ARDA Model Resale Act - attempt to clean up the Timeshare Resale scams

[TUGBrian]

ok so here is the rundown.

ARDA is drafting an article titled the "model resale act" which is intended to address the issues with the resale market scams in the industry.

These scams are not new, but have now grown to a point where its impossible to ignore anymore, and with state AG's getting into the mix and actually going after these companies, the politicians are looking to ARDA to guide them in how this all should work.

The model resale act as I understand it is intended to be that guide.

The issue that many individuals are currently up in arms about, are the items from the model resale act that have been removed or rejected from being included.

These include (summaries)

1. Defining the different entities in the industry.

Basically, it was proposed that each entity involved with timeshare resales in any aspect, be officially identified. the difference between a Timeshare Broker Agent, and a Timeshare dealer, and a Timeshare Title/Escrow service, Travel Club, Timeshare Media Outlet etc etc.

more importantly, it was listed as who was the responsible regulatory agency at the state level, for each of these entities.

Ie Licensed Timeshare Broker Agents are under the regulatory arm o fthe Department of Real Estate (DRE) while Timeshare title/Escrow companies fall under the arm of the Insurance Comissioner/Corporations Comissioner...and NOT the state AG.

common sense right? it is not included at the time of this writing.


2. Setting a max upfront fee limit

Originally requested a max upfront fee of $100, this was changed to a max upfront fee of $300...and then removed completely...the article at the time of this writing has no conditions for limiting the amount of money that can be charged upfront for the sale/marketing/advertising/rental/etc of a timeshare.

(note as I understand this, this is a direct violation of florida law)


3. Right of first refusal proceeds go directly to the owner.

It was suggested that if an owner paid someone to get rid of their timeshare, and the timeshare was taken back by the resort under ROFR via power of attorney etc, that the proceeds paid for the interval by the resort under ROFR would be returned to the original owner.

This is not in the model resale act at the time of this writing.

4. Power of attorney transfers max limit of 11 per year

In many states, power of attorney transfers are specifically allowed, but not on a regular basis or as a commercial basis. It was requested that POA transfers be limited to 11 per year (to cover those who legitimately wish to transfer their timeshares via a lawyer etc).

This was not included in the model resale act at the time of this writing

5. Full disclosure for all transactions

to include full property description, terms of the transaction, all parties included in the transaction...comissions and estimated costs associated with the transaction be transparent and available to both sides of the sale.

this was not included in the model resale act at the time of this writing.


6. Making false or misleading statements in advertising timeshare rentals or resales

a. making fales or misleading statements in any piece of mail sent to an owner/buyer/renter. (postal fraud)
b. making false or misleading statemtns to solicity timeshare owners in any seminar, webinar, presentation, telephone call, or meeting with an owner/buyer/renter.
c. failing to disclose in any seminar, webinar, presentation, telephone call, or meeting, all information regarding the listing/rental/sale/resale or trasfer details of a timeshare interest.
d. misusing the intended purpose of a power of attorney (poa). (which is intended to benefit the principle of the POA...not the attorney-in-fact named in the poa.
e. making false or misleading statements regarding t he IRS deductions. (tax fraud)
f. making false or misleading statements to elders regarding inheritance (elderly abuse)
g. failing to obtain a real estate license before establishing an agency relationship with an owner, buyer or renter in negotiating, contracting and or completing a timeshare transaction
f. practicing real estate without a current and valid real estate license

these items were not included in the model resale act the time of this writing.

6. enacting Resort/HOA transfer departments to restrict the following transfers.

a. transfers that utilize POA
b. transfers without 3rd party title insurance
c. transfers without 3rd party escrows

6a. Resort/HOA should consider exit and welcome calls to minimize unintended transfers before they happen.

6b. Resort/HOA should notify owners of the current and latest timeshare resale entities in volation of the model resale act

6c. Resort/HOA shoudl consider establishing a limited inhertiance buyback program to minimize elder abuse of its owners (more very INTERESTING news on this later)

6d. Timeshare media outlets should take reasonable steps to limit access to timesahre resale entities in violation of the model resale act

6e. timeshare broker agents should advice clients of the remedies available to them due to a timeshare resale entities violation of the model resale act

at the time of this writing, these items were not included in the MRA.

more to come later after the meeting!

 

[Bwolf]

So what was included in the Act?

We are very nice people and we don't cheat anyone.

