Developer Not Paying

[otis8756]

HI all. I'm sure this is more of a Texas question, but any and all input is welcome! I've finally gotten into my Association's books after 7 months of requesing to do so, and I found that the Developer has not been paying annual dues on unsold units. My research of state regulations tells me that he should be making the same payments that we owners do. In addition, there are NO reserves built up after 13 years of this ownership. Any advice on my next step???

 

[Icarus]

Are you a board member? If not, ask the board to deal with it.

-David

 

[otis8756]

I'm not a Board member. The Board is still controlled by the Developer-therein lies the problem. The owner, his CFO and his attorney comprise the Board. They don't meet or provide financial information annually like they are supposed to...

 

[AwayWeGo]

Timeshare Company Has To Pay Its Fees Just The Same As All Other Owners.

Obviously, with the timeshare company calling the shots in the boardroom, it's understandable how the timeshare company might get away with letting its timeshare fee payments slide. That doesn't mean the money isn't owed. It might mean, though, that there is some funny business with the books papering over the lateness of the (non)payments.

Shux, I heard of 1 timeshare -- with an independent, owner-controlled HOA-BOD in charge -- where the timeshare company still gets to cover its maintenance fees on its unsold units via an E-Z payment plan of quarterly installments. All the rest of the regular walking-around timeshare owning doofuses at the same resort have to pony up the full amount on time.

Go figure.

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

 

[Icarus]

I'm not a Board member. The Board is still controlled by the Developer-therein lies the problem. The owner, his CFO and his attorney comprise the Board. They don't meet or provide financial information annually like they are supposed to...

After 13 years they still control the board, and there's no non-developer owners on the board? The board still has a responsibility to the owners and the association. Also they could be in violation of state law also, if they aren't sending you annual reports or running the association properly.

It's probably time to dig out your documents and look through them to see what the plan was/is.

How much are the MFs there?

-David

 

[Mel]

During sales, they may not be required to pay the regular fee, you need to check the timeshare documents. In many cases, they get to pay a different fee "in liue of payment" of the regular annual fees.

There should also be a clause stating at what point the owners get to select a board members. But even if that happens, if the owner's attorney owns a week, he can still represent owners - unless it is otherwise prohibited.

No matter who is on the board, they have a fiduciary responsibility to all the owners. Failure in that fiduciary responsibility is what could hurt them in the end. I don't know where to tell you to start, but you may have to file suit to force the issue. That was successfuly done at one of our resorts, but we were not involved at the time.

 

[otis8756]

You hit the nail on the head Alan. The difference with this group is that they only cover the deficit that dues-paying owners don't cover. For the 2 years of financials I reviewed, that's been a pittance compared to what the owner's share should be if they paid dues on all unsold units. Not to mention the nonexistent reserves for future repairs... If anyone else cares to weigh in on this issue, I can use all the help I can get...

 

[timeos2]

Read the laws and the docs

You hit the nail on the head Alan. The difference with this group is that they only cover the deficit that dues-paying owners don't cover. For the 2 years of financials I reviewed, that's been a pittance compared to what the owner's share should be if they paid dues on all unsold units. Not to mention the nonexistent reserves for future repairs... If anyone else cares to weigh in on this issue, I can use all the help I can get...

That is typical language allowed in most States BUT only for X years/ such & such a percentage build out - NOT for 13 years or indefinitely! (with a few exceptions like Virginia) As you correctly point out after 5-6 years the lack of reserve contributions this leads to means the resort isn't able to fund needed maintenance among other problems.

It is likely they have far exceeded the time frame that they can hold on to Board control and exercise the special status for developer but as that does vary from state to state, you'd have to check your State statutes to be sure. Of course if they haven't reached the magic build out number percentage, and there is no time period like 5 years set in the statutes, then they may still be legal although it certainly isn't the spirit of the law (Powhatan owners have been in that unfortunate situation for nearly a decade). But find out and do what you can to break the hold they are exercising on your resort. It can be done but it isn'r easy.

 

[AwayWeGo]

Strategic Foot-Dragging.

Of course if they haven't reached the magic build out number percentage, and there is no time period like 5 years set in the statutes, then they may still be legal although it certainly isn't the spirit of the law (Powhatan owners have been in that unfortunate situation for nearly a decade).

OK, if I'm the slick Grand Pro of a timeshare company, what's to keep me from putting off selling those last 3-4 units indefinitely, just so my timeshare never officially becomes sold out & that way I can just keep stringing out forever whatever "temporary" privileges & conditions go along with still having units for sale even though I'm not really trying to sell those last few ?

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

 

[Icarus]

I'm no expert, Alan, but I think it depends on state law. Some states have better laws than others.

And it also depends on what's in the docs the buyer received when he purchased his unit.

-David

 

[otis8756]

the plot thickens...

I found today that, here in Texas, the Condominium Act is enforceable only by private lawsuits... The Condomium Act is the State law which requires the developer to pay his dues like I do. Next step besides hiring an attorney???

 

[bobby]

Strength in numbers. See if Timesharing Today will put in a brief mention of the problem and ask owners to contact you so you can act as a group to rectify the payments.

 

[timeos2]

OK, if I'm the slick Grand Pro of a timeshare company, what's to keep me from putting off selling those last 3-4 units indefinitely, just so my timeshare never officially becomes sold out & that way I can just keep stringing out forever whatever "temporary" privileges & conditions go along with still having units for sale even though I'm not really trying to sell those last few ?

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

Depending on how the documents/State law is written maybe nothing prevents it. That seems to be the situation at Powhatan where after over 20 years the developer still holds the Board while sitting at 89% (or something like that) of the 90% build-out required for turnover to the owners. Nice, huh? Fortunately in most States there is both a percentage and a number of years - whichever comes first - to force turnover.

As for the OP if the Texas law says they have to pay the same rate then you need to get a bunch of owners together and force them (retroactively to the original time they owed) to pay up. Once they are facing that the situation may change for the better for the owners.

 

[Tia]

Maybe start a yahoo group with the resorts name. Our ts had an owner who created a website for owners and slowly people discovered it, gathering enough votes to put real owners on the boards vs the developer people http://groups.yahoo.com/group/bluebeards/ Next you find lawyers capable of handling corporate types as otherwise they maybe able to hoodwink your lawyers into their way of seeing the picture. It is not an easy road.