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Exit Strategy

Discussion in 'Buying, Selling & Renting Timeshares' started by OldGuy, Apr 25, 2019.

  1. OldGuy

    OldGuy Guest

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    I have had an involuntary thought.

    :confused:

    With several of the topics being discussed right now . . . Sunset Clause, RTU, Deedback, et al . . . it seems some people are concerned about how long they have the right to use their timeshares, and some people are concerned about how long they are obligated to maintain their timeshares. Some see length of ownership as a positive and some see it as a negative.

    It seems to me that a logical solution would be for all timeshares to be RTU, with a renewal option, for a reasonable period of time for owners to assess, and decide, whether continuing on fits their (changing) needs.

    Say 10 years.

    That seems like a period anyone could last, if they knew they could get out at the end of it.
    - - - - -
    Sorry, I had to stop and eat some BLTs and sweet corn
    - - - - - -
    Owners would be able to calculate, upfront, how many vacations they will get for their "investment".

    Knowing they had to provide what they promised, or owners would not renew, would give resorts an incentive to provide what they promised.

    Resorts would have an exact figure for how many were coming up for renewal.

    And, if an owner elected to not renew, the resort would have it back to sell again.

    No deedbacks, no threats, no litigation, no transfer fees, no upfront fees to unscrupulous resale companies . . . .
     
    Last edited: Apr 25, 2019
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  2. rapmarks

    rapmarks TUG Review Crew: Elite TUG Member

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    You couldn’t resist bringing this topic up again.
     
  3. Iggyearl

    Iggyearl TUG Member

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    Great idea. So is having the sales presentation recorded on digital media and giving a copy to both the developer and the customer. But, do you think anybody in the industry wants that to happen? Verbal representations, perpetual contracts, and no resale market are part of the landscape. But you DO have a good idea. :thumbup:
     
  4. OldGuy

    OldGuy Guest

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  5. PigsDad

    PigsDad TUG Member

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    I don't like this idea at all. I bought all my weeks resale, and plan to keep them for way more than 10 years. I wouldn't want to be forced to pay the developer every 10 years (at developer prices -- yikes!) just to continue to use my timeshares. No way!

    This would also absolutely kill any resale market for timeshares as well. Who would buy a resale week when they know they would have to pay retail prices to keep it in less than 10 years?

    Maybe if I owned some crap weeks I would like this idea, but I purchased good weeks that have preserved their value, while buying them for a big discount from developer prices. I don't see any issue with selling my weeks when the time comes.

    Kurt
     
    Last edited: Apr 25, 2019
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  6. OldGuy

    OldGuy Guest

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    No, it would not be a good idea if you had to ante up again in order to renew. I'm not sure where you got that?

    "Option to renew" would not be at an additional fee. No more money involved. No "force to pay developer". Just an option to renew for another period, or not.

    If the owner has been given what was promised, and if timeshare is still right for them, they renew. If neither of those are true, and they are forced to keep something that under-performed or doesn't fit their needs any longer, it's bad for the industry.

    Just being honest, a significant number of timeshare owners do not want to be timeshare owners.
     
    Last edited: Apr 25, 2019
  7. PigsDad

    PigsDad TUG Member

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    Every existing timeshare company that does a RTU currently has a (large) fee to renew, so it seems like that was a reasonable assumption.

    Kurt
     
  8. OldGuy

    OldGuy Guest

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    When I said, "I don't know where you got that, I meant in the idea I proposed. I had to go look and see if I said something about paying to renew. If there was a small fee in order to renew, which I would be totally against, I might be OK with it if it was a price needed to pay in order to have an option out. After all, we're paying an extra year's maintenance fee to get out of a week we've owned 27 years.

    Hey, that might be an idea, no fee to renew, and a small fee to option out.

    Or, just leave that out of my option.

    :cool:

    PS: Have you noticed how people who like their timeshares tend to not like ideas that help people who don't like their timeshares?
     
    Last edited: Apr 25, 2019
  9. PigsDad

    PigsDad TUG Member

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    Have you noticed how people who do not like their timeshares tend to like ideas that allow them to dump their commitment back to the HOA, who in turn have to raise the MFs on the remaining owners? ;)

    Kurt
     
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  10. OldGuy

    OldGuy Guest

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    Some people may be like that, neglecting their obligations, but what I look for are policies that benefit the entire resort, all owners, so having to neglect obligations isn't an issue.

    We all know that resorts have run themselves into the ground clinging to the policies of 20 years ago like it is still 20 years ago.

    Personally, I have stood behind my commitments for 30 years, while working with resorts to drag themselves into the 21st Century. Heck, one of them finally got email two years ago!!!! Prior to that, all owners had to ask questions by letter!

