First Lawsuit filed against Viking Ship LLCs / PCCs

[DeniseM]

It's a business decision, a financial contract about a LUXURY. If they want out, they should be able to get out. Making it extremely difficult to get out is cruel.

Seriously??? - people should not be held accountable for luxury purchases???

So how about these other luxury purchases - does your theory apply to them as well?

-Sports Cars
-Jewelry
-Designer shoes, clothes, and purses
-Expensive vacations

Should people who charge these items on a credit card, and then default, be let off the hook, because they are luxuries?

That is some strange economics!

 

[VivianLynne]

All my grandparents are dead.
My dad is dying.


Done


Done

Please STOP with the assumptions about me and my life. I may be younger than most of you and I may be new to the timeshare world, but I have experienced many things in life. I am not naive about life stuggles.

Furthermore, you're simply providing reasons for why many owners NEED exit strategies.


I did not propose "simple fixes". In fact, my concept was actually this: It doesn't have to be as simple as 'some owners default so the rest pay more.'

I find the notion that we ought to bully owners into paying their MFs morally repugnant. These are vacation ownerships. This is not group health insurance. The financial duty we TS owners owe one another is simply not high in the moral realm. It's a business decision, a financial contract about a LUXURY. If they want out, they should be able to get out. Making it extremely difficult to get out is cruel.

Spoken like a child of the mid 1980's.

My suggestion is NEVER OPEN YOUR OWN BUSINESS as then you will find out MORALITY is not an outdated concept.

Of course, I am assuming you are not a lawyer or married at a lawyer or daughter of a lawyer.

 

[bogey21]

I find the notion that we ought to bully owners into paying their MFs morally repugnant.

What is morally repugnant is not living up to the agreements you signed. What happened to the days when a deal was a deal? Getting out from under a TS Week isn't rocket science. It just takes a little work. Yes, sometimes it can be more than a little work but nonetheless it is doable. You just have to put your mind to it and you will get it done.

George

 

[csxjohn]

I agree completely! I am not a "Developer Fan"!

I am a developer fan, just not a fan of the way they do business.

The timeshare concept is great but why in world have they gone to making obscene profits from it.

Let's take a resort I own. There are 80 units on the ocean. Let's assume they sell 50 weeks for each unit leaving 2 weeks a year for maintenance projects.

I'm sure if this were built today the asking price would be somewhere around $20,000 per week but let's use $5,000 which most of us might consider a bargain for a beach front resort.

50 weeks X $5,000 per unit = $250,000 per unit X 80 units = $20 million.

I don't know what it would cost to acquire the land and put up the building but $20 million for this small resort seems like a lot of money. Maybe I'm way off on what I think it would cost to build, maybe someone in the know could help out.


But that's not good enough for these greedy types. They found that people can be sold a bill of goods if it is made to look more valuable than it is.

Think about it, where else would you be asked to spend tens of thousands of dollars and not be able to take the contract with you to look it over before it is signed???

They play on people's emotions and fears, and what ever else they can think of to grossly overcharge for their product.


Of course we all realize that without the developers we would have no timeshares and without the retail buyers there would be no resales but HOW MUCH IS ENOUGH???

 

[BocaBum99]

I think some of your proposals are good, but some of your ideas punish responsible owners, and I don't agree with that at all.

Denise,

All owners (well maybe 98% of them) who pay fees to PCCs to get rid of their timeshares are by definition responsible owners. FredM provided that insight. If they didn't care about their credit, they would just default. They are willing to pay $3000 to find a new home for the timeshare because they want to save their credit. I would venture to guess that 30% or more of timeshare owners are in this category.

So, I say that not having a reasonable exit strategy for timeshare owners IS punishing responsible owners.

As I have stated before, you and John want to absolve the HOA from any accountability for solving the problem by labeling them pretty much as innocent bystanders and basically assign no culpability to them in this mess.

Let me ask you this. If it is NOT the HOA who is accountable. Who is accountable? They set the budget for the resort. It's the budget for the resort that makes it unmarketable, so they have direct accountabilitiy for the mess.

 

[BocaBum99]

Maybe things have to get much worse before HOA's come to grips with it.

Well, here's hoping that enlightened sef-interest/preservation kicks in before then. No matter what happens half the owner population is sure to be screaming about it.

There are many enlightened resorts that are starting deedback solutions. More will follow because it is the only way out of this mess. Even John knows it, he is just trying to protect his resort by delaying the inevitable for as long as he can. If I were dying of cancer like many resorts are, I would probably want the same thing which is to live as long as possible with this disease. If someone else must pay for the hospital bill, then so be it.

