After the dust has settled ( I think)

[DavidnRobin]

and mine as well - how much reimbursment is the HOA getting for SVN/II exchanges, rentals, and SPG usage? Follow the money... and in order to do that... transparency (forced via legal action, most likely)

 

[jerseygirl]

What bothers me most, and maybe others will agree, is Starwood has a very profitable rental program, basically through their hotel rental site. They offer condos to the general public via rental, yet the HOA's don't get any money for those rentals.

I would like to know why Starwood is allowed to rent inventory at any resort they choose, and then not pay back the HOA, so the owners don't have to pay for owners who aren't paying fees.

So Starwood rents the inventory not receiving fees from deadbeat owner, and they stick us with paying for those weeks through our fees. Where does that rental income go? That is my question.

and mine as well - how much reimbursment is the HOA getting for SVN/II exchanges, rentals, and SPG usage? Follow the money... and in order to do that... transparency (forced via legal action, most likely)

It's not as simple as it sounds. The "rental rules" are different for SVN units, non-SVN units and are subject to different state regulations. Some of us are attempting to get to the bottom of it, but as of now, I'm not aware that there is any concrete proof that Starwood is doing anything illegal. Should we find evidence to the contrary, the fun will begin!

If anyone has information pertinent to this issue (through discussions with HOA board members, attending HOA meetings, disclosure documents, etc.), please send me a PM. We can use all the help we can get. David is right ... we have to follow the money. And, help doesn't need to be proof -- anecdotal evidence for attorneys to investigate can be very beneficial.

Quote by Jerseygirl's dd: "Starwood is sure going to be happy when you go back to work."

 

[jarta]

rickandcindy, ... "I would like to know why Starwood is allowed to rent inventory at any resort they choose, and then not pay back the HOA ..."

A week ago Sunday, the same claim was made.

I had asked that someone post the language where such an arrangement was set forth. The last response was from LisaRex who was leafing through her owner's documents to find the language. She never posted anything.

I'm not saying such an agreement doesn't exist. I'd just like to have the language posted to see if it is being interpreted the right way. Also, since it is such an important complaint about Starwood, perhaps it could be posted in one of the stickys so that everyone could be directed to the exact language.

If you have access to any such language allowing Starwood to keep all of the rental proceeds and give none to the HOA, could you please post it? TIA. ... eom

 

[jerseygirl]

Jarta -- Don't you have documents with your developer purchasers?

It's late ... and I'm not going to do a thorough search, but here are a few snippets from documents I have:

The managing entity shall have the right to forecast anticipated reservation and use of the accommodations of the timeshare plan and is authorized to reasonably reserve, deposit, or rent the accommodations for the purpose of facilitating the use or future of the accommodations or other benefits made available through the timeshare plan.

Note: We know they can rent weeks to purchase SPs for SP conversions, but the above clause seems a little more broad than that. What the heck does "for the purpose of facilitating the use or future of the accommodations" mean????

Pursuant to the SVN Affiliation Agreement for the Club, Club Operator has assigned to SVN Operator any and all rights to rent unreserved Vacation Periods (in accordance with the reservation priorities of the Club Documents and the SVN Documents).

This makes it legal, but is it ethical?

Pursuant to the SVN Affiliation Agreement for the Club, Club Operator has assigned to SVN Operator any and all rights to rent unreserved Vacation Periods (in accordance with the reservation priorities of the Club Documents and the SVN Documents). In accordance with the Resort Documents, the Club Documents, and the SVN Documents, SVN Operator must make available to Association that portion of such unreserved Vacation Periods verified by Association as being reasonably necessary to perform additional maintenance of the Units. The total net rental proceeds, if any, shall be allocated 50% each to SVN Operator and Association until Association receives an amount of rental equal to 2.5% percent of Association’s annual budget for each fiscal year. SVN Operator shall be entitled to receive the total net rental proceeds received by SVN Operator from the rental of unreserved Vacation Periods at the Resort during the SVN Priority Period (defined in the SVN Documents) to the extent such total net rental proceeds exceed 2.5% of Association’s annual budget. Association’s share of the net rental proceeds, up to 2.5% of Association’s annual budget, will be delivered by SVN Operator to Association and must be applied against common expenses of the Resort each year. As used in this paragraph, “net rental proceeds” means the gross rental proceeds generated from the rental of the unreserved Vacation Periods, less housekeeping fees, travel agent, and other rental commissions and fees, and any other expenses incurred by SVN Operator or its affiliates in connection with the rental of the unreserved Vacation Period.

