I think you already provided me with the document as I was looking through this document. Here is the provision relating to the sale and transfer of trust points. Lets chew on this. This is from page 43 of the POS document you are referring to.
I was able to capture the text using an online OCR tool. So there may be some errors due to the OCR tool not accurately capturing at 100% accuracy.
11. Upon the Sale, Transfer, Conveyance or Lease of an Interestin a Multisite Timeshare Plan.
The sale, lease, or transfer of interests in this multisite timeshare plan is restricted or controlled.
Other than a conveyance of all of a Beneficiary's Interests, no Beneficiary, other than Developer, and subject to Section 4.2 of the Trust Agreement, shall voluntarily sell, transfer, assign, or hypothecate any number of Interests, the sale, transfer, assignment, or hypothecation of which will result in the Beneficiary or any other Beneficiary owning less than a Base Interest. Except as otherwise set forth in the Trust Agreement and the Bylaws, no Base Interest may be subdivided by any Beneficiary other than Developer. The Association Delegee is not required to accept any reservation requests for a Use Period from a Beneficiary who owns less than a Base Interest at any time other than during the Open Reservation Period. The number of Interests comprising a Base Interest may in the future be modified by Developer in its sole discretion.
Subject to Developer's right of first refusal and leasing restrictions as described below, the right of a Beneficiary to sell, transfer, assign or hypothecate the Beneficiary's Interest will not be subject to the approval of Developer, Trustee, or the Association. Accordingly, a proper transfer or conveyance of such Interest will not require the written approval of Developer, Trustee, or the Association. However, in accordance with the Bylaws and applicable Florida law, a Beneficiary is required to notify Developer, the Association, and Trustee of any change in information kept in the Registry by Trustee upon the transfer or conveyance of an Interest, and for payment of any membership education fee required under the Trust Plan Documents. Until such written notice is received the seller of such Interest will remain liable for the payment of all Assessments, taxes, and other fees then due or which may later become due with relation to the Interest. Further, until payment of the member education fee is received, the owner of such Interests will not be entitled to use the Points associated with the Interest, and will not be entitled to reserve any Accommodations.
Upon the sale of an Interest, Program Manager may require the payment of an initiation fee. Until payment of the initiation fee is received (or waived by Program Manager), the owner of such Interest(s) will not be entitled to reserve any non-Trust Accommodations with the Points associated with such Interest(s) except during the Open Reservation Period; however, payment of the initiation fee will restore the ability to make reservations during the Priority 1 Period, the Priority 2 Period, and the Priority 3 Period. If the purchase of an Interest is not made from a Developer or an Approved Broker, then the owner of such Interest(s) will not be entitled to access all of the Exchange Benefits offered by Program Manager in its sole and absolute discretion, even if the initiation fee is paid.
In consideration of the affirmative obligations of and benefits to all Beneficiaries provided by Developer under the Trust Agreement, when any Interest is offered for sale, Developer will have the exclusive option to purchase such Interest at the price and on the other terms of any bona fide offer made in writing to the Beneficiary at such time and submitted to Developer for verification. Each Beneficiary will notify Developer in writing of its intent to sell its Interest and provide Developer with a copy of the offer received. Such notice will include the full terms and conditions of the sale, and the full name and primary address of the prospective true buyer (as distinguished from agents and intermediaries). Notice of a Beneficiary's intent to sell will be sent to Developer at 6649 Westwood Boulevard, Orlando, Florida 32821-6090 or such other department or address as may be designated by Developer from time to time. Developer will have thirty (30) days after receipt of such notice to exercise its option to purchase the Interest at the same price and on the same monetary terms and conditions as the verified offer. If Developer does not notify the Beneficiary of its election to purchase the Interest within such thirty (30) day period, then the Beneficiary may sell the Interest to the subject bona fide offeror subject to the Trust Agreement and to all limitations set forth in the Trust Agreement, at a price not lower than that at which it was offered to eveloper. In addition, any permitted sale between a Beneficiary and a bona fide third party will be deemed to contain a provision requiring that any sums due to the Association as Assessments must be paid in full as a condition of closing of the sale. Should, however, such sale to a third party not be consummated within four (4) months after the date the offer is transmitted to Developer at the price and terms equal to or less favorable than those offered to Developer, the terms and limitations of Developer's right of first refusal will again be imposed on any sale by a Beneficiary. If Developer elects to purchase such Interest, the transaction will be consummated on the terms offered; provided, however, that Developer will have a minimum of thirty (30) days from the delivery of notice of Developer's election to exercise Developer's option to consummate the transaction. Developer may impose an administrative charge in connection with the waiver of this right of first refusal.
