Thanks to everyone who liked my post!
not every request for a deed back is a lazy bum that picked up a resale for a dollar, used the free prepaid fees and now wants to turn it in free. Far from it
John, I want to apologize -- I thought you were the poster on this thread who implied that owners were "lazy" if they wanted to do a deedback, but I checked and it was actually someone else.
OTOH, you did say this:
...
When I hear of people willing to pay thousands to "be out" but they won't take the time or expend the effort to sell it then I know they aren't really hurting - they just want out of what they now feel is a bad agreement and they don't want it to hurt THEM - no matter how much it hurts others.
NO SYMPATHY from me. If they were really so broke then they wouldn't have $2000-$6000+ to pay to a scammer to place the time in a Viking Ship. They would just let it go - unpaid - live with foreclosure and be happy they can put food on their table & have a roof over their heads. A foreclosure for fees isn't a big deal and certainly not as important as basic shelter & food to any family.
I would say that having a foreclosure on one's credit report can be a
huge deal. For starters, many insurance companies use credit ratings to determine fees. If I had a foreclosure, my auto & home insurance would go up by at least $1000 a year, and probably not come back down for several years. Many employers use credit reports to decide whom to hire. Someone may need to refinance a HELOC or other large loan soon, and be unable to do so if they had a foreclosure. A serious hit to one's credit report can start a downward spiral that ends in bankruptcy or even homelessness.
OK, on to other points:
So how do we define "many" owners? A simple majority? A super majority? Those that pay vs those that don't? At the vast majority of resorts, even those in serious trouble, usually the majority (as in 70%+) are paying thus it has to be assumed they want the resort to continue to exist. Fair?
No, not fair at all. We cannot assume that all owners who pay dues want the resort to continue, because if owners stop paying dues, then the resort can ruin their credit. John, you have said that your resorts (or at least one of them) forecloses after just one year of missed MFs. A foreclosure will have a catastrophic effect on a previously good credit rating. So, it's a "heads I win, tails you lose" situation." If an owner keeps paying, the HOA Board assumes the owner
wants to keep paying, rather than having the resort close. And if the owner stops paying, their credit is ruined. An owner who wants out can't win.
We know that, in the timeshare world as a whole, there are not-insignificant number of owners who want out but have kept paying their dues. We know this because Viking Ships get intervals
only from paying owners. If all dues-paying owners wanted to keep their intervals, the whole Viking Ship industry wouldn't exist, and neither would this thread.
As for how many people need to want out before a timeshare should close, that is a difficult question. However, I think that if a majority (50.1% or more) of intervals at a resort are non-performing or are owned by people who want out, the resort should probably close (unless the resort can find some way to reduce the total number of intervals, perhaps by closing some buildings or closing part of the year.) I would point out that if only 70% of the intervals at a resort have paying owners, it is possible that this 50.1% threshold has already been reached, and the HOA Board just doesn't know it. If deedbacks aren't allowed, how will the HOA Board know how many people want out? (An HOA could do a survey and ask if owners want out, but I don't know of any who have.)
And also remember that a benefit to one owner has to be offered to all. So if we say that a paid up ownership can be turned in then every owner has that same opportunity.
There have been several suggestions here to deal with this. Deedbacks could be limited to a certain number per year, first come first served, with other owners placed on a waitlist. Or, a resort could use Boca's suggestion of a "dutch auction" where deedbacks go to owners who pay the highest amount. (I'm not sure most owners would agree to or even understand a dutch auction, but requiring payment of two or three year's MFs for a deedback would have a similar effect.)
We set up free listings, we offer lists of resales to anyone that ask's (we cannot approach them - the sales presence on site prohibits that) and recently we contracted with a bonded, licensed reseller (no up front fees of any kind) to actively market the ownerships at off site locations. We are doing everything we can think of to create a market and sell the now unneeded ownerships to new owners. We have held raffles to give away ownerships, advertised in our newsletters of the great values available to current owners and their friends & families. We have moved many many ownerships using those methods, eBay, TUG and other sites. There is only so much we can do.
John, clearly the HOA boards you are on are doing the right thing, helping unhappy owners find takers for their weeks. But most HOA Boards aren't doing this -- the study VegasBella cited showed that only 28% of owner-controlled HOA boards take steps to help owners sell/giveaway their weeks.
I suppose you'd say the solution is to elect a more responsive HOA Board, but I see two problems with that. First of all, if someone just wants out, running for and serving on the Board is a really difficult way to achieve this goal.
Secondly, even some "owner elected" boards are able to manipulate proxies to stay in power when the other owners want them out. Don't HOA Boards generally get to vote the proxies for HOA-owned intervals? So, if a resort is in trouble and many weeks don't have owners, the Board may be able to vote themselves back in forever.
