Florida Owners - Please vote "yes" to to waive the full funding of reserves

[ocdb8r]

If this were to happen and there were several special assessments you can be sure that those timeshares will be dissolved due to major defaults.
Developers will be all over that prime real estate for re-development for a higher and better use than a timeshare.

So the argument now isn't that "insurance" will fix everything just as it has in the past, it's now "if it all collapses, just walk away and leave the pieces to be picked up by someone else." Sounds like the same logic of the Surfside condo HOA.

 

[brp]

So the argument now isn't that "insurance" will fix everything just as it has in the past, it's now "if it all collapses, just walk away and leave the pieces to be picked up by someone else." Sounds like the same logic of the Surfside condo HOA.

Not so much about "logic" as about human nature. Faced with the large assessments (if it came to that), many people will simply walk away and default. That's just a reality.

Cheers.

 

[ocdb8r]

Not so much about "logic" as about human nature. Faced with the large assessments (if it came to that), many people will simply walk away and default. That's just a reality.

The "logic" wasn't referring to the fact people may/would walk away, it was referring to the implication that rather than properly fund reserves you should just let the financials deteriorate until a special assessment is necessary and then people can all just walk away and default.

I'm not saying all HOAs operate this way (and as I have said, full reserves may be overkill). But the reality is MANY timeshare HOAs operate in a way that is focused solely on minimizing MFs regardless of the long-term cost and potential implications.

 

[T_R_Oglodyte]

Just out of curiosity, has anyone ever heard of any timeshare where 50% or more of the total ownership voted in an election, much less voted for the same thing?

No?

Then that is the key that renders all this discussion a moot, windmill-tilting point.

There will be not a single Florida timeshare association that can dodge this new requirement, imo.

Yes. That happens when the resort is affiliated with a trust-based timeshare system, and the trust owns more than 50% of the units in the resort. This situation exists with some of the former Diamond resorts that are now part of HIlton. It may also exist as some other resorts where a resort is owned by a mixture of timeshare operations - in the aggregate, those timeshare operations own more than 50% of the units, and all of them will cast votes.

 

[TolmiePeak]

Why would any insurance company issue a policy to a property on one of those barrier islands?

 

[bnoble]

it's now "if it all collapses, just walk away and leave the pieces to be picked up by someone else."

For a timeshare, that's often a rational choice.

The value of a single week in almost any timeshare is, at most, low-to-mid five figures. Tops. And those are the very rare exceptions. Most of them are worth significantly less than that--this is true even for some weeks in coastal Florida resorts, because those are still seasonal. If the cost to repair---or equivalently, fund the reserves for---that resort is comparable, then it is a tear-down and not worth saving. It is economically rational to wind the resort down, sell the land to some other developer, and distribute the proceeds.

One of my resorts in Kauai is facing exactly this problem. The resort is closing in on 50 years old, and in the past several years, management discovered significant construction defects. Remediating those defects--required in order to keep the resort operating--is going to run close to $10K per owned 2BR week. Insurance will not cover it, so this is going to have to come from the owners if it happens. But even before this, the weeks themselves were worth nothing on the open market--even those in the ocean view buildings were being given away, often with a free year of use. In other words, the value of the weeks on the open market was already negative.

The Board has called for a vote to dissolve the resort, and this vote requires a super-majority to pass. The vote has been postponed after being started a number of times (long story), but the Board has let slip that a significant majority of owners (a) cast a vote and (b) voted to dissolve the resort. Why? Because it is the only rational decision. Getting a little bit from selling the land is better than pouring high-four/low-five figures into a week that has no open-market value.

 

[chriskre]

The "logic" wasn't referring to the fact people may/would walk away, it was referring to the implication that rather than properly fund reserves you should just let the financials deteriorate until a special assessment is necessary and then people can all just walk away and default.

I'm not saying all HOAs operate this way (and as I have said, full reserves may be overkill). But the reality is MANY timeshare HOAs operate in a way that is focused solely on minimizing MFs regardless of the long-term cost and potential implications.

It may be strategic bankruptcy for the benefit of developers and investors. Sadly you see it in many condos in Florida and I am sure it exists in the timeshare world too.
I am experiencing it now in my 44 year old condo in downtown Miami. We have a rogue board working with a developer to make our condo financially unstable in order to prep owners to sell.
It’s sad to see but then again the county and state have put demands on us that will be very costly to maintain going forward. We have already lost our hurricane insurance. Our pool is closed due to fines and we are facing several lawsuits from employees and owners. What’s next?


