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

[T_R_Oglodyte]

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.

Jennie: A sale does not need to involve money. Consideration, or quid pro quo, merely means that someone gives up something in exchange for something. In this case, the PCC is giving up its right to not own the timeshare (i.e., to not be subject to the payment of annual fees and assessments) in exchange for payment it deems suitable compensation for undertaking those obligations.

Variations on this theme occur often in transfers of impaired assets.

 

[TUGBrian]

I believe the model resale act will eventually be finalized, as its something that is being demanded of ARDA by the lawmakers in washington.

Many states have little to no knowledge about timeshares in general, much less the scams that are out there. Only recently has florida and mass launched their attacks to shut down the big players in the game...and other states will catch on quickly...however without any guidelines...many of these atty generals are flying blind.

I have so much to type on this its not even funny....so this wont die here in this thread...I may however create a new one for discussion =)

My biggest fear, as was the one with many members in the room at the forum...and it was discussed MANY times by various people...is that ARDA has members that allegedly pratice in these acts...thus making a very "hairy" situation that im would have to guess ARDA doesnt want to be in in the first place.

however, the underlying focus is that your states WANT HELP in identifying, and regulating these scams...they cannot find it anywhere and are demanding that ARDA give them something to go on as they represent the industry.

the ONLY way you will have your voice heard, is to email/contact/write/smoke signals your state atty general...AND some other regulartory offices (new info even for me as to who is responsible for policing what in this system).

These people want to end the scams, but just imagine how you would feel if you didnt even own a timeshare, and someone tried to explain all of this to you in an email =)

 

[BocaBum99]

I believe the model resale act will eventually be finalized, as its something that is being demanded of ARDA by the lawmakers in washington.

Many states have little to no knowledge about timeshares in general, much less the scams that are out there. Only recently has florida and mass launched their attacks to shut down the big players in the game...and other states will catch on quickly...however without any guidelines...many of these atty generals are flying blind.

I have so much to type on this its not even funny....so this wont die here in this thread...I may however create a new one for discussion =)

My biggest fear, as was the one with many members in the room at the forum...and it was discussed MANY times by various people...is that ARDA has members that allegedly pratice in these acts...thus making a very "hairy" situation that im would have to guess ARDA doesnt want to be in in the first place.

however, the underlying focus is that your states WANT HELP in identifying, and regulating these scams...they cannot find it anywhere and are demanding that ARDA give them something to go on as they represent the industry.

the ONLY way you will have your voice heard, is to email/contact/write/smoke signals your state atty general...AND some other regulartory offices (new info even for me as to who is responsible for policing what in this system).

These people want to end the scams, but just imagine how you would feel if you didnt even own a timeshare, and someone tried to explain all of this to you in an email =)

Thanks for the information explaining the purpose of this document. It also explains why resort developers didn't want TUG there. They want to target the upfront fee companies and the PCCs while leaving themselves free to do what they do.

What if the so called scams occurring in sales meetings at a PCC presentation are exactly like the sales presentation in the developer pitch? Do they outlaw both types of sales presentations?

Any one of the specific tactics used by PCCs and upfront fee companies can be construed as legal. It's the blatant misrepresentation and half truths that make timeshares so seedy. I'm not sure that what the PCCs do is any different than what the resort developers do.

At the end of the day, it's also up to the consumers to protect themselves. Caveat Emptor must still apply.

 

[TUGBrian]

Thanks for the information explaining the purpose of this document. It also explains why resort developers didn't want TUG there. They want to target the upfront fee companies and the PCCs while leaving themselves free to do what they do.

What if the so called scams occurring in sales meetings at a PCC presentation are exactly like the sales presentation in the developer pitch? Do they outlaw both types of sales presentations?

Any one of the specific tactics used by PCCs and upfront fee companies can be construed as legal. It's the blatant misrepresentation and half truths that make timeshares so seedy. I'm not sure that what the PCCs do is any different than what the resort developers do.

At the end of the day, it's also up to the consumers to protect themselves. Caveat Emptor must still apply.

lots of focus around the PCC issues surround just a few violations that are claimed.

