Create a LLC Business to Get Rid of Timeshare?

[Mel]

Why not just pay an attorney a consulting fee and check into it? The cost to set up a LLC in my state is less than $200. You do not need an attorney to do that part.

I'm not stating that anyone should do anything illegal. Just check into your options. Bringing up jail time and legal expenses are just scare tactics brought forward on this thread by non-attorneys. If you're qualified to offer this type of advice then please let us know. Or even if you could provide an example that would be helpful.

There is more than just the costs associated with setting up the LLC. That LLC has to file taxes, and will have to pay income taxes. Do you know how to file a corporate return? Not only will you have to pay federal taxes, but that state you file in may have other fees and taxes.

If you plan to convince the court that you really did intent to rent your timeshare as a business, you will need to have some actual expenses, aside from just the maintenance fees. You might think that your maintenance fees are small beans, but the same could be said of anyone who doesn't pay their fees. Remember also that the deed may be transferred to your LLC, but the resort may have language in their Condo Declarations which would still prevent you from passing all liability on to your LLC - I know at least one of my resorts has such language to protect all owners. If you tried this at that resort, you would still be personally liable for the unpaid fees - particularly if you maintain control of the ownership.

Yes, there are some resorts where you could probably get away with this - the same ones that would let you go 3 or 4 years before foreclosing - but I wouldn't count on it working at most. The older, smaller resorts have HOAs that are like families, and they would go after you. The resorts affiliated with hotel groups have deep pockets, so they can go after you too, if they choose.

 

[BocaBum99]

Why not just pay an attorney a consulting fee and check into it? The cost to set up a LLC in my state is less than $200. You do not need an attorney to do that part.

I'm not stating that anyone should do anything illegal. Just check into your options. Bringing up jail time and legal expenses are just scare tactics brought forward on this thread by non-attorneys. If you're qualified to offer this type of advice then please let us know. Or even if you could provide an example that would be helpful.

I actually did review this exact business opportunity with an attorney. I did not have to pay the attorney because I already do a lot of business with this particular real estate attorney. I ruled out the opportunity because it is fraught with risks. The PCCs who are creating dumping grounds for timeshares are going to be in for a huge comeuppance pretty soon. It won't be the AG that goes after them. It will be the timeshare resort group. They will have Millions of dollars in maintenance fees at stake, so they will be willing to spend legal dollars to go after individuals by piercing the corporate veil.

 

[AwayWeGo]

What's Wrong With Just Paying What's Owed? Too Simple?

The older, smaller resorts have HOAs that are like families, and they would go after you. The resorts affiliated with hotel groups have deep pockets, so they can go after you too, if they choose.

Good !

All the timeshare HOAs -- large, medium, small, independent, captive mox nix -- should take prompt, aggressive action against the deadbeats & the fee dodgers.

By me, anybody who can afford to own a timeshare can afford to pay the maintenance fees.

By me, timeshare owners should all do the right thing by paying what they owe, on schedule, until such time as they lawfully transfer title to new owners.

By me, schemes specifically contrived to duck the responsibility of ownership via trusts, LLCs, Viking ships, etc., are dishonorable.

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

 

[BocaBum99]

With the invesigations by various state Attorney Generals resulting in PCC's being barred from operating in states and being compelled to reimburse lots of client money, I would suspect that the number is WELL over 1%

Of course. You have an unsubstantiated opinion with no facts. I have real data. The risks of using a PCC are way overblown on these message boards.

 

[theo]

Yessa!

All the timeshare HOAs -- large, medium, small, independent, captive mox nix -- should take prompt, aggressive action against the deadbeats & the fee dodgers.

By me, anybody who can afford to own a timeshare can afford to pay the maintenance fees.

By me, timeshare owners should all do the right thing by paying what they owe, on schedule, until such time as they lawfully transfer title to new owners.

By me, schemes specifically contrived to duck the responsibility of ownership via trusts, LLCs, Viking ships, etc., are dishonorable.

I agree wholeheartedly, with each and every point above.

Unfortunately, in "modern day" American society, the concepts of honor and personal accountability and responsibility are too often somehow perceived as "optional", when adherence to same is "inconvenient".

