Create a LLC Business to Get Rid of Timeshare?

[Mel]

Lets face it In the case of a lot of defaulting owners the association will get the deeds back. Foreclosure is just one way to do it. Its expensive and time consuming. Why not develop other ways to get back control.... reorganize as a co-op rather than as a condo, accept deedbacks, and develop a rental and resale program for example . ...Making the deed back easy or automatic will be a lot better for all of us than the forclosure process. You may not like a socialistic approach like that but its the way timeshares work...ie they are managed for the benefit of all the owners

The problem is that the members of the Association were not the ones that formed the Association or wrote the bylaws and other governing documents. Those were written by the developers, who honestly don't care, because once they sell the week, they are off the hook. They only end up back on the hook if they have to forclose due to non-payment of the mortgage note - and then they are in a position to sell it once again. They have to salesforce, and the background to do that.

These same developers keep the fees low initially, to attract buyers. Then those same buyers, now the Association members, must later make up for the low fees with assessments or higher annual maintenance fees to build a reserve fund. If the developer wrote the bylaws in such a way that they can maintain control of the association, the owners have little hope to stem the spiraling fees, because the developer makes the decisions for them. Resorts where the developer is out of the picture are not always in a better position, because that also means no developer to deal with those weeks deeded back. If the Association has no way to market those weeks, it makes little difference whether they take back the deeds - in fact it's in their best interest not to do so, because that bad debt is still attributable to someone else.

If they want to insert langauge into their bylaws or Condo Docs to make forclosure automatic, they have to have the consent of a majority of the owners - easier said than done. And even if they do that, things may get far worse before they get better. When we updates the Condo Declaration of our resort, which did accept deedbacks prior to rebuilding, we were down to 638 owners out of 1836 units (51 weeks in 36 units). We ended up selling the remaining interest to another developer, but that only worked because the resort was being rebuilt from the ground up. Can you imagine this with your own resort? Only 1 in 3 units result in paid maintenance fees? The Association does have to deal with the eventuality that owners will die, or get old. But they may need to pick and choose which units are a priority to accept the deeds back. Those where there is little likelihood of securing payment are a priority - those where the owner simply wants out, but has the means to pay, are not.

Maybe the associations should form their own mini-PCC programs. Pay the association the equivalent of 3 years maintenance fees, and they will take the deed back. That gives them 3 years to market the week before the other owners have to absorb the unpaid fees.

 

[ronparise]

Not saying it doesn't happen but it's dangerous waters. If you knew that x number of owners got to deed back but now you can't (the resort has too many and has now committed the remaining owners to paying those fees) would you feel it's fair & good? The treat all alike rule applies to every Association by common law. Great book written about Association law I've referenced before. It should be read by every owner.

John

you have already said association may take back deeds from some owners and not others, and take timeshares back, and taking those deeds back is neither fair or good for the rest of the membership...but associations do it every day in the name of good management

Sure the process is foreclosure, but thru foreclosure I can dump my timeshare back on the association

Just saying it could have been done quicker and cheaper


I think you and I are misunderstanding each other....When I say "resorts should have a process in place to take deeds back" (other than foreclosure) You hear "take all deeds back, anytime under any circumstance" When I hear you say "associations should not take deeds back" I hear Associations will never take a deed back"

neither one of us are saying these things, ie we are not reacting to what the other has said

let me try to say it in a different way..........

If we can agree that somewhere, and at some time, a timeshare owner will die without having made plans for his timeshare ownership; and the very next Jan 1 his maintenance fees will go unpaid.

Than we should be able to agree that Timeshare property owner associations should have plans in place to deal with this almost certain eventuality

All Im saying is that an association should have another arrow or two in their quiver besides foreclosure.

To say otherwise is to advocate for bad management

 

[rrlongwell]

... If the Association has no way to market those weeks ... Maybe the associations should form their own mini-PCC programs. Pay the association the equivalent of 3 years maintenance fees, and they will take the deed back. That gives them 3 years to market the week before the other owners have to absorb the unpaid fees.

Great point, you hit the nail right on the head. The association would need to do both of your main points. Have a take back program for a fee and develop a means of selling or renting the inventory. Selling to owners I have heard of at a number of resorts. Selling from the resorts exist at a number of locations. I have seen a resort selling through a normal big name Real Estate Company. They could also sell through Tugs, E-Bay, redweek, etc. or through their own site.

 

[rrlongwell]

... Great book written about Association law I've referenced before ...

Name of Book?

 

[timeos2]

Name of Book?

http://www.newneighborhoodspublishing.com/

A great read from a law firm that has successfully removed deveoper management that wasn't doing the job.