1. abuse of POA...which in many states (including cali) is not intended for regular use such as this...and was also intended to benefit the grantor...not the party executing POA.

2. tax fraud. ie the blatant abuse of possible (but not legal) tax writeoffs claimed in presentations

3. mail fraud. The completely misleading statements made in the post cards or direct mail soliciting the owner to come to the meeting.

These were all brought up by the Real Estate Comission director from Arkansas (forget his name off the top of my head, but its in my notes...ill be more detailed later)....as things he blatantly calls scams.

the main problem he finds in arkansas, is that while he has done his best to end their activity in his state, thats where his jurisdiction ends...he says they just pack up and move north across the border a few miles...and they are untouchable by him.

He made it clear that unless the company OPERATES, or the victim is a RESIDENT of the state, there is nothing the DRE can do...and it falls back to the Atty General (who has the power to subpeona people outside state lines)...but as stated above...most if not all Atty generals are not real estate people...much less timeshare people.

 

[Fredm]

.

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.

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

Your Nightmare Scenario is too often realized.

Very sad, indeed.

 

[DanM]

Well, interpretations of the law is what makes lawyers richer and clients poorer, but there does seem to be a good argument that you have to be a broker in most states to sell a timeshare; that using a power of attorney to facilitate the sale for a fee would come under the requirements as well; and, that being given some form of revocable title to effect a transfer in exchange for cash or other consideration from the seller might also subject a PCC to licensing requirements.
My point was mainly that an AG who couldn't find grounds to prosecute these companies and at least make life uncomfortable for them is incompetent.

Interestingly, I found this site which seems to be devoted to promoting timeshare sales as a career (go figure) and has a state by state listing describing the legal requirements...in most cases being a real estate broker.
http://www.timesharetrack.com/index.php?p=1_29

 

[TUGBrian]

The counter argument that was heard in the presentation surrounding the licensing issue (now before I get into this, I do believe that if you are acting as an RE agent/broker and performing even some of those duties....you should be licensed to do so in your state)...however

Even the regular real estate side (dont yell at me, I know timeshares are "real" real estate, im just differentiating the two for the purpose of this discussion)...allows for the "bare bones" agent listings in the MLS now. where you can simply pay a fee to have someone list your home in the MLS...and do nothing more.

While as it was explained to me, the states balked at this saying if you are putting a home up for sale for someone...you are an agent and thus are required to be licensed..and perform said duties...the DRE comissioner said that the FTC overruled them on this saying that if a consumer WANTS to be able to pay a bare minimum to have his property listed and not the full comission of a RE agent/broker...they MUST be allowed the choice to do so.

now this just opens up a whole new can of worms in terms of upfront fee companies. While the difference for me IMO, is that for the "real" real estate side...the customer knows he is paying for nothing more than a listing in the MLS. on the timeshare side, its again the misleading and at times downright false statements made by many upfront fee scammers that lure owners into thinking its pretty much a done deal.

So while the concept of the upfront fee itself is not illegal, or even perhaps immoral. (after all, he pointed out its pretty obvious that MANY timeshare owners have no problem paying upfront fees if it will actually result in the sale)....the procedures and actions that lead up to the consumer paying the upfront fee are where the scam lies.

So while we at TUG merely place a blanket statement of "never pay upfront fees"...as we all know that doing so will almost certainly end up with you just throwing that money away...I dont think anyone would be in this situation if what was told to the customer (in this case, that a buyer was lined up...or that they had an actual offer of MORE than the asking price)...was true!

 

[TUGBrian]

another HUGE important tip that was mentioned by this DRE comissioner (I really like this guy btw)

is that if you were indeed scammed, not only report the scam to the DRE/atty general, but request the refund promised in writing...and inform them that you are reporting it.

Many of these companies actually avoid prosecution as they have found it financially viable to actually refund the money to those individuals who take the complaints to the next level (ie regulatory agencies...NOT THE BBB).

Doing so does two things that benefit them.

