Maybe a stupid question...but...what happens if the resort blows away?

[AFARR]

A la Katrina or other Major Hurricane? I like the Outer Banks...not the most common area to get hit by a hurricane, but it has happened a long time ago.

But...say that everyone is evacuated (not cruel)...and the resort is totaled.

I'm assuming the MFs paid for some kind of insurance, and the maintenance co. took care of paying it.

Does the Homeowners Assoc. then decide:
#1. "We Can rebuild him, make him stronger, faster"

or

#2. "Show Me the Money"?

I'm guessing #1 is probably the most common course....however, what do they actually insure the as the "value" of each week? There's a huge difference between what the developer sold it for and what the resale market is (especially if you bought a blue week)...

Has this happened?

AFARR

 

[klynn]

That happened to one of the buildling where I owned in Port Charlotte, FL. They never rebuilt and the property was sold to the city for a park. All the owners of the resort got paid a portion of the proceeds. The people who owned at the building that was destroyed got paid more of course.

 

[DianneL]

Unusual experience

I can speak of one resort in New Smyrna Beach, Florida. It was called Ocean Palms and was blown away in 2004 by one of the hurricanes. We have friends that own there. According to the information they have been able to gather, even though they were paying maintenance fees, etc., the management evidentally was not paying the insurance premiums. That situation is still a mess. Our friends continued to pay their maintenance fees for two years and then stopped. Everything there is still in limbo, and information about what is going on has not been forthcoming from whomever is in charge. However, I do believe this is the exception, not the norm. We own weeks in Destin and in Hilton Head. One of our units in Destin was damaged by a hurricane, it was restored and all is good. We did have to pay an assessment, about $200 to $300 as I remember.

 

[AFARR]

I can speak of one resort in New Smyrna Beach, Florida. It was called Ocean Palms and was blown away in 2004 by one of the hurricanes. We have friends that own there. According to the information they have been able to gather, even though they were paying maintenance fees, etc., the management evidentally was not paying the insurance premiums. That situation is still a mess. Our friends continued to pay their maintenance fees for two years and then stopped. Everything there is still in limbo, and information about what is going on has not been forthcoming from whomever is in charge. However, I do believe this is the exception, not the norm. We own weeks in Destin and in Hilton Head. One of our units in Destin was damaged by a hurricane, it was restored and all is good. We did have to pay an assessment, about $200 to $300 as I remember.

Dianne,

Was the building under insured if you had to pay a fee for the repairs? I'm guessing that your friends have already lawyered up?


I asked because if I buy in an area with potential hurricane damage, what might happen....I'm guessing that the owners of the bad weeks (blue for the most part) might be happy to get cash in hand and would vote for just disbursing the money...and the red week owners would probably want a rebuild.

AFARR

 

[theo]

Keep in mind that...

Was the building under insured if you had to pay a fee for the repairs? I'm guessing that your friends have already lawyered up?

Even if well insured, there can often be (and usually are) significant "deductibles", as in virtually any and every other insurance policy of any kind. Insurance companies are not exactly fighting each other to write coastal Florida policies either --- for anyone.

If there is a repair cost shortfall after insurance coverage, which existing reserves can't absorb or cover, owners must then necessarily make up the difference via a "special assessment". That's a fact of life which simply cannot and will not be changed in any way by "lawyering up".

 

[Tia]

Who managed the Ocean Palms that was destroyed and not insured?

 

[vacationdoc]

Peregrine from IKE in 2008

You may want to check this thread http://www.tugbbs.com/forums/showthread.php?t=81517
for peregrine townhomes at san luis pass from 2008 hurricane.

 

[theo]

A good question, but...

Who managed the Ocean Palms that was destroyed and not insured?

...isn't it the HOA (i.e., not the management company) that handles (and is responsible for) insurance?
After all, management companies can be changed like socks...

 

[Tia]

If there was a developer sitting on an HOA who then also was managing the same resort .....? Poor management and maybe a poor HOA but need more details.

...isn't it the HOA (not the management company) that handles insurance?
After all, management companies can be changed like socks...

 

[Mel]

I can speak to another resort where this happened:

Tropical Breeze Resort, in Panama City Beack was destroyed by Hurricane Opal (October 1995). The HOA did have insurance, but the HOA was still controlled by the developer, and he managed to take off with the money, and used it for other purposes. Even so, there is a positive ending to the story.

With no money available to rebuild, a group of owners set out to make things right, and took over the HOA (and filed suit against the developer and the old HOA board members).

The HOA tried to find financing to rebuild, but the HOA only owns the inventory of units turned back to it, if they choose to accept them (in our case, the HOA at one time ended up owning about 40% of the inventory). Financing almost came through a few times, but eventually, we decided to go ahead without. The HOA instituted a special assessment of about $3000 per unit week, in order to start rebuilding. Deed-backs were accepted for those unable to pay, which is why the HOA ended up with 40%. A number of units were eliminated in the plans for the new resort (the few remaining owners of those units were reassigned units from HOA inventory through an update to the Condo Association Docs on file with the county).