I have encountered many owners who run into resistance for deedbacks when they ask themselves. But, when a skill transfer agent networks their way through the resort, they often times take it back because again, they know it is the right thing to do.

The problem I have is that eliminating the last remaining exit strategy (ie, the PCC) will make resorts less likely to take deedbacks because they know many of these owners have no way out and they can get them to continue paying maintenance fees because they want to preserve their good name and good credit.

 

[DeniseM]

Let me ask you this. If it is NOT the HOA who is accountable. Who is accountable?

Ultimately, the laws, and the developers who established the terms and conditions in the first place - all designed to benefit the developers and not the owners, and who, in many situations, have complete control of the BOD.

I don't have a problem with holding the developers accountable, and changing the laws to do so - but this thread is about Viking Ship LLC's, and that's what I chimed in about.

IMNSHO, Viking Ship LLC's are like rats on the sinking ship - they aren't the solution - they are only making things worse.

 

[csxjohn]

There are outside forces at work that the HOA has no control over.

Let's say that the HOA has cut costs to the minimum, lays off staff, and outsources some services. Thus making the MFs as low as possible.

The glut of units available today along with the bad economy all act on rental prices.

I often see written here that if rental prices are lower than the MFs, the HOA is doing something wrong.

I see a lot of truth in both sides of this thread's arguments but to put the whole blame on the HOA while ignoring the economic climate that helps sets rental prices is not realistic.

 

[BocaBum99]

There are outside forces at work that the HOA has no control over.

Let's say that the HOA has cut costs to the minimum, lays off staff, and outsources some services. Thus making the MFs as low as possible.

The glut of units available today along with the bad economy all act on rental prices.

I often see written here that if rental prices are lower than the MFs, the HOA is doing something wrong.

I see a lot of truth in both sides of this thread's arguments but to put the whole blame on the HOA while ignoring the economic climate that helps sets rental prices is not realistic.

If the MF are higher than rental rates, the timeshare should terminate. The problem is that there is no way for them to do it. And, if owners have no way out and are forced to continue paying, then it continues.

 

[BocaBum99]

What is morally repugnant is not living up to the agreements you signed. What happened to the days when a deal was a deal? Getting out from under a TS Week isn't rocket science. It just takes a little work. Yes, sometimes it can be more than a little work but nonetheless it is doable. You just have to put your mind to it and you will get it done.

George

George,

Okay. Let's say you own a Blue week in Minnesota. Week 3. Maintenance fees are $900 for a 2br unit. Red weeks in the summer have the same $900 assessment. You look at rentals in the area, they go for $100 per week for January. Please tell me your plan to get someone to take this unit that does not involve a scam.

Just give me your theory for how you would approach the problem and come up with a target buyer.

This type of example is what Ken McKelvey gave me which is making timeshares insolvent and that HOAs have put their head in the sand and will not try to solve it.

I think you and John are completely wrong about the assertion that all timeshares can move. If that assertion is true, then the resorts would accept a plan that gives them a $400 transfer fee and 2 years maintenance fees to be put into a holding company. They have 2 years to find someone to take it and they have access to the owner list which should be the best way to find a new home for it. In addition, they could add to their fees by renting the available units that come with them.

If the resort truly has value, this business plan would be a no brainer. It would be easy to sign up a Broker to create a holding company along with a resale and rental program that should be self sustainable. If it has no value, they have several years to prove it in by adjusting maintenance fees and making the resort more viable for new owners and renters. If the broker can't make money, then they will quit and now the resort has control of the units and has proved beyond any reasonable doubt that they should go out of business and present such asset sale to the owners for a vote. If that doesn't happen, then they submit a special assessment which will increase every year until the resort declares bankruptcy and a judge cancells all the agreements and allows an asset sale.

I fail to see how anyone can disagree with this idea. If the resort is viable, this plan should succeed. If the resort is not viable, it can sell off the assets and distribute them to the owners who will get a piece of the assets in the HOA holding company.

 

[Fredm]

Who is accountable?

Wrong question. The blame game does not solve the problem.

A viable alternative to parasitic PCC practices and the Viking ships must be found, if that is the objective.

Fact of the matter is the HOA is the only logical point from which a viable substitute for the PCC's can be implemented.
How it might be implemented is a constructive discussion that may get this somewhere.