 

[ronparise]

I actually did review this exact business opportunity with an attorney. I did not have to pay the attorney because I already do a lot of business with this particular real estate attorney. I ruled out the opportunity because it is fraught with risks. The PCCs who are creating dumping grounds for timeshares are going to be in for a huge comeuppance pretty soon. It won't be the AG that goes after them. It will be the timeshare resort group. They will have Millions of dollars in maintenance fees at stake, so they will be willing to spend legal dollars to go after individuals by piercing the corporate veil.

if its worth enough and if they have the dollars to pursue it, Im sure you are right, but it will be money thrown down a black hole.

Even if they pirece the veil, what do they have?...an individual or several individuals that they can go after....the moneys gone or tied up in Florida personal residences (a'la the wallstreet inside traders that moved to Florida in the 1980's) protected by homestead laws. Think about it, how much Madoff money has been recovered... So they throw the bastards in jail...so what , the money is still gone. or they get a judgement..try to collect

The best that can happen is that the PCC is closed down and the days of viking ship LLCs is over

But The problem still remains...some folks cant sell or give away their timeshare and they will stop paying their dues...thats the problem, not the PCC's. the PCC's are just taking advantage of it...do away with the PCC's but the problem remains

My somewhat tongue in cheek post (above) was written with that in mind....my advice if you dont want to pay your fees, is dont. and like the guy that posted here earlier today, you will probably get away with it (for a while)

 

[BocaBum99]

Good !

All the timeshare HOAs -- large, medium, small, independent, captive mox nix -- should take prompt, aggressive action against the deadbeats & the fee dodgers.

By me, anybody who can afford to own a timeshare can afford to pay the maintenance fees.

By me, timeshare owners should all do the right thing by paying what they owe, on schedule, until such time as they lawfully transfer title to new owners.

By me, schemes specifically contrived to duck the responsibility of ownership via trusts, LLCs, Viking ships, etc., are dishonorable.

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

Fantasyland only exists in Disney. The real world is much less virtuous.

 

[Carolinian]

So, what does your research indicate the probability is that what you suggest will happen with a PCC? I have done an assessment and have determined that it is less than 1%. Do you have any data that suggests it is higher?

While this post was addressed to Lanny, I am calling you on your ''assessment'', which so far is nothing but your naked claim with nothing to substantiate it.

Where did your ''data'' come from? The PCC's themselves? How trustworthy a source is that? Of course they are going to tell you that they are honest; would they admit otherwise? For a third party to compile data, they would have to have access to PCC's internal records, and for lots of reasons, I just don't see that ever happening. That would also mean full unfettered access to ALL of their records, not just ones they might want to cherry pick.

 

[Carolinian]

No, what I would expect is them to pick some test cases to convince the rest of the deadbeats that they mean business. Very few timeshare deadbeats are going to be sophisicated enough to flee to Florida and set up a homestead. And who would do that over a t/s m/f??????

They will pick defendants who have assets to collect out of or who have jobs and live in states where wages can be garnished for debts. They will do their homework to find ones who are NOT judgment proof. The ownership of the timeshare will likely be enough for venue in the state where the timeshare is located, so they will be sued there. To make defense more expensive for them, the defendants will probably be residents of other states. Some will spend gobs of money hiring an attorney in that other state where the timeshare is located, and still lose. Some will settle and take their timeshare and its m/f's back or pay out a large lump sum to the HOA. Some will not answer and will have a default judgment entered against them. The HOA will then get a judgment on a judgement in their home state, usually a slam dunk, and then proceed to collect the judgment by garnishment of wages or seizing and selling property of the defendant. The judgments, of course, will also be placed on their credit reports, ruining their credit.

The HOA's will then have the bloody shirt they can waive to other deadbeats to make certain they stay in line.

This is not going to be about suing everyone, I would wager, but about establishing the carefully selected test cases.

if its worth enough and if they have the dollars to pursue it, Im sure you are right, but it will be money thrown down a black hole.

