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Purchasing Timeshare Under LLC

Discussion in 'Buying, Selling & Renting Timeshares' started by ej16nb5k, Jun 23, 2019.

  1. ej16nb5k

    ej16nb5k Guest

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    I read a bunch of posts on the forums about purchasing a timeshare under an LLC and all seem to be about trying to anticipate walking away from the maintenance fees. To be clear, this is not what I am asking....

    Long story short, my mom has a bunch of perpetually deeded timeshare weeks. She wants out and offered to give them to me for free. She asked that I allow my brother to use them, which I have no problem with. I thought about purchasing them under an LLC so that we can allocate a % of ownership between the two of us and keep them as sort of a family owned thing. Some years we may sell them to offset fees and some years we may use the weeks. My brother would share the annual fees with me.

    I am not looking write off losses or do anything sketchy....

    So I have two questions....

    1. Has anybody done this? If so, anything I should know? It seems like it would just be set-up an LLC, contribute some cash to it and have a deed transfer done from my mom to the LLC with an agreement between my brother and I.

    2. Separately, I do have my own separate company that is my full-time job and I do travel a lot on business to Washington DC. If I use a week for a business trip in DC, can I simply expense the annual fee for that week to my company for reimbursement? It would be way cheaper than if I paid for a hotel, so I don't see why I couldn't do this?

    Thanks!

    ---
    Sorry, I accidentally posted this in the Exchange forum and I can't figure out how to move it or delete it.
     
    Last edited: Jun 23, 2019
  2. taterhed

    taterhed TUG Member

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    A trust is a more appropriate way of doing it.

    Most companies won't allow an LLC as far as I know.
     
  3. md8287

    md8287 TUG Member

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    I agree a Trust may be better. Is your mother with her timeshare? If so you may want to see if the timeshare company would allow you to transfer elite status to you vs your trust.
     
  4. Pathways

    Pathways TUG Member

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    You own both companies? You set the rules! Expense what you want. Now tax/accounting wise - see your accountant for that - there may well be other consequences after the fact.

    Please - Cliff's notes version on why?

    'Most' may be correct. However, all the major timeshare entities allow it with no issues. I can also say at least 4 independent properties allow llc's. I have never been denied title in an llc
     
  5. JohnPaul

    JohnPaul TUG Review Crew: Expert TUG Member

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    Perhaps "a trust is a more COMMON way of doing it" would be more accurate.
     
  6. taterhed

    taterhed TUG Member

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    You got me....

    Yes, legitimate legal entities (not just individuals) can and do own timeshares/fractionals etc... I'm guessing that a new, unfunded LLC might have some explaining to do with some timeshare title offices. Or, it might never even be an issue. Who knows. Various rumors circulate.

    Yes, I should have used appropriate language: A trust is a more common way of titling a TS (AFAIK) to retain personal shared benefits (vs non-personal corporate benefits) with a minimal amount of fuss.
    I suspect that an LLC may now have limited advantages for those who attempt to abandon ownership without liability or with criminal intent depending on the situation...who knows? Not me and not your question.
    I'm not sure what specific benefits an LLC vs a Trust might have....other than an attempt to disguise the controlling ownership of a property used for business expenses. The IRS would be the ones to ask there.

    For the OP, I add this advice which I do have knowledge of:

    Careful what you expect from your timeshare.....making reservations that fit your business needs might be a bit more difficult than you expect. Also, the income from your occupancy would need to be declared etc... so there is a price to pay. I'm sure you're aware of all this though.... I think a trust might meet your needs for basic 'shared' ownership.

    Maybe someone can explain to me why an LLC might be a good way to own a 'recreational' timeshare. Not the 'for business use' or 'to generate profit' examples normally shared. Clearly the 'timeshare disposal angle has been explored by many and apparently, there have attempts to hold fraudulent LLC's accountable. So, for a recreational owner, why would an LLC be advantageous?
     
  7. Pathways

    Pathways TUG Member

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    Don't think there are a huge number of people following this thread, but I still want to clear up any misconceptions where I have personal experience.

    Rob - I don't understand the difference between a 'unfunded' llc and any other. An llc is an llc is an llc. And for a title office to ask for an explanation would be like asking someone why is your name Bob and not Steve.

    All the rumors seem to come from people just totally speculating. That's why when you say 'most companies won't allow an llc I ask for further clarification as I only have experience with 9 different timeshare entities, all of which never questioned the llc. Maybe the nine I have experienced are the only nine out there who don't have an issue, and the other 500 do. I don't know. But while I offer personal knowledge, I can't get anyone to give me personal experience where an llc was denied. (Not saying they aren't out there, but no one seems to be willing to give a real world example).