The right of a Beneficiary to lease or rent the Use Period(s) related to the Beneficiary's Interest (or enter into any other agreement relating to use of the Trust Property if not designated as a "lease") for periods of less than three (3) years shall not be subject to the approval of the Association; however, notice of such lease or rental of any Use Period must be delivered to the Association within five (5) days after the Beneficiary's agreement to lease or rent. Any leasing or rental agreements must set forth or will be deemed to have set forth an acknowledgment and consent on the part of the lessee-sublessee-tenant to use, occupy, and possess such Use Period and the Trust Property in conformance and compliance with the provisions of the Trust Agreement and the other Trust Plan Documents. In the event a Beneficiary fails to secure a written leasing or rental agreement, the Association shall have the right to require the lesseesublessee-tenant to execute an acknowledgment to use and occupy the rental or leased Use Period and the Trust Property in conformance with the Trust Agreement and the other Trust Plan Documents.
The expectation of deriving any profit or gain should not be a consideration in the decision to purchase an Interest in the Trust.
Generally, a Beneficiary should expect substantial competition from Developer and no established resale market in the event a Beneficiary desires to resell an Interest.
Interests are offered for sale for personal use and enjoyment only, and the expectation of achieving capital appreciation or any other financial return or valuable benefit, including, but not limited to, any tax benefit, should not be a consideration in the decision to purchase.
The Trust anticipates that the Trust will be treated as a partnership for federal income tax purposes and will, therefore, file annually a Form 1065 - U.S. Return of Partnership Income, to the extent the Trust determines it is required. Consequently, the trust's items of income, gain, loss, deduction and credit would flow through to, and be reflected on, each Beneficiary's individual income tax return. To assist the Beneficiary in properly reflecting these items, if any, on the Beneficiary's income tax return, the Trust will send to the Beneficiary, to the extent the Trust determines it is required, a summary of such Beneficiary's share of such items, if any, in the form of a Form 1065 Schedule K-1. Generally, distributions made to a Beneficiary (other than liquidating distributions), if any, will not affect a Beneficiary's distributive share of flow through income or loss from the Trust. The Beneficiaries acknowledge and agree that the Board will have the sole discretion and authority to make or revoke any tax elections on behalf of the Trust.
For income tax purposes only, the transfer of an Interest by the Developer to a Beneficiary will be characterized by the Developer and the Trust as the transfer by the Developer to such Beneficiary of: (1) the rights to use (in accordance with the Trust Plan Documents) all Trust Property held or to be held in the Trust for which a Notice of Use Rights has been or is delivered (the "Use Rights"); and (2) an economic interest in the portion of the Trust treated as a partnership for federal income tax purposes (the "Economic Rights"). The Economic Rights consist primarily of the right to receive cash distributions from the Trust in the event that any Trust Property (other than Restricted Use Property) held by the Trust is sold and the sales proceeds are not fully reinvested in other Trust Property for which a Notice of Use Rights has been or is delivered, as more particularly provided in the Trust Plan Documents. The purchase price paid by the Beneficiary to the Developer will be allocated between the Use Rights and the Economic Rights in such proportions as determined by the Developer. This allocation of purchase price will be used to determine the Beneficiary's initial tax basis in her or his Use Rights and the Beneficiary's initial tax basis in her or his Economic Rights.
The foregoing statements in this discussion are based upon current provisions of the Internal Revenue Code of 1986, as amended from time to time, existing and currently proposed Treasury Regulations, and existing administrative rulings and judicial decisions, all of which are subject to change, and such statements are only a general summary of certain federal income tax considerations that may be relevant to a prospective Beneficiary. The effect of existing federal income tax laws and the income tax laws of any applicable state or local taxing authority will vary with the particular circumstances of each Beneficiary.
With respect to federal, state, and local tax consequences of acquiring an Interest as they may relate to an individual Beneficiary, each Beneficiary should consult with and rely on her or his own professional tax advisor. In no event should the Trust, the Developer, or any of their respective affiliates, counsel, or any other professional advisors or counsel engaged by an of them, be considered as providing legal or tax advice or opinions or as guarantors of the tax consequences of ownership of any Interest acquired from the Developer. Beneficiaries should look to, and solely rely on, their own professional tax advisors with respect to the tax consequences of any Interest acquired from the Developer.