Even if they pirece the veil, what do they have?...an individual or several individuals that they can go after....the moneys gone or tied up in Florida personal residences (a'la the wallstreet inside traders that moved to Florida in the 1980's) protected by homestead laws. Think about it, how much Madoff money has been recovered... So they throw the bastards in jail...so what , the money is still gone. or they get a judgement..try to collect

The best that can happen is that the PCC is closed down and the days of viking ship LLCs is over

But The problem still remains...some folks cant sell or give away their timeshare and they will stop paying their dues...thats the problem, not the PCC's. the PCC's are just taking advantage of it...do away with the PCC's but the problem remains

My somewhat tongue in cheek post (above) was written with that in mind....my advice if you dont want to pay your fees, is dont. and like the guy that posted here earlier today, you will probably get away with it (for a while)

 

[ronparise]

No, what I would expect is them to pick some test cases to convince the rest of the deadbeats that they mean business. Very few timeshare deadbeats are going to be sophisicated enough to flee to Florida and set up a homestead. And who would do that over a t/s m/f??????

They will pick defendants who have assets to collect out of or who have jobs and live in states where wages can be garnished for debts. They will do their homework to find ones who are NOT judgment proof. The ownership of the timeshare will likely be enough for venue in the state where the timeshare is located, so they will be sued there. To make defense more expensive for them, the defendants will probably be residents of other states. Some will spend gobs of money hiring an attorney in that other state where the timeshare is located, and still lose. Some will settle and take their timeshare and its m/f's back or pay out a large lump sum to the HOA. Some will not answer and will have a default judgment entered against them. The HOA will then get a judgment on a judgement in their home state, usually a slam dunk, and then proceed to collect the judgment by garnishment of wages or seizing and selling property of the defendant. The judgments, of course, will also be placed on their credit reports, ruining their credit.

The HOA's will then have the bloody shirt they can waive to other deadbeats to make certain they stay in line.

This is not going to be about suing everyone, I would wager, but about establishing the carefully selected test cases.

It seems we agree about the suing...they will either win or lose and win or not, or close down the PCC's or not

My point is that It dosent make a difference. The PCCs can dry up and blow away, but the problem of unwanted timeshares will still be there begging for a solution

 

[BocaBum99]

While this post was addressed to Lanny, I am calling you on your ''assessment'', which so far is nothing but your naked claim with nothing to substantiate it.

Where did your ''data'' come from? The PCC's themselves? How trustworthy a source is that? Of course they are going to tell you that they are honest; would they admit otherwise? For a third party to compile data, they would have to have access to PCC's internal records, and for lots of reasons, I just don't see that ever happening. That would also mean full unfettered access to ALL of their records, not just ones they might want to cherry pick.

I happen to be in the business. That gives me plenty of data. You are clueless because you are just making stuff up.

 

[funtime]

This has strayed a bit from the original poster's desire to offload quickly. I find that it often happens that folks (including me as I am guilty of this) put up with a problem for a very long time and then they want to solve the problem like right now - including "getting rid of that awful timeshare and just dumping it!"

I just sold a late summer week in Vail (nice resort but week 34 getting into low season and resort has high maintenance fees.) I spent some time pumping up the resort and experience as I do like the resort. I placed it on ebay and set the bidding at 1.00. While it did not get a bid the first week, I put it up again and it got a bid of 17.50 the second week and we are going through with the transfer. I often find that when I really work on an advertisement I can find a lot of good things about the resort - even if it is a true blue week rather than a mildly pink week. Often resort areas have festivals in the off season and the local events and festivals can be included in your advertisement - also cut and paste pictures of the resort and also pictures of off season activities - hiking, golfing, white water rafting etc. And, further, even blue weeks get great trades in II in flex time so you might also list your trade history. While it takes effort and creativity to "sell" your timeshare for 1.00 it can be done with a positive advertisement. Of course a negative advertisement that is short, unsophisticated and states that I need to dump this because my wife is sick yada, yada, yada will probably not bring results. Funtime

 

[ace2000]

No, what I would expect is them to pick some test cases to convince the rest of the deadbeats that they mean business. Very few timeshare deadbeats are going to be sophisicated enough to flee to Florida and set up a homestead. And who would do that over a t/s m/f??????