    Looking at some ideas is better than looking at no ideas.

    But, I can understand how on a forum frequented by people who like their timeshares, having to think about things that make timeshares unpopular is not a popular topic. If you like the way things are run at your resort, and your resort is doing just fine, there should be no need to spend time on ideas that resorts that are having trouble need to look at.

    I probably didn't say all that right, but it is with good intention, acknowledging that there are things in timesharing that are good, and things that need to be worked on.
     
  11. VacationForever

    VacationForever Tug Review Crew: Rookie TUG Member

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    We like what we own but we believe having all timeshare be RTU with a timeframe of 10 years will solve alot of problems with owners being stuck with their ownership when they no longer want them. Better still, buyers should be given RTU of 5 years, 10 years or 15 years which cater to demographics where a younger person may want a longer RTU and an older person a shorter RTU period.
     
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  12. DeniseM

    DeniseM Moderator

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    There's an old saying: Wish in one hand and spit in the other and see which one fills up first...
     
  13. OldGuy

    OldGuy Guest

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    Who says that? (Now I'm chuckling. I googled that, and it did not say spit.)

    :cool:

    back to the topic . . .

    Let's try this . . . at the "renewal" time, it automatically renews with no fee, like so many things do now if you don't take action, which encourages renewal, but if a person wants to terminate, assuming they have honored all their obligations to that point, they have to elect to terminate, and maybe even pay a fair termination fee.

    Would that satisfy those who like their timeshares, or do you believe that even offering an out will mean it will be more expensive to owners, a belief I have seen disproven in practice?

    I'm all for keeping fees as low as possible, and eliminating debt collection and legal fees and foreclosure litigation helps do that. When I read resorts' financials that last few years, those are the items that fees are being raised for.

    Isn't the real question how detrimental is it to a resort to have owners feeling stuck in their timeshares?
     
    Last edited: Apr 25, 2019
  14. DeniseM

    DeniseM Moderator

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    So, are you proposing this legislation to your congressman, or are you working on a ballot measure in your state? Because short of legislation, this is never happening...
     
  15. OldGuy

    OldGuy Guest

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    I'm still stuck on spit.

    :cool:

    Can't recall that I've ever proposed legislation, although I could most likely do as good a job as those whose job it is to propose legislation. I do talk to legislator-types a lot, but I can't recall them asking for suggestions.

    My interest is in the area of what problem resorts could do to resolve their problems, although if this particular idea had been in place all along, perhaps those resorts would not have problems. Mostly I promote deedbacks and rental programs and resort-assisted resale programs, which address the issue of owners feeling stuck. When owners don't feel stuck, resorts are much healthier.

    This idea just happened, involuntarily like I said, because there has been a lot of talk here about RTU and Sunset Clauses and dissolving resorts.

    As someone once said, "Some men see things the way they are, and say why. I dream things that never were, and say why not?"
     
  16. PigsDad

    PigsDad TUG Member

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    While we are spit-balling, how about this modification to your idea: if an owner elects to terminate, they would pay a termination fee of 10 year's worth of MFs for the HOA to take it back. However, the owner will receive a refund of that fee when their week is re-sold, based on how long it takes to resell that week again.

    So if it re-sells right away and the HOA has no interruption of MFs, 100% would be refunded (maybe minus some marketing fee to cover the costs of reselling). If it takes 3 years to resell, they would receive a 70% refund, etc. That would protect the current owners of having to carry the MF load of those who want out, and would also encourage the owners to pressure the HOA to keep the property updated so that weeks are still desirable and represent some value. It would discourage owners from having the HOA set the MFs so low that they let the property deteriorate, effectively making the weeks worthless.

    Kurt
     
  17. bluehende

    bluehende TUG Review Crew: Veteran TUG Member

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    The problem with this approach is that it would insure that a resort did not resell the week. If they do not sell they are guaranteed a steady cash flow. If they sell it they go back to the danger of default and no cash. Better would be to share the risk. Put up 5 yrs and lose a half year every year might work. Incentivizes both sides.

    I will spit into the wind here and comment on the topic. I think deedback with 1 yrs maintenance fees are a good compromise. It keeps owners from willy nilly giving back their ownership. It also puts pressure on the resort to make their ownerships worth something. If a resort cannot get an ownership into the hands of someone willing to take it in a year the resort has a fundamental problem. They have a steady stream of potential buyers.


