" misguide this. "Ownership" is the key term (vs. RTU) and this takes this to a different level. At the end of the day, you are still buying an equity share in either a property trust, or deed, or stock in a holding company. As an owner, deeds and stocks are not required to pay dividends and you participate in the gains and losses of the underlying asset.

At some level there is an expectation of recouping one's investment in a timeshare. No one goes into a developer timeshare purchase expecting to lose $50,000.

There are many forms of stock ownership. There are also many forms of REITs and holding trusts. Although there are different forms, all fall under the auspices of the SEC if shares of securities are being sold to the public.

You raise an interesting point about usage. Some stocks do provide benefits for ownership so it is not unprecedented. Great examples are onboard credits for cruise ships, use of vineyard facilities for private events, and discounted hotel stays to stockholders.

https://www.gobankingrates.com/investing/strategy/stocks-with-perks/

Going back to the country club example. If the country club issues stock to a large number of non-family club owners, it is considered equity and still must meet SEC requirements if it meets certain thresholds. And most country clubs still require you to pay annual country club dues and green fees to maintain and use the club regardless of your original equity buy-in.

Membership in the country club could be considered separate from equity ownership because club members are paying annually for the rights to use the club via MF. For example, in HGVC and Westin weeks we have the underlying deeds (equity) and then we pay annual MF and separate club fees with separate rules to use the club that can change at any time (e.g. VSN StarOptions, Hilton Club Points programs).
 
Last edited:

Dean

TUG Review Crew
TUG Member
Joined
Jun 7, 2005
Messages
9,909
Reaction score
3,583
Points
648
Thank you Danny....I know that now. Thank god....if I decide to just chuck the whole thing and resell back to Marriott at the $1.67 they offered me, it won't change anything for me , other than feeling totally stupid. I feel however, for those that it does.
We all have regrets about one thing or another but we should make the best decisions for where we are now. It's like owning a stock that's going down because you paid more than you can get. If you keep it, it's as if you bought it as the current situation so if you wouldn't buy Trust Points at $1.67 pp then you likely should take it. I think most of us would if we had that opportunity.
 

CalGalTraveler

TUG Review Crew: Veteran
TUG Member
Joined
Dec 21, 2014
Messages
9,749
Reaction score
8,274
Points
498
Location
California
Resorts Owned
HGVC, MVC Vistana
FYI...Below is a helpful video on what defines a security under SEC:

Overall it must meet 4 tests to be considered a security:

1) Money must be invested (sweat equity doesn't count)
2) It must be for profit (there needs to be explicit paperwork disclosing to the equity buyer that there will be no profit ever from this purchase - e.g. Rich Uncle Joe gives you money to start your business and doesn't expect it back.)
3) Common Entity/Equity Ownership (a loan doesn't count)
4) From the efforts of others (i.e. you don't work in the business)


(He claims this is posted on the SEC site but I could not find it. Perhaps someone else can find and post?)
 

StevenTing

TUG Member
Joined
May 7, 2009
Messages
1,552
Reaction score
974
Points
323
https://www.sec.gov/fast-answers/answersreitshtm.html

The MVC Trust doesn't meet these requirements. Bolded items are my emphasis.

Fast Answers


Real Estate Investment Trusts (REITS)


A real estate investment trust (“REIT”), generally, is a company that owns – and typically operates – income-producing real estate or real estate-related assets. REITs provide a way for individual investors to earn a share of the income produced through commercial real estate ownership – without actually having to go out and buy commercial real estate. The income-producing real estate assets owned by a REIT may include office buildings, shopping malls, apartments, hotels, resorts, self-storage facilities, warehouses, and mortgages or loans.

Most REITs specialize in a single type of real estate – for example, apartment communities. There are retail REITs, office REITs, residential REITs, healthcare REITs, and industrial REITs, to name a few. What distinguishes REITs from other real estate companies is that a REIT must acquire and develop its real estate properties primarily to operate them as part of its own investment portfolio, as opposed to reselling those properties after they have been developed.

To qualify as a REIT, a company must have the bulk of its assets and income connected to real estate investment and must distribute at least 90 percent of its taxable income to shareholders annually in the form of dividends. In addition to paying out at least 90 percent of its taxable income annually in the form of shareholder dividends, a REIT must:

  • Be an entity that would be taxable as a corporation but for its REIT status;
  • Be managed by a board of directors or trustees;
  • Have shares that are fully transferable;
  • Have a minimum of 100 shareholders after its first year as a REIT;
  • Have no more than 50 percent of its shares held by five or fewer individuals during the last half of the taxable year;
  • Invest at least 75 percent of its total assets in real estate assets and cash;
  • Derive at least 75 percent of its gross income from real estate related sources, including rents from real property and interest on mortgages financing real property;
  • Derive at least 95 percent of its gross income from such real estate sources and dividends or interest from any source; and
  • Have no more than 25 percent of its assets consist of non-qualifying securities or stock in taxable REIT subsidiaries.
REITs generally fall into three categories: equity REITs, mortgage REITs, and hybrid REITs. Most REITs are equity REITs. Equity REITs typically own and operate income-producing real estate. Mortgage REITs, on the other hand, provide money to real estate owners and operators either directly in the form of mortgages or other types of real estate loans, or indirectly through the acquisition of mortgage-backed securities. Mortgage REITs tend to be more leveraged (that is, they use a lot of borrowed capital) than equity REITs. In addition, many mortgage REITs manage their interest rate and credit risks through the use of derivatives and other hedging techniques. You should understand the risks of these strategies before deciding to invest in these types of REITs. Hybrid REITs generally are companies that use the investment strategies of both equity REITs and mortgage REITs.

Many REITs (whether equity or mortgage) are registered with the SEC and are publicly traded on a stock exchange. These are known as publicly traded REITs. In addition, there are REITs that are registered with the SEC, but are not publicly traded. These are known as non-traded REITs (also known as non-exchange traded REITs). You should understand the risks of the different types of REITs and their strategies before deciding to invest in them.

As with any investment, you should take into account your own financial situation, consult your financial adviser, and perform thorough research before making any investment decisions concerning REITs. You can review a REIT’s disclosure filings, including annual and quarterly reports and any offering prospectus at sec.gov. You can invest in a publicly traded REIT, which is listed on a major stock exchange, by purchasing shares through a broker (as you would other publicly traded securities). Generally, you can purchase the common stock, preferred stock, or debt securities of a publicly traded REIT. You can purchase shares of a non-traded REIT through a broker that has been engaged to participate in the non-traded REIT’s offering. You can also purchase shares in a REIT mutual fund (either an index fund or actively managed fund) or REIT exchange-traded fund.
 

davidvel

TUG Member
Joined
May 9, 2008
Messages
7,432
Reaction score
4,477
Points
648
Location
No. Cty. San Diego
Resorts Owned
Marriott Shadow Ridge (Villages)
Carlsbad Inn
I think we're getting sideways. Whether it qualifies as a REIT or not isn't the core allegation. The allegation is simply that the deeds Marriott gives, and that are recorded by Orange County, Florida are not deeds to real property at all, and that Orange County, Florida can't issue a deed to all the properties in other counties and other states. (I'm not sure if there are actually any Trust resorts in Orange County at all.)

It is alleged that this is fraudulent as the buyers think that they are getting a deed to real property. I'm finding it hard to argue anything to the contrary, but I am sure Marriott's lawyers won't have the same problem.
 
Top