They will pick defendants who have assets to collect out of or who have jobs and live in states where wages can be garnished for debts. They will do their homework to find ones who are NOT judgment proof. The ownership of the timeshare will likely be enough for venue in the state where the timeshare is located, so they will be sued there. To make defense more expensive for them, the defendants will probably be residents of other states. Some will spend gobs of money hiring an attorney in that other state where the timeshare is located, and still lose. Some will settle and take their timeshare and its m/f's back or pay out a large lump sum to the HOA. Some will not answer and will have a default judgment entered against them. The HOA will then get a judgment on a judgement in their home state, usually a slam dunk, and then proceed to collect the judgment by garnishment of wages or seizing and selling property of the defendant. The judgments, of course, will also be placed on their credit reports, ruining their credit.

The HOA's will then have the bloody shirt they can waive to other deadbeats to make certain they stay in line.

This is not going to be about suing everyone, I would wager, but about establishing the carefully selected test cases.

How long do we get to hear this mantra? When do you predict they're going to take that giant leap forward and actually do something? At some point, you can keep saying they should do this or that, but when is it going to be real?

Why hasn't it been done by now, if it's a such an obvious and easy choice? It kills me that we're all sitting here analyzing what they should do, and for some reason they don't do what we think they should do.

 

[ace2000]

How long do we get to hear this mantra? When do you predict they're going to take that giant leap forward and actually do something? At some point, you can keep saying they should do this or that, but when is it going to be real?

Why hasn't it been done by now, if it's a such an obvious and easy choice? It kills me that we're all sitting here analyzing what they should do, and for some reason they don't do what we think they should do.

Perhaps the answers just aren't as easy as we think they are...

 

[timeos2]

How long do we get to hear this mantra? When do you predict they're going to take that giant leap forward and actually do something? At some point, you can keep saying they should do this or that, but when is it going to be real?

Why hasn't it been done by now, if it's a such an obvious and easy choice? It kills me that we're all sitting here analyzing what they should do, and for some reason they don't do what we think they should do.

The well run resorts are taking proactive measures now. If yours isn't find out why not.

 

[ronparise]

Good !

All the timeshare HOAs -- large, medium, small, independent, captive mox nix -- should take prompt, aggressive action against the deadbeats & the fee dodgers.

By me, anybody who can afford to own a timeshare can afford to pay the maintenance fees.

By me, timeshare owners should all do the right thing by paying what they owe, on schedule, until such time as they lawfully transfer title to new owners.

By me, schemes specifically contrived to duck the responsibility of ownership via trusts, LLCs, Viking ships, etc., are dishonorable.

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

Im not in favor of schemes either I would prefer to be up front and direct about it; either pay or not but at least be honest with yourself about your reasons,

Alan I cant agree with you when you say a person that can afford to own a timeshare can afford to pay the maintenance fees. Over the last year I was able to buy 15 timeshare weeks for a total investment of less than $1000. That I can afford the purchase says nothing to whether or not I can afford the nearly $9000 in maintenance fees every year. I can and I should and I will pay, but the poa has no idea whether or not that's true...and neither do you

Until today I would have agreed with the moral argument.. I bought this stuff, I should pay my fair share to maintain it. But after reviewing the budget for one of the resorts where I own, Im not so sure any more

While its true that the association should expect me to pay my fair share for maintenance, isnt it also true that I should expect the association properly maintain the place. ...

This is a 254 unit property with 13728 intervals. Heres what I see in our budget that bothers me...

1) $1,286,000 bad debt...at the average mf being paid thats about 17% of my fellow owners, that are not paying...Thats too high I think...They do seem to be able to make up most of that with rental income but it still concerns me that there are that many of my fellow owners not paying

2) we pay 375k for Administration, 797k management, 105k reservation and inventory management and 375k for General and Administration..thats $1,652,000 skimmed off the top as I see it and paid to our management company; nearly 20% of the total budget.

3) There is no money in this years budget for reserves for painting, paving, roof replacement, the pool or elevators. That scares me..Do they really expect to be able to repair and maintain this stuff forever, and never renovate or replace?