 

[jamstew]

6. Making false or misleading statements in advertising timeshare rentals or resales

a. making fales or misleading statements in any piece of mail sent to an owner/buyer/renter. (postal fraud)
b. making false or misleading statemtns to solicity timeshare owners in any seminar, webinar, presentation, telephone call, or meeting with an owner/buyer/renter.
c. failing to disclose in any seminar, webinar, presentation, telephone call, or meeting, all information regarding the listing/rental/sale/resale or trasfer details of a timeshare interest.
d. misusing the intended purpose of a power of attorney (poa). (which is intended to benefit the principle of the POA...not the attorney-in-fact named in the poa.
e. making false or misleading statements regarding t he IRS deductions. (tax fraud)
f. making false or misleading statements to elders regarding inheritance (elderly abuse)
g. failing to obtain a real estate license before establishing an agency relationship with an owner, buyer or renter in negotiating, contracting and or completing a timeshare transaction
f. practicing real estate without a current and valid real estate license

So they can continue to make false & misleading statements at will? Astonishing

 

[DanM]

Brian,
I am a licensed real estate broker in New York and, as I understand NY Law, you have to be a licensed broker to offer other people's real property for sale...including timeshares. (I should add that I have no interest in brokering timeshare resales because they are not worth enough). Anyway, I believe all the postcard companies are violating NY law already because they aren't licensed brokers in all the states they operate, and any broker who employed false or misleading statements in securing a listing or marketing the timeshare could lose their license. It is also illegal in NY to take an upfront fee or any fee other than a percentage commission.

I believe this is true in most other states as well.

Maybe one of your 20 friends in the room can point out to ARDA that they could simply urge states to clarify that timeshares are real property, if it isn't already clear, and advise State AGs that they already have the tools to clean up the resale industry if they check the statutes.

 

[e.bram]

DanM:
PCC are offering to "buy" your TS in that way,they are acting for themselves. Perfectly legal. Once they buy the TS, they can sell them for themselves, again perfectly legal.

 

[alexadeparis]

Sounds as if this "model" act has had all its teeth removed

 

[AwayWeGo]

Legal, Shmeegle.

PCC are offering to "buy" your TS in that way,they are acting for themselves. Perfectly legal. Once they buy the TS, they can sell them for themselves, again perfectly legal.

Main problem with "buying" timeshares that way is in holding flippable quitclaim deeds instead of actually taking title to the unwanted timeshares.

If a timeshare acquired that way is not flipped before the annual fees come due, then the old owner, who most likely paid dearly to be relieved of the obligation, gets hit yet again with another bill for annual fees.

A quitclaim deed that's signed but not recorded leaves the old owner on the hook.

Paying big bux for relief & not getting any is a major serious ripoff any way you shake it.

-- Alan Cole, McLean (Fairfax County), Virginia, USA.​

 

[dougp26364]

DanM:
PCC are offering to "buy" your TS in that way,they are acting for themselves. Perfectly legal. Once they buy the TS, they can sell them for themselves, again perfectly legal.

I don't think they actually "buy" the timeshare but only act as POA to transfer the title. Once you sign the POA papers, they're simply acting on your behalf to transfer the title and are not acting as a broker. If they don't transfer the title, then you still own the property and still owe all assessments and fee's associated with the property.

They're not really selling it and they're not really buying it. They're only acting as a limited POA to transfer title to the property. It seems to be a very sneaky way to get around states real estate laws, take large up front fee's and assume no risk.

 

[e.bram]

I am not endorsing PCCs. I am stating they are not violating RE laws. Once they sign the sales contract they own it whether a new deed is drawn up or not. you can own RE by contract.

 

[T_R_Oglodyte]

I am not endorsing PCCs. I am stating they are not violating RE laws. Once they sign the sales contract they own it whether a new deed is drawn up or not. you can own RE by contract.

That's assuming that what you sign is actually a sales contract, and not merely a POA.

Also, until a deed effectuating the sale is recorded the original owner is still the owner of record of the property, which as I understand means that creditors and government agencies may still look that entity for collection of debts and payment of taxes. (That's one of the primary purposes for which the recording system was created in the first place; people would run up debts against a property, then contract sale the property in an attempt to evade paying creditors.) It would then be the obligation of the seller to get the new owner to pay the debts.