I could keep going and going ... these three snippets are from the first 20 pages of 357, but, again, I think you have the same or similar documents so I'll let you pitch in on the homework.

 

[ocdb8r]

Well, I think Jarta is right...we really should be making sure we try to identify the exact language and rights.

As for the above, I don't see anything wrong with the first couple of snippits....to me it just makes clear that Starwood has authorization for the rental function, which I think we want (the amount of latitude they should have may be up for debate).

The final snippet provides the real issues we should be talking about. Looks like rental income is split 50/50 until it hits 2.5% of total operating budget for the resort. At that point it appears Starwood pockets the rest. In a good year that may be plenty fair, but if usage is low and/or defaults are high it would seem there would be MORE weeks to rent, while at the same time a greater justification for the HOA getting more than 2.5% (to cover the loss from defaults).

 

[jarta]

"The managing entity shall have the right to forecast anticipated reservation and use of the accommodations of the timeshare plan and is authorized to reasonably reserve, deposit, or rent the accommodations for the purpose of facilitating the use or future of the accommodations or other benefits made available through the timeshare plan."

This gives the managing entity, now Starwood, the right to forecast future anticipated reservations and the discretion to reasonably decide to keep the unit in the reservation pool, to make a deposit to II or to rent the unit if it has no reservation. The club manager should not have to call a board meeting every time it has a unit that is unreserved to obtain authority to deposit it in II or to rent it out. That's what the language above means and why it exists.

It does not say that, if the unit is rented, Starwood would keep all the rental income and the HOA would get nothing.

"Pursuant to the SVN Affiliation Agreement for the Club, Club Operator has assigned to SVN Operator any and all rights to rent unreserved Vacation Periods (in accordance with the reservation priorities of the Club Documents and the SVN Documents)."

This language is merely a declaration that the right to decide which units will be rented exists in the Club Documents (see above; the owner document you have quoted above) and the SVN affiliation agreement (the management contract between the club and Starwood). And, the use of "any and all" means that Starwood has the exclusive contract to rent the unreserved units.

Again, it does not say that if the unit is rented, Starwood gets to keep all the money and the HOA gets nothing. ... eom

 

[jarta]

"Pursuant to the SVN Affiliation Agreement for the Club, Club Operator has assigned to SVN Operator any and all rights to rent unreserved Vacation Periods (in accordance with the reservation priorities of the Club Documents and the SVN Documents). In accordance with the Resort Documents, the Club Documents, and the SVN Documents, SVN Operator must make available to Association that portion of such unreserved Vacation Periods verified by Association as being reasonably necessary to perform additional maintenance of the Units. The total net rental proceeds, if any, shall be allocated 50% each to SVN Operator and Association until Association receives an amount of rental equal to 2.5% percent of Association’s annual budget for each fiscal year. SVN Operator shall be entitled to receive the total net rental proceeds received by SVN Operator from the rental of unreserved Vacation Periods at the Resort during the SVN Priority Period (defined in the SVN Documents) to the extent such total net rental proceeds exceed 2.5% of Association’s annual budget. Association’s share of the net rental proceeds, up to 2.5% of Association’s annual budget, will be delivered by SVN Operator to Association and must be applied against common expenses of the Resort each year. As used in this paragraph, “net rental proceeds” means the gross rental proceeds generated from the rental of the unreserved Vacation Periods, less housekeeping fees, travel agent, and other rental commissions and fees, and any other expenses incurred by SVN Operator or its affiliates in connection with the rental of the unreserved Vacation Period."

The split is 50/50 of the net rental.

The deductions from the gross rental are housekeeping fees (charged by the resort and going to HOA), travel agent (steering fees paid from the rental to a "finder," the travel agent), any other expenses (unspecified) and expenses of the SVN operator (unspecified, but Starwood's not the resort's).