Im not ready to jump to any conclusions, but Im becoming convinced that that the building is being mismanaged...or being managed for the benefit of the management company, not the owners

So what to do about it?...I could run for the board, I could organize a proxy fight to replace the board or the management company. I could attend the meetings. Im sure that there are lots of good things I could do, but I think another good thing would be to join the 17% that are not paying and just walk away from this place

The question is: Is it reasonable for an owner to stop paying maintenance fees if the resort is not being maintained...or if its being managed into the ground?

I think that the reasonable and responsible thing might be to walk away

 

[Carolinian]

That article in Timesharing Today revealing this toughened posture by a number of national management companies is only a few months old. I would expect them to first see if the threat alone works. If so, there is no need to go farther. If demonstration of what can happen to members who go the PCC route becomes necessary, then I could only speculate as to their timetable. You might ask one of them.

How long do we get to hear this mantra? When do you predict they're going to take that giant leap forward and actually do something? At some point, you can keep saying they should do this or that, but when is it going to be real?

Why hasn't it been done by now, if it's a such an obvious and easy choice? It kills me that we're all sitting here analyzing what they should do, and for some reason they don't do what we think they should do.

 

[Carolinian]

I happen to be in the business. That gives me plenty of data. You are clueless because you are just making stuff up.

You are in the business in handling owner rentals and in buying and selling Bluegreen. In the latter context, you probably have arranged with PCC's to deed you Bluegreen weeks they get in, which would give you data limited to Bluegreen, and as they have a go-to person to dispose of that inventory, of course 99% of it would be passed on. That only makes sense. It also explains why you would support PCC's as they would help your own business. But that gives you exactly nothing in the way of data on what they do with weeks where they do not have a go-to source of unloading, so you obviiously just make stuff up as to that.

The area I follow is also limited, but more diverse as not limited to one developer. for a number of years, as 1ST VP of my HOA, resales of HOA inventory were my responsibility, so I followed all aspects of timeshare resale in the area, the NC Outer Banks. Subsequently during my terms as HOA president, I also stayed on top of those issues. Since that time, when I have nothing else to do, I still look up what is going on in that respect.

 

[Mel]

How long do we get to hear this mantra? When do you predict they're going to take that giant leap forward and actually do something? At some point, you can keep saying they should do this or that, but when is it going to be real?

Why hasn't it been done by now, if it's a such an obvious and easy choice? It kills me that we're all sitting here analyzing what they should do, and for some reason they don't do what we think they should do.

Soome resorts are doing something. One of my resorts amended the condo docs a few years ago, to block the possibility of a developer ever gaining control of the HOA. At the same time, language was inserted to protect the HOA, should someone transfer their deedto a trust or LLC. It is not something I would expect in original filings,and it requires consent of a significant percentage of owners, but I doubt this is the only resort doing this.

 

[Maple_Leaf]

Deferred MF increases

This is a 254 unit property with 13728 intervals. Heres what I see in our budget that bothers me...

1) $1,286,000 bad debt...at the average mf being paid thats about 17% of my fellow owners, that are not paying...Thats too high I think...They do seem to be able to make up most of that with rental income but it still concerns me that there are that many of my fellow owners not paying

2) we pay 375k for Administration, 797k management, 105k reservation and inventory management and 375k for General and Administration..thats $1,652,000 skimmed off the top as I see it and paid to our management company; nearly 20% of the total budget.

3) There is no money in this years budget for reserves for painting, paving, roof replacement, the pool or elevators. That scares me..Do they really expect to be able to repair and maintain this stuff forever, and never renovate or replace?

Ron, #1 will kill you on the revenue side but at least it has to be dealt with immediately, #3 on the cost side with high probability of future MF increases and SAs which the HOA appears to have no problem with baking into the cake. #2 doesn't appear too bad, I'm familiar with a well-run resort that is at about 17% for management, depending on how you classify the expenses. I agree, start the process of getting out of this resort.

 

[Carolinian]

Soome resorts are doing something. One of my resorts amended the condo docs a few years ago, to block the possibility of a developer ever gaining control of the HOA. At the same time, language was inserted to protect the HOA, should someone transfer their deedto a trust or LLC. It is not something I would expect in original filings,and it requires consent of a significant percentage of owners, but I doubt this is the only resort doing this.