The HOA didn't collect enough to complete the project, and rather than ask for more from the owners, decided to sell the HOA inventory to a different developer, with provisions in the bylaws to prevent that developer from ever gaining control of the HOA. In exchange the developer (Coopershare, which is now Escapes! Resorts) agree to complete contruction. Fast forward a few more years, and the resort opened - and has been for I think 3 years now. "Original" inventory was sold as deeded weeks, but the Escapes! inventory is now sold as part of their internal points program, which exchanges through II. This has caused a few bumps along the road, but has worked out well. Most of the owners that remained involved use their week, leaving a smaller number of people exchanging through RCI, and our 1BR week trades quite well. We purchased resale after Opal, but before the rebuild back when TRI West had a Christmas Auction, for $500 and paid the $3000 assessment, so consider our real cost of ownership to be $3500 (plus closing costs). We were able to pick up a second week on eBay last Christmas for $1 plus closing costs, there were no other bidders, but someone not familiar with the resort would have had some issues, as the deed was one of the ones that was reassigned.

So to answer the original question, yes a resort could be rebuilt, but it may take significant time (10+ years in our case), if there is no insurance money. The insurance is the responsibility of the HOA, and is taken out on the property as a whole, not on individual ownerships. While is may not be clear what the fair market value is of a timeshare unit, both the FMV and the cost to rebuild for the entire building should be relatively easy to determine.

 

[AFARR]

Even if well insured, there can often be (and usually are) significant "deductibles", as in virtually any and every other insurance policy of any kind. Insurance companies are not exactly fighting each other to write coastal Florida policies either --- for anyone.

If there is a repair cost shortfall after insurance coverage, which existing reserves can't absorb or cover, owners must then necessarily make up the difference via a "special assessment". That's a fact of life which simply cannot and will not be changed in any way by "lawyering up".

Theo:

By lawyering up, I was referring to the resort (Ocean Palms) that wasn't insured, and no details given to the owners. I had figured there would be a shortfall for a regular insurance policy (i.e...the special assessments referred to), but for a Management Co. to not buy basic insurance (especially if the Owners were paying for it)....that's something that needs a good bit of legal work.

AFARR

 

[DianneL]

Ocean Palms

I really don't know all the details about this situation, and neither do our friends who own there. They have had a lot of trouble trying to find out just what did happen and what is going on. The resort was controlled by a HOA, and evidentally these people were not looking out for the interests of the owners. There is even speculation that one particular person is trying to take over the property completely, using scare tactics to get owners to turn over their deeds to him. Recently, after about two years of hearing nothing, our friends were contacted to verify their address and their email adress. They supposedly are to hear from someone about the situation in about two weeks, but they don't know anything further.

 

[Tia]

Hmmm sounds suspicious. Terrible board and poor management all the way around.

 

[JudyS]

Not a stupid question!

I saw an abandoned resort in St. Maartin. The taxi driver said it had been damaged by a hurricane while being built, and never opened. Of course, there may be less protections for owners in Caribbean countries than in the US.

I've heard stories that are all over the board, regarding hurricanes. Sometimes the owners lose their property, sometimes they have a huge special assessment, and sometimes they get a "windfall" -- literally -- and the property is sold for more than what they paid.

...
So to answer the original question, yes a resort could be rebuilt, but it may take significant time (10+ years in our case), if there is no insurance money....

Were annual fees charged during that 10 years???

 

[Mel]

Were annual fees charged during that 10 years???

Yes, but they were pretty low (If I recall correctly in the range of $50-100, and that covered the property tax and a retainer with a lawyer who helped us with our lawsuits against the developer, insurance company, and old HOA board members.

For Ocean Palms, a similar tactic may be necessary. If the HOA members were looking out for their own interests rather than the membership as a whole, they failed in their fiduciary responsibility, and might be held liable. If the owners were paying for insurance (if it was a line item listed as part of the annual budget), and it wasn't purchased, I'm sure someone can be held accountable, as they were at Tropical Breeze.

 

[Tia]

I don't think this is a stupid question at all, the the posts that followed have proved it.

I worry one of my hurricane area resorts may not have enough in reserves to cover the deductible if it should happen. It's Wyndam managed and recently per court settlement following Equivest bankruptcy allowed a 3rd owner on our board hand picked. But they are all developer friendly owners 3 + 2 Wyndham employees on our HOA board. Last year they used 300K for unplanned for utility costs out of our reserves . One of our owner board members is telling owners via yahoo posts he thinks Wyndham execs should stay on our HOA board as they have such great experience in running resorts .

 

[AFARR]

So the general impression I get is that:

A lot of it depends on the HOA and/or Managment Co.

If they pay the insurance.
If they keep sufficient reserves to cover the deductibles.
If they are pro-owner or pro-resort.

I'm sure there's more than a few owners around that would hope for the resort to blow away in a hurricane...and they would save their MFs if they got cashed out...

Thanks again.

AFARR

 

[JudyS]

Yes, but they were pretty low (If I recall correctly in the range of $50-100, and that covered the property tax and a retainer with a lawyer who helped us with our lawsuits against the developer, insurance company, and old HOA board members....

Thanks for the info! So, it sounds like the owners needed a LOT of patience while the resort's issues were litigated and the resort was eventually rebuilt. At least owners weren't paying full MFs during that time!