 

[Carolinian]

When I was an HOA president, most of the resorts in our area had a policy to accept deedbacks but not publicize that fact. Publicizing it would risk encouraging people to do that, which obviously was a big neggative. The economics were that a foreclosure was a lot more expensive than having a member cover all expenses of a deedback. Once members got behind, we agressively went after them. We pointed out at one stage that a foreclosure would end up on their credit report and could very severely damage their credit, something most people don't want. Even at that stage we usually did not bring up deedbacks unless the member suggested it. The first point where the HOA mentioned the possibility of a deedback was when it got to the first attorney letter prior to initiating foreclosure. We ended up with relatively few foreclosures and reletively few deedbacks.

It is amazing sometimes what weeks people will deedback. We had an owner with a desirable summer week who died and left it to his church, which could not figure out any way to use it so they asked to deed it back. We accepted it and sold it on to someone else for a nice profit.

 

[rrlongwell]

http://www.newneighborhoodspublishing.com/

A great read from a law firm that has successfully removed deveoper management that wasn't doing the job.

Thanks for the info.

 

[pammex]

Actually pretty easy to prove fraud at this point...hmmm..it is all in writing right on here...duh...

 

[PortableTech]

Let me start by saying that I write this is jest, and not as a serious recommendation to the issue of ridding ones self of a timeshare. I have always been a firm believer in the theory of "Horses not Zebras", meaning one should not look for the complicated solution first, but rather the simple one.

We have all this discussion about forming LLC corporations and complicated paperwork to deal with what might be seen as fraud. We also have the idea of knowingly paying a PCC to get rid of it to let them shield us from the concept of the fraud (and hope they actually do what they say). But perhaps we are overlooking a much simpler solution that if done correctly should not be illegal at all as far as I can tell.

Go find some nice homeless fellow rattling his cup for money on the street. Ensure he can at least prove who he is with an ID for legal purposes and that he is not insane or unstable (think competent to make an informed decision). Explain to him you have a great short term deal for him that might hurt him in the long run. Tell him you will rent him a room for the night at a hotel, buy him dinner, let him get cleaned up, and pay him say $500- $1000 for his time and trouble. All he has to do is accept ownership of your timeshare. Explain up front to him that he is going to be expected to pay this fee annually and that if he does not it could ruin his credit for the next 7 years. Be completely up front about the whole thing, almost annoyingly so. Then have the title agent meet with both of you, collect the signatures and record the deed.

Wish the poor fellow the best and be on your way.

-- PortableTech

 

[AwayWeGo]

Is There An Echo In Here ?

Let me start by saying that I write this is jest, and not as a serious recommendation to the issue of ridding ones self of a timeshare. I have always been a firm believer in the theory of "Horses not Zebras", meaning one should not look for the complicated solution first, but rather the simple one.

We have all this discussion about forming LLC corporations and complicated paperwork to deal with what might be seen as fraud. We also have the idea of knowingly paying a PCC to get rid of it to let them shield us from the concept of the fraud (and hope they actually do what they say). But perhaps we are overlooking a much simpler solution that if done correctly should not be illegal at all as far as I can tell.

Go find some nice homeless fellow rattling his cup for money on the street. Ensure he can at least prove who he is with an ID for legal purposes and that he is not insane or unstable (think competent to make an informed decision). Explain to him you have a great short term deal for him that might hurt him in the long run. Tell him you will rent him a room for the night at a hotel, buy him dinner, let him get cleaned up, and pay him say $500- $1000 for his time and trouble. All he has to do is accept ownership of your timeshare. Explain up front to him that he is going to be expected to pay this fee annually and that if he does not it could ruin his credit for the next 7 years. Be completely up front about the whole thing, almost annoyingly so. Then have the title agent meet with both of you, collect the signatures and record the deed.

Wish the poor fellow the best and be on your way.

-- PortableTech

Say, are you acquainted with someone on TUG-BBS known as e.bram ?

( Just asking. )

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

 

[e.bram]

Alan:
I don't who he(she) is, but they are stealing ideas.
I also say pay to send them to the resort, then they will be happy when they defalt

Instead of calling this a Viking Ship, we sould call it the FLYING DUTCHMAN model

 

[PortableTech]

I am not familiar, but given the context of the question, I have to assume I am not the first to have the idea. I certainly had no intention of stealing any ideas out there, so credit to the original.

-- PortableTech

 

[DeniseM]

Wish the poor fellow the best and be on your way.

-- PortableTech

So the end justifies the means, huh?