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[chriskre]

So the argument now isn't that "insurance" will fix everything just as it has in the past, it's now "if it all collapses, just walk away and leave the pieces to be picked up by someone else." Sounds like the same logic of the Surfside condo HOA.

In this economy I don’t see people choosing to bail out their timeshares.
Especially if they rarely use them or are getting up in age and are done traveling.

I am sure Marriott would have no problem finding a higher and better use for the land if the timeshare failed and they ended up owning the whole thing again. It’s in a prime area of development for apartments.


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[1Kflyerguy]

I always vote in these elections. We don't own any HGV in Florida, but do have exposure to a similar issue from our MVC trust ownership.

There seems to be a lot of focus on insurance and how much that would cover. I think that its important to remember that reserves also cover many things that would not be covered by insurance. We have an HOA for current and prior primary residences, and both times our HOA reserves came up short. The club pool at our current place needed to be replaced after 60 years, and the after years of not funding the reserves as recommended they came up short. Eventually we had a special assessment and the HOA took out a short term loan for the balance.

 

[chriskre]

I always vote in these elections. We don't own any HGV in Florida, but do have exposure to a similar issue from our MVC trust ownership.

There seems to be a lot of focus on insurance and how much that would cover. I think that its important to remember that reserves also cover many things that would not be covered by insurance. We have an HOA for current and prior primary residences, and both times our HOA reserves came up short. The club pool at our current place needed to be replaced after 60 years, and the after years of not funding the reserves as recommended they came up short. Eventually we had a special assessment and the HOA took out a short term loan for the balance.

The problem with fully funding reserves is that when you get a rogue board they can steal those reserves and leave you on the brink of bankruptcy before you realize what they’ve done and they are out of there. It’s very hard to prosecute and you end up with an assessment anyway and the funds gone. The government is zero help in doing anything about it and nobody wants to front the money for the attorneys so what’s the point of saving up for the thieves to just get a nice payday. It’s happened a few times in my building. It’s a big problem in Miami and I am sure in other cities too.


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[kc01075]

The major failure for timeshares and home associations is the underfunding of reserve accounts and it doesn't matter the state. Insurance companies are attempting limit their losses by a variety of different approaches. One of our timeshares is in the midwest and we had strong wind damage to our roof. About 10 pages into the policy, it was discovered we had about a 3 million dollar deductible because we were in a certain part of the country. The existing owners are elderly and we have a high delinquency rate. The failure to maintain a proper reserve may force our timehare into bankruptcy.

 

[heitmullerj02]

I own at Sheraton Vista and voted no. The reason was fully funded reserves were approx. $278 vs not fully funded $274. The difference seemed minimal and the Board was very concerned about future increases if the "yes" vote went through. Our reserves are a very healthy $8.5 mil and all the repairs are covered for 2024. I have only received 1 special assessment in the 25 years I have owned, when Sheraton bought the property.

 

[Deb & Bill]

Why would any insurance company issue a policy to a property on one of those barrier islands?

Because the mortgage company requires it. I have both homeowners' insurance and flood insurance. I haven't made any claims since Irma where we got a new roof (shingles) and soffits.

 

[chriskre]

The major failure for timeshares and home associations is the underfunding of reserve accounts and it doesn't matter the state. Insurance companies are attempting limit their losses by a variety of different approaches. One of our timeshares is in the midwest and we had strong wind damage to our roof. About 10 pages into the policy, it was discovered we had about a 3 million dollar deductible because we were in a certain part of the country. The existing owners are elderly and we have a high delinquency rate. The failure to maintain a proper reserve may force our timehare into bankruptcy.

And this is just an inevitable flaw in the timeshare and condo model. People will age out of the ownership and the ability to keep up with the ever rising costs of maintenance.

As much as I have enjoyed my downtown condo I am living the nightmare now of seeing the sharks circling our development trying to force us out of our building.

I believe the county would much rather have a shiny new building with a richer tax base than help us stay in our homes.

There is certainly back door dealing happening so I am just waiting for my offer. I will be one of the first to sign the contract and cut my losses before they force us into bankruptcy. Sadly this play has been seen over and over again with no legal intervention. It’s either sign and leave or face $200k special assessments.