    Now I will pose a question. I know this would take a lot of work with legislation. Wouldn't it be nice if MF's were like all other lodging and are season dependent. Not fair to change any current resorts to this model, but new resorts could proceed as long as laws don't prohibit this (they do in a lot of states). Would you as a tugger be more inclined to own an off season week?
     
  18. OldGuy

    OldGuy Guest

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    Sorry . . . long . . . but I see we're making some headway. Opening a dialogue with all owners is the best way to find what will benefit all owners. That is what the successful legacy resort have done, talked and come up with progressive answers.

    I am not opposed to a refundable termination fee, the amount of the termination fee being fair, and the amount of refund based on the Association's ability to replace that terminating owner's annual fee. I say it that way, so that if the resort rents out that week to another owner or to the public (as our more-progressive legacy resort does) for at least the annual fee, the terminating owner would receive a refund of the amount of the annual fee. The excess to the annual fee would go to the resort.

    Of course, if the resort sells the terminated week, the terminated owner would receive the balance of the termination fee.

    In the case of our more-progressive legacy resort, a significant portion of their annual budget is from the rental of weeks they've taken back and the rental of owned weeks. In the latter, the resort first receives an annual fee from the owner, then receives a commission for renting out that week, and the owner receives more than their annual fee back in rental income.

    That resort also offers for sale weeks they've taken back and they've done that in a variety of ways. They have had public auctions (we bought one that way), they have had resort-owned-weeks available to owners only at a low set price, they have a local real estate company listing them, and they have some listed themselves on their website. Owners wanting to sell can be on the site, too.

    I'm saying these things to demonstrate that in actual practice in the real world actual resorts are turning unproductive weeks into positive cash flow.

    I'm not saying that 10 years of future annual fee payments is a fair amount to make this idea productive, but that can be compromised and worked out. Whatever it takes to take the angst out of timeshare ownership, resort-by-resort, is a good thing.

    At one of our slower-to-change-and-less-progressive-but-finally-coming-around-after-being-hateful-too-many-years resorts, I finally received a deedback invitation after harping like I am here for probably ten years. We have/had owned there since 1992, and it had been a problem resort for a long time. The deedback program they finally approved requires one year's maintenance fee and a $150 transfer fee. I countered with "I'll just Quit Claim it to you like I have Quit Claimed our other two weeks to new owners," and they said No. Then I countered with, I'll pay if you'll refund the extra fee if you sell or rent it for enough to pay it, and they said No.

    So I said, what the Hey, we've talked this out for all these years, and I've already managed to transfer 6 weeks without any fees, so I'll just let the rental income we would receive in 2020 to offset that fee go, and we will finally be down to the two weeks that actually fit our needs now, 30 years after we started timesharing.

    The key to turning the financial tide at that resort is that they have reconfigured unproductive weeks into full ownerships, and have been selling them at fair market.

    In order for these things to work, there has to be some real market value to the resort. There has to be demand for it, so that the rental value is at least as much as the maintenance fee. Or there must be real market value for the real estate. If that is not the case, then there's a problem, and there should be serious consideration about dissolving the resort.

    Actually, thinking about it, since these things are actually happening, and successfully, in resorts that make one wonder how they could possibly be getting by, they are neither a wish or spitting in one's hand. I am excited about what some resorts are doing, and after 30 years we have found a place that fulfills our needs, provides year-round amenities day-use, and we actually come out ahead financially each year.
     
    Last edited: Apr 26, 2019
  19. OldGuy

    OldGuy Guest

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    There's a lot to be learned from doing a bit of Internet research. I searched "converting a timeshare to Right to Use", and found out the following:

    For one, there is, in fact, a movement to provide shorter-term timeshare concepts, that being an easier concept than "forever."

    Next, a problem with shorter-term concepts (let's just call them "memberships"), and the reason timeshares changed from mostly RTU originally, to deeded/forever, in the 1970s is taxes. The tax consequence of a sale is much more favorable than that of a lease, which RTU is considered. So, the movement in timesharing was from RTU to deeded, the opposite of what I was searching.

    But, next, there is another possibility, and that is converting a timeshare to a Trust, the third in the evolution of timeshare legal setups. In a Trust, the Trust owns all of it, and the owners have an interest in the Trust. A person "selling" their timeshare merely transfers their interest in the Trust to the new person. No deeds, no recording, no foreclosure, etc. Simple. Clean.

    But, that does not preclude defaulting owners and bad debt expense. And it is still not limited to a period of time; it is still forever, still consider a sale.

