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Laws regarding renting or selling a timeshare

easyrider

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I am thinking about adding to my timeshare inventory to rent, buy and sell. I contacted five different state licensing offices for timeshare sales and asked what are the requirements to sell and rent these. What I was told by everyone is that if I own these I do not need to be a licensed broker. If I solicit to buy, sell or rent other peoples property then I need to be a licensed broker. So by using my own inventory I don't need to be a broker.

If I advertise anywhere, even on the internet, I have to state on the advertisement that these are for sale or rent by owner or include my license number. On Creigslist I very seldom see anyone advertising this way. Looking at other peoples internet sites at tug I see everything from owners using their own inventory, brokers using all kinds of inventory to private people acting as brokers using all kinds of inventory.

I am assuming that if a license number isn't included on an internet page that the entity isn't licensed. Also I am assuming that if there is no license number on the web page and they offer broker services that they are doing so illegally.

http://www.insidethegate.com/about-timeshare/license-requirements/

I did ask these officials about the consequences of acting as an unlicensed broker. It looks like a fine and possible jail time at the state level and the posibility of lawsuites from either the buyer, seller or renter.

So what am I missing ? It is a good time to buy and I do have an exit stratagy should it not work out.

Thanks
Bill
 

easyrider

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From the Tug posting rules we can only advertise in certain areas of tug. What if a person is brokering in an illeagle way on their link ? Is the link in the signature outside of tug control ?
_________________________________________________________
"The advertising ban includes information in your bbs signature. You may link to a commercial website in your signature, but the link itself may not indicate the nature of the site. If your URL or domain name indicates the nature of the site, it should not be visually displayed. A visual link saying only "My website" or other similar innocuous wording is acceptable."

Bill
 

ronparise

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Why are you concerned about the consequences of acting as a broker without a license?...that's not your intent, and not an issue if you are selling or renting what you own

Craigs list is like the wild west..I know that there are rules, but you have to assume no one is following them...people that respond to my ads on Craigs list are not concerned that I may or may not be a licensed agent (I am by the way) nor do they care if Im acting for myself or for a client. (I only rent my own stuff) Their concern is whether or not Im trying to steal their money.
 

whatsburning

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I think for the most part, TUGers are listing ads for their own excess points or trade (personal use).

If you are looking to purchase more TS with the intent of renting them for profit, or at the least with the intent of profiting from them, then I think you fall into the category of business owner trying to make money off of your investments, instead of the common timeshare owner.

You'll have to have a business license, insurance, file income taxes, etc.
 

rrlongwell

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... have to have a business license, insurance, file income taxes, etc.

The original poster was right, the laws vary by state. The best way is to contact the State Regulatory Authority. As it relates to the tax implications of buying, selling, and renting out of your own inventory, the poster may want to talk to a accountant, attorney, insurance commission, and/or taxing authority for the laws that pertain to them.
 

vacationhopeful

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It takes a nack to convince people via the internet to SEND you $$$$$.

You need to be able to respond within minutes to emails or phone calls about your unit.

You need to understand that the dates YOU LISTED will NOT be the dates most persons will want to rent - and NOT even the normal checkin dates, but the best airfare dates or school off dates or weird 9 day vacations dates they MUST have until you demand payment --- then you will never hear from them again.

Your skin has to be as thick as steel - because your asking price will most likely be higher than the other ad they inquired about or their puppy just died or grandma got run over by Santa's raindeer.

On top of this and after you think everything is set and the money is collected, be prepared to still have issues despite executed contracts and 10 + emails.

Yes, it takes TIME to get that rental money. But you HAVE to get it, otherwise YOU are paying for all that timeshare MFs out of your other income.
 

Carolinian

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Also, you should be aware that some states take an expansive view of what constitutes a timeshare developer. In North Carolina, the Real Estate Commission considers that anyone who sells or rents a timeshare other than one that they own for personal use is a developer and has to comply with the developer rules. That includes people buying timeshares to flip or to rent. I have considered buying cheap weeks on the OBX, if I could find any, to rent out, but to cover that base, I would for the first year deposit them with an exchange company or let a relative use them or something. I also thought that one could argue that they were bought for personal use during retirement, but I hadn't retired yet.
 

easyrider

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So it seems that the advertising of the timeshare product is what gets you in trouble. If you advertise that you can broker for others, you are taking a chance that you will get busted for this illeagle activity if your not a licensed broker or working with a licensed broker.