1. it successfully ends the complaint...thus nothing to prosecute or go after

and

2. appeases the customer, who is then not likely to agree to show up in court should the DRE/Atty general seek legal action down the road...because as far as the complaintant is concerned, they got their money back etc.

so these companies are finding themselves able to stay out of hot water by indeed refunding the extreme "squeaky wheels" as so many others remain silent...its still ridiculously profitable.

so, if you have been wronged or scammed...THEY WANT YOU TO BE QUIET.

if you want your money back, speak up...and dont stop speaking up until you get a refund.

 

[DanM]

Brian,
Good points, but, as I understand it, the FTC required multiple listing services to accept flat fee FSBO listings from their members, who, in turn, have to be licensed brokers. The FTC didn't say anything about state or mls requirements that you had to be a broker in certain transactions. They did say that a broker could, essentially, sell an ad on the mls for a flat fee and not provide any other service for that fee. This is an important distinction, because once a broker or anyone else starts negotiating a transaction on behalf of a seller, preparing a contract or transfer papers, or any of the other things a PCC often does, they have stepped out of the FTC's bailiwick and back into the minefield of state law.

That said, you couldn't be more right about squeaky wheels getting refunds. These crooks know they are crooks and are unlikely to expose themselves to real scrutiny by AGs or State licensing authorities.

 

[T_R_Oglodyte]

Well, interpretations of the law is what makes lawyers richer and clients poorer, but there does seem to be a good argument that you have to be a broker in most states to sell a timeshare; that using a power of attorney to facilitate the sale for a fee would come under the requirements as well; and, that being given some form of revocable title to effect a transfer in exchange for cash or other consideration from the seller might also subject a PCC to licensing requirements.

I don't disagree at all, save that I think that your first part should read "…there does seem to be a good argument that you have to be a broker in most states to sell a timeshare that you don't own …"

As far as I know, in almost all jurisdictions in the US it's perfectly fine to sell your own real estate without the participation of a broker.

++++++

We should also keep in mind that there are many timeshare ownerships that are not real estate, particularly right-to-use properties. Then there are other ownerships that may or may not be real estate, such as fractional ownerships in trusts, in which the trust owns the property.

 

[TUGBrian]

another fascinating point that was made by the DRE comissioner was that he only has power over LICENSED individuals.

If the person performing the act has no license, then they have no real power to do anything.

I found this the most absurd thing id ever heard in the entire event...much akin to an example someone gave me of saying a police officer pulls you over for speeding...and you telling him you dont have a drivers license to provide him to identify you...and him letting you go because he cant give you a ticket without a license.

sad...but true!

he did mention that they were currently in the works to provide new "claws" for the DRE to more aggressively deal with unlicensed violators...but I have no idea how long or if that will take place.

also note this was for arkansas, and im not aware if the laws in other states are similar (one did mention that florida was pretty ridiculously lax in their real estate enforcement...saying that "as long as you dont murder someone during the transaction you are probably safe") etc.

 

[BocaBum99]

Brian,
Good points, but, as I understand it, the FTC required multiple listing services to accept flat fee FSBO listings from their members, who, in turn, have to be licensed brokers. The FTC didn't say anything about state or mls requirements that you had to be a broker in certain transactions. They did say that a broker could, essentially, sell an ad on the mls for a flat fee and not provide any other service for that fee. This is an important distinction, because once a broker or anyone else starts negotiating a transaction on behalf of a seller, preparing a contract or transfer papers, or any of the other things a PCC often does, they have stepped out of the FTC's bailiwick and back into the minefield of state law.

That said, you couldn't be more right about squeaky wheels getting refunds. These crooks know they are crooks and are unlikely to expose themselves to real scrutiny by AGs or State licensing authorities.

Anyone can create an advertising service without being licensed Real Estate brokers. Newspapers are a good example of that. There are lots of listings every single day of the year in newspapers from which they get revenue. The newspapers are NOT licensed brokers. They are providing a service (advertising) for a fee. As long as the fee is not tied to the actual sale of a property, they are fine.

The upfront fee timeshare scams are actually not creating illegal businesses. They are illegally misrepresenting what they do. Someone has to catch them illegally misrepresenting what they do before they get into trouble. In addition, they use sneaky tactics to make it very difficult for the owner to get their money back.