This caps the rental income received by the HOA at 2.5% of the entire budget of the association. Only when the 2.5% cap is reached, Starwood has the right to keep the rest of the net rental income.

So, the things you have to know are:

1. The budget amount - to calculate the cap.

2. The normal vacancy rate of the resort - to see if the 2.5% is a reasonable cap.

3. The "other expenses" - I assume they are the expenses normally paid by HOA that are reimbursed since Starwood expenses are found in 4; and

4. The SVN operator (Starwood) expenses.

Please note that this is not a 90 day give away. Please also note that the HOA gets its housekeeping expenses taken off the top, IMO its "other expenses" taken off the top and also gets, from the 50/50, split of the net up to 2.5% of its budget from the rental program in addition to the MF fees.

Also, please note that in many States net rentals of delinquent properties would go to pay off the delinquency. So, these types of rentals of unused rental would probably generate more revenue for the HOA than renting delilnquent units.

Reasonable? Is the cap a fair number? That depends on the circumstances. ... eom

 

[jerseygirl]

not[/B] say that if the unit is rented, Starwood gets to keep all the money and the HOA gets nothing. ... eom

No, but that's covered in the 3rd paragraph, isn't it?

And, again, this isn't the full story .... it's dependent on whether or not a unit is SVN/non-SVN and the statutes of the particular state involved. Not to mention that I only skimmed ~5% of the disclosure documents for one phase of one resort. It's much more complicated than it needs to be.

From my research this far, I have drawn one conclusion: The terms are in no way designed to favor the owners.

I don't think there's an owner alive who doesn't approve of Starwood making a reasonable profit in this business. But, what's reasonable? What's fair?


Edited to add: Written before I read jarta's above post (only after seeing the first).

 

[Pit]

If you have access to any such language allowing Starwood to keep all of the rental proceeds and give none to the HOA, could you please post it? TIA.

From the SDO CCRs:

Any Interval Weeks not timely reserved as herein provided, and not needed by the Association for maintenance, repair or related puposes, shall be available for use by the Declarant as it determines in its sole discretion, including but not limited to rental for the account of Declarant with no obligation of payment to the Association ...

 

[DavidnRobin]

There is a lot to cover from above - but from my POV...
The standard rental is covered from the aspect of what the Owner/HOA will get back - and not the direct issue because these are from Owners that have paid their MFs.

MY ISSUE is for those Owners that are deliquent in MFs and their VOIs are used by SVO (by renting, SVN/II exchanges, or used in the SPG program) - HOW are these VOIs reimbursed to the HOA?

As long as each the MFs for each VOI used is reimbursed to the HOA - I have no big issue since that is what I signed up for. It is the non-payment ones that I would like to see transparency on (as well as the overall reimbursement processes)

 

[ocdb8r]

There is a lot to cover from above - but from my POV...
The standard rental is covered from the aspect of what the Owner/HOA will get back - and not the direct issue because these are from Owners that have paid their MFs.

MY ISSUE is for those Owners that are deliquent in MFs and their VOIs are used by SVO (by renting, SVN/II exchanges, or used in the SPG program) - HOW are these VOIs reimbursed to the HOA?

As long as each the MFs for each VOI used is reimbursed to the HOA - I have no big issue since that is what I signed up for. It is the non-payment ones that I would like to see transparency on (as well as the overall reimbursement processes)

But VOI's are not split out this way...especially in a floating system. There is no way to say week X rented by Starwood was a deault week, while week Y was for non-use/SVN trade/etc.

 

[DavidnRobin]

Perhaps I was not clear - it comes down to if MFs were not paid (and this does not matter based on the VOI type) - and this VOI ends up in SVO's hands to use as they please. Then how is the HOA reimbursed for that usage?

If the MFs are paid - and SVO ends up with the VOI (e.g. Owner converted to SPs) then it is less of an issue (other than the usage and wear/tear may be unfairly balanced towards Owners in the HOA).

 

[James1975NY]

What bothers me most, and maybe others will agree, is Starwood has a very profitable rental program, basically through their hotel rental site. They offer condos to the general public via rental, yet the HOA's don't get any money for those rentals.