    I have purchased from ebay where there ad stated no llc, and promptly submitted my llc with no issue. I'm guessing there are some independent timeshares out there who are having problems with owners defaulting/unloading them and they don't want the llc titles. I would never buy a week at those locations, so I can't testify as to their actual practice.

    Trust vs llc. - I also can't testify here as I have never formed/utilized a trust for my ownership. I have never read a clear and convincing reason to utilize a trust. But I can tell you the llc process I used a recently as May:

    Tuesday - reached an agreement on price with seller, Tuesday night came up with possible names for an llc
    Wednesday AM - Online with Sec of State website, applied for llc, took about 45 minutes, cost $97.00.
    Wednesday 3:30pm: llc approved.
    Thursday am - received email with official docs from SOS for llc entity. Forwarded these to closing company

    LLC positives:
    Privacy - my name not on the deeds.
    Transfer/sale - no deed change needed, no title co. Just change the owners of the llc with the Sec of State office. Takes 15 minutes online, about $15. If developer purchase, all rights 'transfer' to the new owners b/c there really is no 'new' owner. Some companies will charge a nominal fee to change the llc 'member' names in their records. You have to send a 'resolution' from the LLC to the timeshare admin with proof of the SOS llc change and they will change the member name associated with the ownership. I believe DVC and Hyatt both charge $50 or less. It's always a nominal fee if any.
    Estate: again simple- they don't want them- just refuse them. If they do, change the name on the LLC and it's done.

    Negative (minor): All the weeks within an llc go "with" that llc. For example, I had 5 Marriott weeks in the same llc and sold one. I couldn't sell it by 'selling' the llc b/c ALL the weeks would go with it. I had to do a standard deed transfer. Actually, this isn't really a negative, as the sale was made the same as any other sale would have been.

    BTW, funded/unfunded I'm not sure I get it.
    With all my llc's I have never opened a bank account or involved $ in any way. No one has ever not accepted my personal check or CC for any and all fees. Accountant tells me no tax forms needed. I'm told that if you are trying to avoid liability by utilizing an llc, then you need separate bank accounts and need to avoid co-mingling of funds. But since I use them only for the holding of a timeshare property, it doesn't matter.
     
    Last edited: Jun 28, 2019
  8. WVBaker

    WVBaker TUG Member

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    Quite an interesting concept. :ponder:

    Have you ever transferred a property, once purchased, from an individual, in this case yourself to a LLC, which of course is in your name? In that case, wouldn't you need to file and pay for the transfer documents again? The transfer documents it seems, would need to go back to the resort which of course would begin the ROFR again. Not saying that would be bad thing though.
     
  9. Pathways

    Pathways TUG Member

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    I have, early on. Again, you are not transferring it to an llc 'in your name'. The llc is stand alone. It then has a 'managing' member or partner. A lot of llc's utilize an attorney or accountant as the manager. I always name myself.

    Since it is a deed change, a new deed would have to be filed, which you can create and file yourself. Just as with a trust, I have never heard of a resort requiring ROFR or huge fees. If you name yourself (along with any others you want attached so you can avoid guest cert for them), they usually keep the same 'account' number and just change the name. I know with Hyatt, they don't charge the $650 transfer fee, but charge a nominal $50 or something like that.
     
  10. Pathways

    Pathways TUG Member

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    The bad rap for llc's came from the unscrupulous 'post card' companies getting rid of the unwanted timeshares. For the most part, this group has been replaced by the unscrupulous 'lawyers' who are simply taking owner's cash directly without the added effort of trying to get rid of a timeshare by utilizing the llc.

    While I would hope no one here is trying to transfer to an llc just to eliminate a MF, one can't overlook long term disaster planning.

    Just like retirement investing, asset protection should always be taken into account. One of my sons did not want to invest in a 401K, as he felt his direct stock/mutual fund purchases would give him a higher yield. Then we discussed worst case scenarios. Each of us are only one accident by us, our spouse, even a dependent where we are deemed negligent and our entire asset base is wiped out. Or we have a health issue that puts our assets at risk. A retirement account is generally protected against that loss.

    Just look at OJ, the #1 example. This guy owes a bazillion dollars in judgement's to the Goldman's and the Brown's, yet lives like a king because all his money is in retirement and is 'untouchable'.

    If our 'unthinkable' happens, and happens during a recession where you can't unload a timeshare, the llc gives you that final protection. If I'm hurt and will require care for life, I'm sorry but I will not hesitate to help my family by utilizing the protection of the llc against a resort's demand for MF's.
     

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