 

[BocaBum99]

another fascinating point that was made by the DRE comissioner was that he only has power over LICENSED individuals.

If the person performing the act has no license, then they have no real power to do anything.

I found this the most absurd thing id ever heard in the entire event...much akin to an example someone gave me of saying a police officer pulls you over for speeding...and you telling him you dont have a drivers license to provide him to identify you...and him letting you go because he cant give you a ticket without a license.

sad...but true!

he did mention that they were currently in the works to provide new "claws" for the DRE to more aggressively deal with unlicensed violators...but I have no idea how long or if that will take place.

also note this was for arkansas, and im not aware if the laws in other states are similar (one did mention that florida was pretty ridiculously lax in their real estate enforcement...saying that "as long as you dont murder someone during the transaction you are probably safe") etc.

This is true and always puzzled me as well. However, in Florida, it is a 3rd degree felony to perform services of real estate on behalf of third parties without a license. The jurisdiction issue gets fuzzy. But, it is the law. I asked many times who actually investigates and prosecutes such claims. I still don't know how it is done. But, it is clearly law.

 

[BocaBum99]

I don't disagree at all, save that I think that your first part should read "…there does seem to be a good argument that you have to be a broker in most states to sell a timeshare that you don't own …"

As far as I know, in almost all jurisdictions in the US it's perfectly fine to sell your own real estate without the participation of a broker.

Exactly. Buying and selling your own property is perfectly legal. The issue is in how the agreements are written. The PCCs could eliminate the POA and still operate exactly the same businesses simply by writing the agreements differently. Eliminating the POA won't stop the PCC business model.

 

[BocaBum99]

lots of focus around the PCC issues surround just a few violations that are claimed.

1. abuse of POA...which in many states (including cali) is not intended for regular use such as this...and was also intended to benefit the grantor...not the party executing POA.

2. tax fraud. ie the blatant abuse of possible (but not legal) tax writeoffs claimed in presentations

3. mail fraud. The completely misleading statements made in the post cards or direct mail soliciting the owner to come to the meeting.

Some comments.

1. Abuse of POAs. I do agree that the manner in which the PCCs use POA is against the spirit of the laws which allow it. However, at the end of the day, the POA in nice, but not required. There is a very simply legal trick that PCCs can use to eliminate this as an issue.

2. Tax fraud. Yes, this is an issue. This fits into the category of misrepresentation. This also is very similar to how Resort Developers have been accused of selling timeshares as investments. This is very easy for the PCC to beat in exactly the same way the Resort Developer gets away with it. They simply make them sign a disclosure document that tells them to get tax advise from an accountant.

3. Mail fraud. This is a marketing issue that can be regulated. But, not entirely stopped. The PCCs can invite people to attend a seminar on how to get rid of their timeshare. The post cards just need to be word smithed.

The bottom line is that the consumer needs to perform their own due diligence. We cannot legislate against being stupid. It is every American's right to be as stupid as they want with their money.

 

[e.bram]

In NJ you have to be a licensed a RE agent working thru a licensed RE broker to sell RE. That woulde mean that any TS salesman would have to be a licensed agent to sell TSes. Is that true in other states and could be a reason to get out of a TS contract after the recission period?

 

[DanM]

In NJ you have to be a licensed a RE agent working thru a licensed RE broker to sell RE. That woulde mean that any TS salesman would have to be a licensed agent to sell TSes. Is that true in other states and could be a reason to get out of a TS contract after the recission period?

It is true in other states, but the fact that the salesman broke the law doesn't necessarily void a contract signed by a buyer. On the other hand, it is part of a good argument that could frighten a seller into letting a buyer rescind -- if the alternative is the AG or other authority investigating the links between agent and seller and any pattern of illegal actions. Actually, many timeshare developers (Disney for one) hire brokers/agents as salespeople in the states they sell in for that reason. PCCs probably don't and are at greater risk.