 

[Carolinian]

The norm in the industry is that 50-60% of the purchase price from a timeshare developer represents its marketing costs, so less than half the purchase price represents cost of the product, profit, etc. That is what really skews the purchase price when you buy from a developer.

I am a developer fan, just not a fan of the way they do business.

The timeshare concept is great but why in world have they gone to making obscene profits from it.

Let's take a resort I own. There are 80 units on the ocean. Let's assume they sell 50 weeks for each unit leaving 2 weeks a year for maintenance projects.

I'm sure if this were built today the asking price would be somewhere around $20,000 per week but let's use $5,000 which most of us might consider a bargain for a beach front resort.

50 weeks X $5,000 per unit = $250,000 per unit X 80 units = $20 million.

I don't know what it would cost to acquire the land and put up the building but $20 million for this small resort seems like a lot of money. Maybe I'm way off on what I think it would cost to build, maybe someone in the know could help out.


But that's not good enough for these greedy types. They found that people can be sold a bill of goods if it is made to look more valuable than it is.

Think about it, where else would you be asked to spend tens of thousands of dollars and not be able to take the contract with you to look it over before it is signed???

They play on people's emotions and fears, and what ever else they can think of to grossly overcharge for their product.


Of course we all realize that without the developers we would have no timeshares and without the retail buyers there would be no resales but HOW MUCH IS ENOUGH???

 

[BocaBum99]

And if the floodgates were opened to every owner in your development to stop paying fees and turn in their property to the HOA just how long could the good management / HOA Board continue to maintain things? Survive at all?

Your argument is non-nonsensical. No HOA can survive if they are willing to simply take back any ownership offered. Period.

(Of course owners with full ownerships are far less likely to deed back as they live there and/or have tens or even hundreds of thousands of dollars at risk. With a timeshare the amount "invested" is small enough that they are willing to just walk away - and stick other owners with the problem - rather than properly deal with it themselves. Still the idea and obligations are the same in both situations. Only the magnitude of personal investment tends to differ.)

Westin Kaanapali Beach Resort can. Please try to prove me wrong. Any Disney Vacation Club property can. Any WorldMark ownership can. There are plenty. The one thing all of these resorts have in common is that it costs a lot more to rent units at these resorts than their maintenance fees.

 

[Carolinian]

For many resorts, year round use of the resort facilities by locals makes the m/f viable to own such a week. The developer of Wychnor Park in the UK, for example, marketed that way during developer sales as ''a country club that is also a timeshare''. Many locals bought off season weeks just for use of the resort facilities yearround. The HOA's at several Outer Banks timeshares have marketed offseason weeks to locals the same way, most notably Outer Banks Beach Club I and II.

George,

Okay. Let's say you own a Blue week in Minnesota. Week 3. Maintenance fees are $900 for a 2br unit. Red weeks in the summer have the same $900 assessment. You look at rentals in the area, they go for $100 per week for January. Please tell me your plan to get someone to take this unit that does not involve a scam.

Just give me your theory for how you would approach the problem and come up with a target buyer.

This type of example is what Ken McKelvey gave me which is making timeshares insolvent and that HOAs have put their head in the sand and will not try to solve it.

I think you and John are completely wrong about the assertion that all timeshares can move. If that assertion is true, then the resorts would accept a plan that gives them a $400 transfer fee and 2 years maintenance fees to be put into a holding company. They have 2 years to find someone to take it and they have access to the owner list which should be the best way to find a new home for it. In addition, they could add to their fees by renting the available units that come with them.

If the resort truly has value, this business plan would be a no brainer. It would be easy to sign up a Broker to create a holding company along with a resale and rental program that should be self sustainable. If it has no value, they have several years to prove it in by adjusting maintenance fees and making the resort more viable for new owners and renters. If the broker can't make money, then they will quit and now the resort has control of the units and has proved beyond any reasonable doubt that they should go out of business and present such asset sale to the owners for a vote. If that doesn't happen, then they submit a special assessment which will increase every year until the resort declares bankruptcy and a judge cancells all the agreements and allows an asset sale.

I fail to see how anyone can disagree with this idea. If the resort is viable, this plan should succeed. If the resort is not viable, it can sell off the assets and distribute them to the owners who will get a piece of the assets in the HOA holding company.

 

[BocaBum99]

Wrong question. The blame game does not solve the problem.

A viable alternative to parasitic PCC practices and the Viking ships must be found, if that is the objective.