I would like to know why Starwood is allowed to rent inventory at any resort they choose, and then not pay back the HOA, so the owners don't have to pay for owners who aren't paying fees.

So Starwood rents the inventory not receiving fees from deadbeat owner, and they stick us with paying for those weeks through our fees. Where does that rental income go? That is my question.

There are different types of rental pools:
1.) Owners have elected to use the internal rental option. This is between SVO and the owner. Owner nets X amount of dollars, SVO gets X amount of dollars.
2.) Owners elect to convert their ownership into SPG points. SVO rents the a week to recover costs associated to issuing of SPG points to the owner.
3.) 60-day inventory. SVO can place inventory into a rental pool that has not been reserved 60-days out. Not sure if this is across the board or within certain HOA's or for SVN inventory.
4.) Delinquint owners.

This is not an illustration of priority for rental. Just outlining why you may see inventory on Starwood websites for rental.

The HOA's do collect on the delinquint rentals and SVO also gets their commission.

 

[ocdb8r]

Perhaps I was not clear - it comes down to if MFs were not paid (and this does not matter based on the VOI type) - and this VOI ends up in SVO's hands to use as they please. Then how is the HOA reimbursed for that usage?

If the MFs are paid - and SVO ends up with the VOI (e.g. Owner converted to SPs) then it is less of an issue (other than the usage and wear/tear may be unfairly balanced towards Owners in the HOA).

Again, I don't understand how you would identify a VOI Starwood has rented as being one that specifically came from a default on maint. payments vs. one they are entitled to from other sources(SVN/non-use/etc.)?

Say you have 100 VOI's - 10 weeks are in default on maint. fees, 20 weeks are just unused, and 70 weeks are SVN trade outs. Starwood puts 100 weeks up for rent and 75 rent out. Why wouldn't you expect them to just say they rented out their 70 SVN weeks and 5 unused weeks? Not saying this is ethical, but with a floating system you can't identify a specific defaulted VOI as being "the" one which was defaulted.

Therefore Starwood has written the rules to apply to the rental pool as a whole. I don't think this is necessarily unfair (and is probably the most practical thing to do), however limiting rental receipts to a max of 2.5% of overall HOA budget may be too restrictive in periods where maint. fee defaults are high.

 

[ocdb8r]

There are different types of rental pools:
1.) Owners have elected to use the internal rental option. This is between SVO and the owner. Owner nets X amount of dollars, SVO gets X amount of dollars.
2.) Owners elect to convert their ownership into SPG points. SVO rents the a week to recover costs associated to issuing of SPG points to the owner.
3.) 60-day inventory. SVO can place inventory into a rental pool that has not been reserved 60-days out. Not sure if this is across the board or within certain HOA's or for SVN inventory.
4.) Delinquint owners.

This is not an illustration of priority for rental. Just outlining why you may see inventory on Starwood websites for rental.

The HOA's do collect on the delinquint rentals and SVO also gets their commission.

Related to my above post...if a renter goes to Starwood.com and rents week 32, how is it determined to which of the above pools you have identified that rental goes to? What prevents it operating like my above example where Starwood applies the rentals to the categories which benefit them most first. Given the price of rentals I can't see there being enough to make it to cover delinquent owners if that's the LAST pool that gets reimbursed.

 

[DanCali]

There are different types of rental pools:
1.) Owners have elected to use the internal rental option. This is between SVO and the owner. Owner nets X amount of dollars, SVO gets X amount of dollars.
2.) Owners elect to convert their ownership into SPG points. SVO rents the a week to recover costs associated to issuing of SPG points to the owner.
3.) 60-day inventory. SVO can place inventory into a rental pool that has not been reserved 60-days out. Not sure if this is across the board or within certain HOA's or for SVN inventory.
4.) Delinquint owners.

This is not an illustration of priority for rental. Just outlining why you may see inventory on Starwood websites for rental.

The HOA's do collect on the delinquint rentals and SVO also gets their commission.