Protection from takeover by a developer or points club is important for an HOA. One example of that I am familiar with is Stouts Hill in the UK. When a well known points club bought out the original developer's inventory, the HOA saw the danger signals flashing and amended their governing instruments to provide that each member had one vote in the annual HOA meetings, no matter how many units they owned. That meant the points club only had one vote total, not a vote for every week it owned or controlled.

Another example is Outer Banks Beach Club I and II on the Outer Banks of NC. Their HOA went to court against a points club with control of a significant but not overwhelming number of their weeks and got a judgment in court that it was the owners of the underlying points weeks, not the points club itself, that got to vote those weeks at HOA meetings.

 

[Fauxqui]

Single owner LLC

In my opinion, as a tax practitioner, the Llc is the "entity du jour". Everyone wants one. You should be aware that a single owner Llc files a Schedule C with his or her tax return. The single owner Llc may not have the corporate protections and shield from liability that a multi-owner Llc has. I agree with much of what has been said here, "this is dangerous territory".

 

[ampaholic]

Protection from takeover by a developer or points club is important for an HOA. One example of that I am familiar with is Stouts Hill in the UK. When a well known points club bought out the original developer's inventory, the HOA saw the danger signals flashing and amended their governing instruments to provide that each member had one vote in the annual HOA meetings, no matter how many units they owned. That meant the points club only had one vote total, not a vote for every week it owned or controlled.

Another example is Outer Banks Beach Club I and II on the Outer Banks of NC. Their HOA went to court against a points club with control of a significant but not overwhelming number of their weeks and got a judgment in court that it was the owners of the underlying points weeks, not the points club itself, that got to vote those weeks at HOA meetings.

Are you able and willing to name the points club(s) involved in these examples please?

 

[Brerrabbit]

How long do we get to hear this mantra? When do you predict they're going to take that giant leap forward and actually do something? At some point, you can keep saying they should do this or that, but when is it going to be real?

Why hasn't it been done by now, if it's a such an obvious and easy choice? It kills me that we're all sitting here analyzing what they should do, and for some reason they don't do what we think they should do.

Yes - I would have to ask - have there ever been any cases where anybody has actually been sued over these unpaid maintenance fees? And what was the result of that? I get the impression that there is a lot of scare-speculation about what could or would happen, and that it has probably not ever really happened (yet). Some concrete examples would be very helpful.

 

[Brerrabbit]

Good !

All the timeshare HOAs -- large, medium, small, independent, captive mox nix -- should take prompt, aggressive action against the deadbeats & the fee dodgers.

By me, anybody who can afford to own a timeshare can afford to pay the maintenance fees.

By me, timeshare owners should all do the right thing by paying what they owe, on schedule, until such time as they lawfully transfer title to new owners.

By me, schemes specifically contrived to duck the responsibility of ownership via trusts, LLCs, Viking ships, etc., are dishonorable.

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

I think what is really needed is some kind of legal procedure, which would probably be the result of a law passed in some state, that would make it possible for the owner who decides he does not want it any more, to get rid of it very quickly, and not be on the hook for any more of these maintenance fees.

People who have the attitude of Mr. Cole here, don't seem to take into account that people's circumstances can change, maybe they lose their job, maybe they lose a bunch of value of their retirement because they were a client of Bernie Maddow, or maybe their health declines and they have medical bills on top of which they can't use it like they could in their younger days, and can't see paying MFs for something they don't or can't use, or there could be any number of other reasons why it is no longer such a great deal for someone.

Maybe there could be a law saying that after you have had it a certain number of years (I'd say no more than 10), if you don't want it any more, then you can give it back to the HOA or whoever, and they have to take it, and you can't be legally held responsible for any more expenses of it.

Of course, any resort could write something like this into the contract without having to wait to get a law passed, so maybe some of them might read this and start thinking about something like that. Because this business of people wanting to get rid of these things and being stuck with these maintenance fees that they can't afford, is just a great big problem, and leads to more problems such as these resale scams, and somebody needs to just solve it once and for all, maybe with something like I have suggested here.

In case anyone is interested, I was in that situation myself, and I found out that they had foreclosed on me (without notifying me), but nobody has ever tried to sue me over it. I don't know if it went on my credit rating or not.