Without getting into another legal argument with the lawyers here (each of whom is entitled to an opinion), there are a variety of PCC tactics that could be challenged, including, in my opinion, phony 'sales'. The bottom line, as others have mentioned, is educating and motivating State AGs and licensing authorities to enforce laws that are already on the books.

 

[T_R_Oglodyte]

In NJ you have to be a licensed a RE agent working thru a licensed RE broker to sell RE. That woulde mean that any TS salesman would have to be a licensed agent to sell TSes. Is that true in other states and could be a reason to get out of a TS contract after the recission period?

You've mentioned several times that legal research is easy and fun; any person can go to a law library and figure out what the law is on a topic. So why don't you research it and get back to us on what you find out!

 

[AwayWeGo]

Looking For Loopholes ?

In NJ you have to be a licensed a RE agent working thru a licensed RE broker to sell RE. That woulde mean that any TS salesman would have to be a licensed agent to sell TSes. Is that true in other states and could be a reason to get out of a TS contract after the recission period?

At many if not most (or possibly all) of the timeshares we've gone to, there is a semi-inconspicuous sign by the front door of the main building giving the name of the licensed real estate broker on site under whose authority the timeshare sellers there are selling timeshares.

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

 

[Dave H]

another fascinating point that was made by the DRE comissioner was that he only has power over LICENSED individuals.

If the person performing the act has no license, then they have no real power to do anything.

I found this the most absurd thing id ever heard in the entire event...much akin to an example someone gave me of saying a police officer pulls you over for speeding...and you telling him you dont have a drivers license to provide him to identify you...and him letting you go because he cant give you a ticket without a license.

sad...but true!

he did mention that they were currently in the works to provide new "claws" for the DRE to more aggressively deal with unlicensed violators...but I have no idea how long or if that will take place.

also note this was for arkansas, and im not aware if the laws in other states are similar (one did mention that florida was pretty ridiculously lax in their real estate enforcement...saying that "as long as you dont murder someone during the transaction you are probably safe") etc.

Brian:

Sad but true. It is true with closing companies as well that is how there are so many that tranasct with escrow that are not licensed. Being pulled over by a police officer is a bad example. The LAW requires you to produce the drivers licensed when asked for it. By not doing that, you have broken a law.

In the RE world and in my world, the state RE commission or Insurance Commission can only take action where a licensee is involved. No license, what do they take form you and how do they fine you. That is where the AG becomes involved.

Dave

 

[e.bram]

AwayWeGo:
I don't know about other states, but in New Jersey anyone working under a broker doing selling has to be a licensed agent(separate license)and must work under a broker(another type of lecense.)

 

[AwayWeGo]

The Las Vegas Of The East.

I don't know about other states, but in New Jersey anyone working under a broker doing selling has to be a licensed agent(separate license)and must work under a broker(another type of lecense.)

We haven't gone to any New Jersey timeshares since taking an Atlantic City timeshare tour (for freebies) way back about 1970 or so.

We'd be interested in an Atlantic City or Brigantine Beach timeshare exchange or Last Call reservation some time, but that's about the extent of our interest in New Jersey timeshares.

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

 

[GregGH]

Hello Admin

questions - could we ever get a 'link' button so we could click to follow w/o having to post.

GREAT THREAD, btw.

Greg

 

[T_R_Oglodyte]

Hello Admin

questions - could we ever get a 'link' button so we could click to follow w/o having to post.

GREAT THREAD, btw.

Greg

There are a couple of options.

First, above the top post of the thread is a drop-down "thread tools" menu. One of the options is to subscribe to the thread.

The second is that when you arrive at the BBS after log-in, you can click on the New Posts link in the top bar. That will call up all of the posts that have new content since your last visit. If a thread you are interested in shows up on the list, then you can click this icon,

, located next to the name of the last poster in the "Last Post" column, to go the most recent post in the thread.

Actually, I have the "New Posts" link bookmarked, and I have my preferences set to remember me, so I just come straight to the New Posts link when I check in.

Finally, if there are forums you are not interested in, you can go to your User CP (on the left end of the blue bar at the top of the page) and limit the forums against which the New Posts query runs.

 

[TUGBrian]

new thread to move the model resale act discussion into its own thread.