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[TolmiePeak]

Because the mortgage company requires it. I have both homeowners' insurance and flood insurance. I haven't made any claims since Irma where we got a new roof (shingles) and soffits.

I didn't ask why you would purchase insurance. I asked why an insurance company would write a policy for any property on a barrier island. The insurance company doesn't care if you paid cash or if you have a mortgage on the property.

 

[TravelinZiggy]

Florida Owners - HGVC has sent an email about this but I am posting to bring it back to attention for those who have not yet voted. The vast majority of owners never vote at their owner meetings and this year it is super critical that you do.

This is very important to prevent your maintenance fees from increasing significantly in 2025.

From HGVC:

I think HGVC have done a great job at preparing for updates and not over-inflating the costs of the issues to be addressed. That being said, the recent info that came out for Tuscany had a number of errors, so make sure you look at the info sent. For instance one line for painting didn't have any statutory reserves/costs but the lower waivered amount did. In addition, if you look at the side by side comparisons, there are two additional line items where the funding with the waiver > statutory funding (made no sense for me). I'm waiting for a call back as the GM of the property already did touch base with me. I wish that there was a 5 OR 10 year plan put in place to slowly get the reserves to 100% -there is no reason not to do that. I feel like the option is just all (to 100%) or nothing (waiver).

 

[bizaro86]

I didn't ask why you would purchase insurance. I asked why an insurance company would write a policy for any property on a barrier island. The insurance company doesn't care if you paid cash or if you have a mortgage on the property.

I mean, there's a price for everything. The reason an insurance company would write a policy on a TS on a barrier island is that they expect to make money after paying out claims. That might, of course, require very high premiums...

 

[1Kflyerguy]

I didn't ask why you would purchase insurance. I asked why an insurance company would write a policy for any property on a barrier island. The insurance company doesn't care if you paid cash or if you have a mortgage on the property.

Correct, that's what has been happening is some areas of California with a high fire risk, its become very hard to find insurance, and thus difficult to obtain a mortgage

 

[dayooper]

I didn't ask why you would purchase insurance. I asked why an insurance company would write a policy for any property on a barrier island. The insurance company doesn't care if you paid cash or if you have a mortgage on the property.

To make money. That’s why it’s so expensive to insure. They know the risks and have priced accordingly.

 

[CO skier]

Yeah, I posted about this on blue green page. One week after ballots went out to some owners, 95% of owners voted yes.

Was that 95% of owners who voted? (very believable)

or

95% of the total ownership? (not so believable)

Big difference.

 

[rapmarks]

Was that 95% of owners who voted? (very believable)

or

95% of the total ownership? (not so believable)

Big difference.

My guess is that bluegreen voted for all vacation club members thus 95 %

 

[TolmiePeak]

Correct, that's what has been happening is some areas of California with a high fire risk, its become very hard to find insurance, and thus difficult to obtain a mortgage

To make money. That’s why it’s so expensive to insure. They know the risks and have priced accordingly.

I think many companies have pulled out of California and Florida because they can't accurately predict the risks and have found out their models are completely flawed.

 

[TolmiePeak]

I mean, there's a price for everything. The reason an insurance company would write a policy on a TS on a barrier island is that they expect to make money after paying out claims. That might, of course, require very high premiums...

Yeah but no one is going to pay to insure a house that has a 10% chance of getting wiped off the face of the earth on any given year.

 

[PigsDad]

I think many companies have pulled out of California and Florida because they can't accurately predict the risks and have found out their models are completely flawed.

I'm kind of surprised there isn't a bigger difference in our homeowners insurance premiums between our two homes in CO and FL. The homes are about the same size and value. The CO home is not in the mountains so wildfire is not a risk. Our FL home is about 8 miles from the coast, has a much more expensive roof (tile vs. asphalt/composite) and also includes a pool with a quite large pool cage. The difference in premiums is less than 40%; logically I would have thought it would be more but with all things considered, that isn't bad.

Kurt

 

[PigsDad]

Yeah but no one is going to pay to insure a house that has a 10% chance of getting wiped off the face of the earth on any given year.

By that logic, there shouldn't be hardly any homes older than 15 years there, but there certainly are. I think you are way off on your perception. Plus, any home built after about 1995 (30 years ago) has the benefit of the much more stringent building codes precipitated by hurricane Andrew ('92), and they withstand storms much better.

Kurt