 

[TUGBrian]

back now, interesting event. lots of stuff to share.

as it stands now (as i was previously uninformed) this model resale act is still currently in development and not close to being finalized...they are seeking input and comments from everyone in regards to what to add to the act.

while there is an old version of this act currently online ...as it sits now it was updated from the task force meeting yesterday and is now in version 4 or 5 at this point.

When I locate a current version of the act online, ill post it here...as well as the email address arda has created for comments and suggestions on the act is resales@arda.org

 

[Talent312]

When I locate a current version of the act online, ill post it here...as well as the email address arda has created for comments and suggestions on the act is resales@arda.org

From what you describe, it be better for the "PCC Scammers Relief Act" to be scrapped altogether. ARDA is saying, let's not even try to regn in scammers, after all we're not here to protect the buyers from themselves.

 

[DanM]

DanM:
PCC are offering to "buy" your TS in that way,they are acting for themselves. Perfectly legal. Once they buy the TS, they can sell them for themselves, again perfectly legal.

Here's the statute. A motivated prosecutor could destroy any PCC with legal costs, if nothing else:

NY Real Propery Law Article 12A says:
§440. Definitions
1. Whenever used in this article “real estate broker” means any person, firm, limited liability company or corporation, who, for another and for a fee, commission or other valuable consideration, lists for sale, sells, at auction or otherwise, exchanges, buys or rents, or offers or attempts to negotiate a sale, at auction or otherwise, exchange, purchase or rental of an estate or interest in real estate, or collects or offers or attempts to collect rent for the use of real estate…

Moreover:

Section 484 of the Judiciary Law additionally provides that "no natural person shall ask or receive, directly or indirectly, compensation for... preparing deeds, mortgages, assignments, discharges, leases or any other instruments affecting real estate... unless he has been regularly admitted to practice, as an attorney or counselor..." ... should a real estate broker or salesperson be found to have engaged in such unlawful practice, the Department will take independent action against such person's license.

 

[T_R_Oglodyte]

Here's the statute. A motivated prosecutor could destroy any PCC with legal costs, if nothing else:

NY Real Propery Law Article 12A says:
§440. Definitions
1. Whenever used in this article “real estate broker” means any person, firm, limited liability company or corporation, who, for another and for a fee, commission or other valuable consideration, lists for sale, sells, at auction or otherwise, exchanges, buys or rents, or offers or attempts to negotiate a sale, at auction or otherwise, exchange, purchase or rental of an estate or interest in real estate, or collects or offers or attempts to collect rent for the use of real estate…

I bolded the key phrase for purposes of this discussion. If the PCC buys the timeshare from you, then turns around and resells it, they are not working "for another". If the PCC only has Power of Attorney then there's a good chance they may be afoul of the law.

It's always dangerous to excerpt a few portions of law (or one or two court cases) and draw conclusions, as there are usually other matters that often bear on a situation.

 

[e.bram]

T R Oglodite:
Let say you bought a house and now want to sell it, are you doing it for another? PCCs buy your TS and resell lt. That is not for another.

 

[Fredm]

T R Oglodite:
Let say you bought a house and now want to sell it, are you doing it for another? PCCs buy your TS and resell lt. That is not for another.

PCC's DO NOT buy the timeshare.

They obtain a limited power of attorney (used to sell it).
The owner just thinks they washed their hands of it.
The POA is most often obtained by deceitful methods. Therefore, obtained "under duress", which can serve to invalidate the POA.

 

[T_R_Oglodyte]

T R Oglodite:
Let say you bought a house and now want to sell it, are you doing it for another? PCCs buy your TS and resell lt. That is not for another.

What are you arguing with me about?? How could you possibly read what I've posted on this and think that I'm disagreeing with you on this point?

Of course you're not doing it for someone else. That's why I wrote, "If the PCC buys the timeshare from you, then turns around and resells it, they are not working "for another"."

As that apparently wasn't stated clearly enough in my previous post for you to catch it, I've emphasized the language to help it stand out more for you.

++++++

But as noted, if the PCC only has power of attorney then they do not own the property. In that case, their actions to sell it would likely constitute working "for another". That would now be similar to someone who has to leave the country for an extended period, and engages a realtor to market and sell their house, including giving the realtor power or attorney to handle the details of the transaction after a suitable buyer is found.

 

[e.bram]

Sorry Steve
Fredm; How do you know what "all" PCCs do?
It is incumbant for any user of a PCC to make sure you sign a sales contract and the user signs and records(affirms at leasr)the deed.