It looks like (1) - (2) have to go through SVO... (1) is because the owners elects to rent via Starwood and (2) because an owners gets SPG points

In regards to (3) I don't really see why any open inventory needs to be rented out at all. In theory, (and assume a stand alone resort with no exchanges allowed) an entire resort may be comprised of owners who just pay MFs and never occupy units or exchange. It's their choice... as long as MFs are paid it doesn't hurt anyone and the units can stay unoccupied (HOA even saves on housekeeping labor which is paid and goes unused). Now if the HOA is made better off because those units are rented out by Starwood, maybe it's worth it. But an arrangement like the one Pit describes in post #34 from the SDO CCR&Rs (in response to jarta's request) is outlandish!

In regards to (4) I don't see why an HOA needs to rent through Starwood - other than that it is forced upon them. As pointed out in other places, the HOA may be able to do better on its own by offering those weeks to other owners etc... For example, at HRA they could offer (fixed) delinquent weeks for rental via Atlantis Family Fun for a much lower commission than Starwood. Does a Board even have a choice? If they do, then what can we say about fiduciary duty? And if Starwood does the rentals, then of course there needs to be a proper paper trail as to where the money goes...

 

[jarta]

"From the SDO CCRs:
Quote:
Any Interval Weeks not timely reserved as herein provided, and not needed by the Association for maintenance, repair or related puposes, shall be available for use by the Declarant as it determines in its sole discretion, including but not limited to rental for the account of Declarant with no obligation of payment to the Association ... "

That's SDO. jerseygirl did not post where her language #3 is from. So, maybe it varies from resort to resort and from development time to development time.

I assume the Declarant at SDO is the developer. Was the developer Starwood? Or, was the Declarant/developer of SDO Sheraton or even some company before Sheraton who saddled the resort with that language? It was formed as "Scottsdale Pinnacle Condominium," wasn't it?

On 3/22/05 dbmMayer posted on TUG:

"Starwood didn't build this property - they bought it, so some of the deeds are recorded under the original name. Doubt if there is any way to change this.
------------------
Denise"

If Starwood didn't insert the provision into the CCRs, why blame Starwood for its existence?

... eom

 

[Pit]

Scottsdale Pinnacle was the original SDO developer.

Fredm posted on the other thread that his Mission Hills docs have the same verbiage. I'm not sure who the original Mission Hills developer was that saddled the resort with that language.

 

[jarta]

Well, if the original developer isn't Starwood, why is Starwood responsible for the language in the CCRs?

I thought it was posted as an example of Starwood overreaching. ... eom

 

[rickandcindy23]

Starwood cannot pick and choose which of the CCR's they will follow and not follow. We are supposed to be able to deposit any week into II, yet they took that away.

Scottsdale Pinnacle was originally Embassy, I think. Maybe someone will correct me.

 

[James1975NY]

Scottsdale Pinnacle was the original SDO developer.

Fredm posted on the other thread that his Mission Hills docs have the same verbiage. I'm not sure who the original Mission Hills developer was that saddled the resort with that language.

SDO was previously branded as an EVR property - Embassy Vacation Resort. Interesting that the verbiage is the same but not surprising.

 

[jarta]

"We are supposed to be able to deposit any week into II, yet they took that away."

So, sue Starwood. If your interpretation of the unique CCRs at SDO hold up, you will be doing all the owners of SDO a terrific service. If not, you will still have tried. The new procedure has been in place for nearly 9 months and nobody's sued. ... eom

 

[Pit]

Well, if the original developer isn't Starwood, why is Starwood responsible for the language in the CCRs?

I thought it was posted as an example of Starwood overreaching. ... eom

You asked, "If you have access to any such language allowing Starwood to keep all of the rental proceeds and give none to the HOA, could you please post it?"

It was posted in response to your request. Of course, this language doesn't require Starwood to rent units and keep the money. It only enables them to do so. The decision to do so rests with Starwood.

Why don't you look up the relevant language in your own documents and post it here for comparison?

 

[jarta]

Because I am at Lagunamar and all my documents are at home. I am enjoying immensely my TS trip.

 

[jerseygirl]

my three snippets came from a WSJ Hillside Svn document. As i stated earlier [may be on another thread - I'm on my phone so hard to type and follow>, the rules vary by state and location. CCRs are amended - especially when SVN is overlaid.