    Here's from an interview with an attorney specializing in timeshare Trusts:

    Directors want to look at the numbers of use that are going on with respect to the property and address the question of whether or not the property is too large to accommodate the use and whether some downsizing would be appropriate. Unfortunately in some dire cases where a property has not been well managed or for one reason or another is no longer popular, perhaps because of the area in which the resort is located is no longer a hot destination place, then the board should consider whether or not the resort should be dissolved and sold and whatever value remains in it distributed to the owners.

    http://www.gcglaw.com/resources/resort/timeshare-board-directors.html
     
  20. OldGuy

    OldGuy Guest

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    Somewhat morbid . . . but my Dad had a sense of humor.

    When he got to the point of having to move to one of those places that old people often have to move to, he acted like he didn't even want to consider what would be the best one for him because they had a lump-sum entrance fee (but lower-than-others monthly fee), and he did not want to pay. "But, Dad," I told him, "that fee is pro-rated, and they pay back what you do not use." (phrasing it delicately)

    Dad said, "Not to me."

    ;)

    He was right.

    I still miss him, and wish we could have been closer.
     
    Last edited: Apr 26, 2019
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  21. OldGuy

    OldGuy Guest

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    Given the negative tax aspects of RTU, which I did not realize until now, I can see why a 10-year (or any length) RTU is not a good idea.

    But, the other things we talked about are. There's no reason why resorts can't have a time-fixed "renewal option" whether it's deeded or a Trust interest set-up. Just having a set time for reflection and renewal, every five years or seven years or ten years or whatever, would help take the "stuck forever" stigma out of ownership.

    & if the option is to not renew, have a set and known termination fee, whether it's one year or three years fees, or whatever, and with a refund option if the resort is able to obtain those fees by renting or by sale. Regarding other comments, I kinda like three years, with a refund feature. That's enough time for a resort to either sell it or to get into a firm rental situation, if the resort is serious about doing that.
     
  22. jme

    jme TUG Member

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    I understand your concern, however.....

    I see this proposal, in whatever it morphs into, as ultimately hurting the resorts and the happy owners.

    There is already a FAIR strategy in place -----if you want out, sell it for what you can.
    There are many examples of choices we make in life that demand ongoing responsibilities, and buying a timeshare is one of them.

    I just had three voluntary thoughts regarding this idea........pipe dream, exercise in futility, and fool's errand.
     
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  23. OldGuy

    OldGuy Guest

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    Pretty much the predominant thought at pretty much most legacy resorts. It is pretty much only at the point that a resort appears to be pretty much beyond hope that Boards consider something else. Pretty much.

    When a resort is healthy, things like this pretty much are not considered, pretty much like people don't think about how they will end their timeshare ownership pretty much until they have to end their timeshare ownership.

    So, if your resort is healthy, pretty much, and you are not considering ending your ownership, these ideas are pretty much unpopular. But, on the other hand, there are those who are in a situation where things like this are more important, pretty much:

    https://tugbbs.com/forums/index.php?threads/increased-assessment-fees.289232/

    :cool:

    Those who own in corporate-controlled resorts don't need to be concerned about this type of thing.
     
    Last edited: Apr 27, 2019
  24. OldGuy

    OldGuy Guest

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    ARDA is concerned:

    http://www.arda.org/arda/government-affairs/issues.aspx?id=5876

    https://resorttrades.com/new-law-for-older-florida-timeshare-resorts/
    - - - - - -
    We have been timeshare owners for 23 years. We have owned 2 deeded timeshares at different resorts in Coastal California. I sold one of them 3 years ago. At the time I was happy that they were deeded. However in retrospect I now wish that they were RTU so we would be done with them and free of the obligation to pay the M/F.

    If you have the option to buy RTU, I would do it so you aren't locked in forever. When the RTU expires, you can always buy another for next to nothing resale if you want to continue timesharing.

    John Cummings, Dec 29, 2010
     
    Last edited: Apr 27, 2019
  25. jme

    jme TUG Member

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    Therefore I'm not concerned.

    Guess I chose wisely. No luck, just basic research..... homework.

    We're obviously talking about two vastly different classes of resorts, one of which I would have never considered,
    much less chosen, since I always exercise my due diligence. Some don't, and end up having to be concerned.

    However, like a mortgage or a vehicle, there is personal responsibility for purchases with long-term commitments,
    and my sympathies are simply not present in cases where someone awaits the cavalry riding white horses to rescue them.

    A resort does have inherent variables that can cause it to go down over time, and it's incumbent on the owner, imho,
    to recognize the symptoms of the resort's cancer and exit far in advance of its total demise.
    Freedom to "opt out" (in whatever form) to avoid assessments and maintenance fees would wreak chaos
    if allowed in the industry, and that would necessarily burden other owners.

    Exit? It's called selling. Pretty much
     

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