 

[Jennie]

DanM:
PCC are offering to "buy" your TS in that way,they are acting for themselves. Perfectly legal. Once they buy the TS, they can sell them for themselves, again perfectly legal.

The PCCs offer to "take the (alleged) horrible burden" off the owner's hands if the owner PAYS THE PCC $3500. or more.

I don't see how this could be construed as buying the timeshare.

 

[joestein]

While I think the idea to stop the post card companies from scamming people is a worthy endeavor. I don't really see anything coming of this act passed with or without this information.

As the attorney said in an earlier post, the state attorneys already have the ability to deal with the post card companies, but they don't.

The question is why? Because most people who buy timeshares are uninformed and don't question anything they are told. That is how they ended up with developer purchased timeshares to begin with.

Unless there is a news story on a national show, I don't see anything else changing.



In addition, I am concerned how these regulations would affect someone like me who wishes to get rid of one of their T/S? I don't want to be subject to all these additional requirements.

Joe

 

[Jennie]

I know you will tell us how that came out. The result will substantially influence my desire to support ARDA with the $5 annual assessment it requests for each of my timeshares. "Taxation without representation is tyranny."

The requested ARDA "donation" tacked onto most maintenance fees bills is $3.00 .
I stopped paying it years ago after reading an article in Timesharing Today Magazine about how ARDA had actively lobbied against a bill that that would have implemented a national law protecting consumers against many of the abuses that are still rampant in the industry.

 

[Carol C]

Brian,
ARDA's actions tell me that they think TUG is doing for timeshare owners exactly what it is intended to do, and that scares them.

We've come a long way, baby!

Fern

What Fern said! And btw, I continue my practice of not funding ARDA. Folks should check their bills, especially Marriott owners. I opt out when Marriott bills me that extra 5 bucks or whatever for ARDA "dues"...atop my maint fee.

 

[Fredm]

Sorry Steve
Fredm; How do you know what "all" PCCs do?
It is incumbant for any user of a PCC to make sure you sign a sales contract and the user signs and records(affirms at leasr)the deed.

e.bram,

The scam works on those that do not know what they are doing.
"All" may be too inclusive. I did not say"all". I said that "most often" the PCC practices are deceitful.

A more detailed explanation can be found here and here , and other comments I have made in the same thread.

 

[AwayWeGo]

Plowing Over Old Ground.

A more detailed explanation cam be found here , and other comments I have made in the same thread.

Well put.

And while we're hashing over settled science, click here for the famous Nightmare Scenario of various compound timeshare hornswoggles & bamboozles out there just waiting to snare the unwary.

It's really sad that so many aspects of the timeshare biz. are based on pulling the wool over people's eyes.

The carnival barker atmosphere in those Muzak-filled salesrooms where customers are inveigled in via the razzle-dazzle offer of valuable freebies should be a tipoff to watch out for everything that follows, no ?

-- Alan Cole, McLean (Fairfax County), Virginia, USA.​

 

[BocaBum99]

back now, interesting event. lots of stuff to share.

as it stands now (as i was previously uninformed) this model resale act is still currently in development and not close to being finalized...they are seeking input and comments from everyone in regards to what to add to the act.

while there is an old version of this act currently online ...as it sits now it was updated from the task force meeting yesterday and is now in version 4 or 5 at this point.

When I locate a current version of the act online, ill post it here...as well as the email address arda has created for comments and suggestions on the act is resales@arda.org

My guess is that this model resale act will remain in a perpetual state of draft form. There is very little incentive for the resort developers to solve this resale problem. Sure, the resale value of their properties have tanked. But, that doesn't matter that much to them because anyone who finds out about those very low resale prices isn't going to buy from them again anyway (well, very few anyway). They are outside of their target market. In addition, if they have ROFR, the lower purchase prices just gives them cheaper inventory.

The resort developers can easily solve this problem if they wanted without the support of any other parties. All they need to do is provide full disclosure about the resale market. They can tell them who their authorized resellers are and they can publish documents and warnings about the potential scams out there. That's really all that needs to be done. However, that works against their own sales and marketing model. Therefore, the resort developers will not back any resale model until they decide to eliminate their current sales and marketing model of luring them in with a gift and closing them hard when they get there.

This effort is a total waste of our $5 fee paid to ARDA per ownership.