(I actually owned three weeks in a resort system where many owners were angry at the HOA Board. This wasn't a failing resort; the issue was the Board approving a large purchase without asking the owners. Unhappy owners didn't have a way to communicate with each other, so there was no good way to give proxies to someone who could attend the annual meeting in Utah, far from most owners. So, the Board stayed in power despite the many unhappy owners. Luckily for me, the resort system
took deedbacks! A TUG member took a week of mine that special reservation privileges, and I deeded back the other two weeks.)
If so many want out why not hold the vote to terminate the resort? That makes far more sense than a slow, inevitable death by some individuals getting out for free while others get stuck with the bills until they too finally give up. That's why there are methods to terminate a resort if the time comes....
There is no magic bullet to make buyers line up for ownerships no matter how low fees may be, how nice the area / resorts are - there are far more timeshares for sale than there are buyers. Period.
Now, I think we've come to the crux of the matter. There are more timeshare intervals than there are people who currently want to own, and it is too hard to terminate a timeshare. For many resorts, termination requires a substantial supermajority. This may be impossible to obtain at some older resorts, even if a large majority of owners want out, because the resort lost track of many owners, or owners have died or have dementia, leaving substantial numbers of intervals in limbo.
Timesharing Today reported (sometime within the last year) about a Florida timeshare resort that was destroyed by a hurricane. The underlying property could never be sold because at any given time, many of the intervals were in probate or owned by people who were ill, and the resort couldn't get enough people to vote on a purchase offer. As time went on, the problem actually got worse because intervals were divided among heirs (some of whom also vanished, died or developed dementia), leaving an ever-increasing number of people entitled to vote. Eventually, the law in Florida was changed so that the owners no longer got to vote on purchase offers, only the Board did. Finally, the Board was able to sell the real estate. This particular timeshare did not involve abandoned intervals, but it shows that it can be simply impossible to do anything that requires a vote by the majority (or a supermajority) of owners.
So, that is the issue here: How do we change things to make it easier for timeshares to close? As Carolinian is fond of reminding us, US law limits the extent to which old contracts can be changed. So, we are stuck with what
can be changed. Making it easier for resorts to go bankrupt, forbidding resorts from reporting unpaid MFs to credit agencies -- these are things that may be changeable under our current legal system. HOA Boards can also agree to take deedbacks (as evidenced by the fact that many do), as long as they treat all owners equally.
The economy is improving, but the issue of resorts with aging infrastructure and aging owners is not going away. It is hurting the whole industry, and we need a way to make it easier for old resorts to close. Given the way many timeshare docs are set up, bankruptcy may be the best or only option.
More than anything else it is that "tone" of blame the HOA/ Board that makes me see red.
I agree that many of the posts here have been overly blaming of HOAs. I think most HOAs are made up of hard-working volunteers that are doing the best they can.
However, as I said in my last post, I have become convinced that many HOA Boards simply want something different from the average owner. Pretty much by definition, HOA Boards attract owners who are very committed to the resort. While this is usually a good thing, it can be an obstacle if a resort has outlived its usefulness and should to close down. The people who serve on HOA Boards will often have a strong emotional investment in the resort -- and emotional investments can make it very difficult to make financial decisions.
Making it worse is that the timeshare world tends to think of a resort that closes as one that "failed." This likely makes it even tougher for Boards to realize when a resort needs to close.
I think older resorts that close should be viewed in a different light. If the resort provided good, reasonably-priced vacations for several decades, then it fulfilled its purpose and didn't fail at all. The original owners are now deceased or too old to travel, and got what was promised from the resort. (As for the claim, "You can deed it your your heirs," well, if most of the original owners had heirs who wanted their ownerships, then there would be no problem.)
Few business in the hospitality industry last for decades in the same location. Most restaurants often go under or totally change menus in a few years. As hotels age, they are bulldozed, converted to other purposes, or downgraded to a cheaper brand. If a 30-year old timeshare needs to close, no one is to blame (except maybe the people who set up the original timeshare docs and didn't make it easy enough to terminate the timeshare.)
Rather than blame and recrimination, it would be great if HOA Board members and owners could view the closing of a timeshare as more like a retirement. There could maybe be a party where everyone says say goodbye, and the owners could (voluntarily) chip in and buy the HOA Board members plagues of appreciation. Maybe the owners would treat Board members to a vacation somewhere else the next year.
I don't have any personal knowledge of the situation at your Cape Cod resort, John, and am not saying it should close. But, I don't think decisions should be made on the basis of that one resort, either. If a particular resort can stay open for decades in a highly seasonal area, even with the bad economy, then that is great. But, there are many other resorts that can't manage it, and should close.