Fact of the matter is the HOA is the only logical point from which a viable substitute for the PCC's can be implemented.
How it might be implemented is a constructive discussion that may get this somewhere.

Accountability is not blame. It is where the buck stops and where you grant authority to solve problems. It is where you look for solutions. John and Denise would say that the accountability lies in the owners themselves. I claim the accountability lies in the HOA who sets the budget. If the owners had the accountability, they could set their own budgets. They can't. Therefore the only entity in a resort that is not in developer control is the HOA. It is the only place where the problem can be solved.

If the resort is developer controlled, the solution is easier. Just require the developer to be the buyer of last resort and to set up a reserve fund that would enable it to do just that before they leave for good.

 

[tschwa2]

I wish it weren't such a moral/ethical issue. I own a seasonal resort (where luckily the HOA works really hard to keep fees down). I bought it for $100 off ebay a little over 10 years ago. The price included that years MF's and closing cost. It is an off season week. I was clueless about timeshares at the time and the time worked for me and I thought that if/when it didn't I might have to pay closing cost and MF's and then could sell/give it to someone else. At the time MF's were just over $300. They are now just over $400. It is not a time I can now use and even it I wanted to use that time I could pay $200 to RCI and get a rental. It gets 10 tpu's (which is probably over pointed) but at $40 a point not a good value. The resort won't take deed backs but even when they did for hardship cases I felt too guilty because I have over $3000 in MF's for all my weeks total so I can afford $400. It just annoys me to pay $400 for something that is worthless and I can't use. And I feel guilty not using the $400 for something more useful for my family. But just because a HOA accepts deedbacks it doesn't mean you are sticking it any less to the other owners if the HOA can't get the units into paying hands. And mine can't get off season weeks off their books. Summer owners (June-Aug) own 70% of the units. The HOA goes after people hard and threatens very hard the remaining off season owners who don't pay. They work very hard not to allow transfers to LLC's. And yet I feel too guilty to try to give it away to stick anyone else in the position I am in. I feel too guilty to sweeten the pot with a payment and advance MF's because the taker is likely to abandon the unit as soon as the prepaid MF's ends. The timeshare HOA had a chance to end the timeshare in 2016 with a simple majority but voted to change it to a perpetual ownership thanks to the 70% of summer owners who still own something of value. I think they should feel guilty because the remaining off season owners are being held hostage to the current system.

The system sucks and I hate feeling like everything that is in my power to do makes me feel guilty. Part of it is the old laws when the TS's were built. Part of it is the HOA's not being able to come up with creative solutions.

 

[Carolinian]

RCI's massive program of rental of exchange deposits to the general public has also helped flood the market and drive down rental prices.

There are outside forces at work that the HOA has no control over.

Let's say that the HOA has cut costs to the minimum, lays off staff, and outsources some services. Thus making the MFs as low as possible.

The glut of units available today along with the bad economy all act on rental prices.

I often see written here that if rental prices are lower than the MFs, the HOA is doing something wrong.

I see a lot of truth in both sides of this thread's arguments but to put the whole blame on the HOA while ignoring the economic climate that helps sets rental prices is not realistic.

 

[DeniseM]

Westin Kaanapali Beach Resort can. Please try to prove me wrong.

Yes, they can, and do - as selectively directed by the developer, who has control of the BOD. But the BOD isn't really calling the shots - Starwood is.

But, WKORV is one of the most popular resorts in Hawaii, and even though the MF is ridiculous, the rental rate is even higher, and it still has resale value in the thousands of dollars. So it certainly don't represent the average resort, where they would be overwhelmed by a large influx of inventory.

 

[Carolinian]

You paint with too broad a brush. Some HOA's DO require a vote by the membership on the budget and the m/f. Two timeshares I have owned at on the Outer Banks have always done so since they kicked the developer out. At others, members elect the board which adopts the budget, sort of like citisens electing Congress which passes a budget and sets taxes. The place where there is a problem is where there is a developer controlled resort where members have no say at all.

Accountability is not blame. It is where the buck stops and where you grant authority to solve problems. It is where you look for solutions. John and Denise would say that the accountability lies in the owners themselves. I claim the accountability lies in the HOA who sets the budget. If the owners had the accountability, they could set their own budgets. They can't. Therefore the only entity in a resort that is not in developer control is the HOA. It is the only place where the problem can be solved.

If the resort is developer controlled, the solution is easier. Just require the developer to be the buyer of last resort and to set up a reserve fund that would enable it to do just that before they leave for good.