My theory is ----

I could send out an advertisment that says I will buy your timeshare contract. I would pay $1.00. I could take these contracts as my own personal property or start a LLC. I then could legally rent them or sell them. To do this I would want all closing costs and two years of MF paid.

I would also need the seller to donate $2000.00 into my vacation club. The vacation club would be a non-profit llc. or trust.

If it didn't work out it would mean the llc goes out of business. All contracts go back to the developers and HOA's.

Since the effort is made to stay in business there is no securities fraud.

What am I missing here ?????? It sounds to easy.

Bill
 

rrlongwell

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So it seems that the advertising of the timeshare product is what gets you in trouble. If you advertise that you can broker for others, you are taking a chance that you will get busted for this illeagle activity if your not a licensed broker or working with a licensed broker.

My theory is ----

I could send out an advertisment that says I will buy your timeshare contract. I would pay $1.00. I could take these contracts as my own personal property or start a LLC. I then could legally rent them or sell them. To do this I would want all closing costs and two years of MF paid.

I would also need the seller to donate $2000.00 into my vacation club. The vacation club would be a non-profit llc. or trust.

If it didn't work out it would mean the llc goes out of business. All contracts go back to the developers and HOA's.

Since the effort is made to stay in business there is no securities fraud.

What am I missing here ?????? It sounds to easy.

Bill

Other than it resembles what other threads refer to as a Viking Ship and it may draw attention of Law Enforcement and/or the Management Companies that run the POA/HOAs and possably implicate your sellers in a allegation of conspirisy to commit fraud. Not a whole lot. Except maybe, if intent, like your laying out the plan is proven, an all expense paid trip the slammer by government authorities on fraud charges.
 
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e.bram

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Are you saying anyone who starts a business and fails is guilty of fraud?
And anyone who sells a TS with closing cost and free year of MF(like Denice reccomends) are accessories.
 
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easyrider

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Other than it resembles what other threads refer to as a Vicking Ship and it may draw attention of Law Enforcement and/or the Management Companies that run the POA/HOAs and possably implicate your sellers in a allegation of conspirisy to commit fraud. Not a whole lot. Except maybe, if intent like your laying out the plan is proven, an all expense paid trip the slammer by government authorities on fraud charges.


If done right and legal this would not be fraud. You would have to intend to go out of business off the get go for this to be securities fraud.

Im sure the developers and HOA's wouldn't want these back as they offer no exit plan on these timeshares. I understand that if resort x gets 50 deeds back from the same outfit in the same year they would look into it.

After looking into it they could try to prove fraud, but if the entity that goes belly up did things legit there isn't anything for them to gain except more legal fee's. imo

Bill
 

easyrider

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Are you saying anyone who starts a business and fails is guilty of fraud?
And anyone who sells a TS with closing cost and free year of MF(like Denice reccomends) are accessories.


The last TS we bought was for $1.00 and included that years MF + all closing costs. :D

This is why Im thinking that some people would pay 2 years MF + Closing Cost + 2K or even more to escape their contracts.

Bill
 

rrlongwell

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Are you saying anyone who starts a business and fails is guilty of fraud?
And anyone who sells a TS with closing cost and free year of MF(like Denice reccomends) are accessories.

If no intent to commit fraud is there probably not, I am not an attorney and where the line is between legitamate business activity and intentional fraud is would need an Attorny that is knowledgable in applicable law would need to comment on.
 

FractionalTraveler

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All this sounds too hypothetical and not probable.

The industry as a whole suffers from lack of regulation, enforcement, and credibility so to think that HOA or any other entitly would invest any significant time, effort, and funding to prosecute is remote in my opinion.

The general consensus is that timeshares from a financial point of view (valuation) are worthless so ask any attorney to bring a case against someone and their reaction may be to laugh you out of their office and send you a bill for wasting their time.
 

easyrider

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Why are you concerned about the consequences of acting as a broker without a license?...that's not your intent, and not an issue if you are selling or renting what you own

Craigs list is like the wild west..I know that there are rules, but you have to assume no one is following them...people that respond to my ads on Craigs list are not concerned that I may or may not be a licensed agent (I am by the way) nor do they care if Im acting for myself or for a client. (I only rent my own stuff) Their concern is whether or not Im trying to steal their money.

If you did the buy for $1 senario with the requirements I listed above and some one found your advertisment it would need to worded so it could not trigger fraud charges, imo. There should be proper verbage. I have looked at many of the Tuggers signature links and have found some that are so so wrong and illeagle. Not yours Ron. Yours is one that I really like. That is why I was asking if the signature link is not controlled by tug.
 
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