 

[BocaBum99]

Ultimately, the laws, and the developers who established the terms and conditions in the first place - all designed to benefit the developers and not the owners, and who, in many situations, have complete control of the BOD.

I don't have a problem with holding the developers accountable, and changing the laws to do so - but this thread is about Viking Ship LLC's, and that's what I chimed in about.

IMNSHO, Viking Ship LLC's are like rats on the sinking ship - they aren't the solution - they are only making things worse.

Viking Ships are a bad idea. But, so is not assigning accountability to current HOAs to solve the problem of no exit plan for responsible owners who want out in a reasonable way.

I would love to speak to a resort to become their resale and rental broker if they had maintenance fees and reservation rules that allowed their intervals to have value.

Create a holding company for deedbacks owned by the HOA. Have them charge a $400 transfer fee plus 2 years maintenance fees and access to all unused inventory. Let me market directly to the owners in the resort.

If I couldn't make that work, then the resort is not viable. There is plenty of money there to run a successful operation.

How many resorts have actually tried to do this?

Moreover, if a resort did this and it failed economically, how is an individual owner ever going to be able to do it on their own? How can anyone argue that even given this program that moving an interval from one person to another is still possible without a scam?

 

[Fredm]

Accountability is not blame. It is where the buck stops and where you grant authority to solve problems. It is where you look for solutions.

Fair enough.

I agree the HOA is where the problem should be solved.
If the developer is still around, they likely influence/control HOA actions anyway.

 

[BocaBum99]

You paint with too broad a brush. Some HOA's DO require a vote by the membership on the budget and the m/f. Two timeshares I have owned at on the Outer Banks have always done so since they kicked the developer out. At others, members elect the board which adopts the budget, sort of like citisens electing Congress which passes a budget and sets taxes. The place where there is a problem is where there is a developer controlled resort where members have no say at all.

Easy. For developer controlled resorts, create a law that requires them to be the buyer of last resort and to set up a reserve fund when they leave so that timeshares can be re-acquired.

For owner controlled resorts, have them do what I said above, hire an onsite broker to do sales and rentals for a fee. Allow them to market to owners and rent to the general public.

I would imagine that the resorts you keep talking about in North Carolina are already doing this and don't have much of a problem with delinquencies. If they did, having a well communicated deedback program would be helpful.

 

[BocaBum99]

Fair enough.

I agree the HOA is where the problem should be solved.
If the developer is still around, they likely influence/control HOA actions anyway.

Thank you. John and Denise do not believe that the HOA is accountable. They believe the owner is accountable and needs to come up with their own exit plan. I believe the HOA is accountable and they need to come up with a general exit plan that benefits owners who want to stay, owners who want to leave and addresses owners who default on obligations. Equally importantly, they need to determne when the resort is no longer viable as a timeshare resort and must take action to terminate it. These ideas are all important for HOAs to be discussing and determining solutions for.

 

[Beefnot]

Although perhaps the ebay sellers get most of their inventory from owners who want out, at least some of their inventory is coming from developers who have trade-ins on their hands. The developers toss this unwanted inventory to these ebay sellers. So I suspect developers are also deliberately contributing to this "problem".

 

[mstoyanov]

Denise,

Ignoring the rant about Starwood (and I as a WKORV owner fully agree with it but it is off topic) you actually made the point exactly what is that make WKORV/N sustainable (or viable) resort:
"even though the MF is ridiculous, the rental rate is even higher"

This is the ONLY thing that determines if a resort is viable or not.
And the ONLY responsible body that makes that determination is BOD of HOA by setting MFs.
No ifs, buts or any moral lessons will change that.
Only BOD of HOA has the power to set the maintenance fees and 100% of the blame and responsibility for the viability of a resort is for BOD HOA
Trying to blame someone else (owners, PCCs or whoever) is simply excuse for BOD that is not doing their job.

If resort is highly seasonal and there is no way to bring off season weeks MFs below rental price then simply reduce service to minimum or even close the resort during these off times and offer owners a replacement weeks from the HOA inventory.

Yes, they can, and do - as selectively directed by the developer, who has control of the BOD. But the BOD isn't really calling the shots - Starwood is.

But, WKORV is one of the most popular resorts in Hawaii, and even though the MF is ridiculous, the rental rate is even higher, and it still has resale value in the thousands of dollars. So it certainly don't represent the average resort, where they would be overwhelmed by a large influx of inventory.