Letter I plan to send, any constructive comments?
July 13, 2020
Worldmark Legal Affairs
Worldmark Consumer Affairs
6277 Sea Harbor Drive
Orlando, FL 32821
To Whom It May Concern:
RE: Request for Information Letter: Guest Certificates and Credit Restoration Guidelines
We are writing you to request that you provide us with detailed written legal analysis and justifications that supported recent changes to Club Guidelines regarding guest certificates and credit restoration guidelines.
Saying it plainly, show me where it says you can do this. In my reading of the Club documents, I find little basis or authority for the Board to impose guest fees or to refuse credit and related taxes/fees restorations.
First, guest fees. Board Guidelines (II)(A)(10) and (17) seem to be the only applicable Board authorities to set fees or assessments. (10) reads “set reasonable monetary fees for the use of specific Club property” (emphasis added). (17) reads “levy annual and special assessments”.
If the Board is using (10), then how are guest fees tied to the use of specific Club property? Applying the “ordinarily prudent person” (and related) standards cited under Board Guidelines (IV), Standards of Conduct for Directors, it seems unlikely that one could conclude a guest fee could be required for use of specific Club property (for example, to occupy a room, or to use the pool or the clubhouse), when no such fee is required of the Owners. More likely, (10) was written to allow fees to be levied on all Owners and guests, for special “extras” or activities, such as spas, restaurants, or paid recreational activities.
If the Board is using (17), then does this mean the Board considers guest fees to be the same as annual or special assessments? As above, an ordinarily prudent person would say “no, they are not”.
The Club's Bylaws likewise do not provide for guest fees. The only revenue generation allowed in the Bylaws is annual and special assessments (Bylaws Section 7, which ties back to the Board's purview over those specific revenue streams in Board Guidelines (17), above).
It has been put forward by many that the Board's guest certificate actions are designed to thwart rental activities, even though the Board's stated logic (currently posted on the Club's website) supporting guest certificates does not mention this reason. My reading of the Board's purported reasoning suggests it flows from Board Guidelines (II)(A)(3) and (4). Neither of these Guidelines gives the Board any authority to levy fees or charges to further its purposes to “conduct, control or manage Club business, affairs, or guests” (paraphrased). If, in fact, the Board has decided to “go after renters”, which looks to be the case, then that action violates Declaration Section 2.15, which specifically allows rentals, with very limited restrictions, none of which relate to guest usage or certificates.
Furthermore, I believe the Board's actions also violate Declaration Section 2.11 regarding cancellations. Changes in cancellation policies, specifically the new guideline:
Members will be required to add a guest name within 48 hours of booking or at time of booking if the reservation is booked 14 days or less from date of arrival.
If a guest name is not added by the deadline, the reservation will be subject to cancellation and the corresponding credits will be forfeited in accordance with the cancellation policy.
can only be imposed upon the Membership after a majority vote of Members. Therefore, I believe this new guideline, not having been put in front of and approved by the Membership, is invalid.
It also appears that any effort by the Board to restrict or abridge a Member's right to allow guests within the “Use Easement” (aka the Member's right to use the units and properties) is prohibited by Declaration Section 5.7(a)(i) Use Easement: “(the Club) shall not interfere with the right of Members to permit the use, possession, and enjoyment of the Property by the Guests of Members ...”. Charging guest fees, and canceling reservations lacking guest names after 48 hours, both constitute interference with these Members' rights. And pursuant to Section 5.7(c)(v) Club Rights, the Club may “regulate the number and behavior of Guests”. The plain reading of this is, the Club can limit how many guests can occupy a Unit and how they behave, but not charge Members a fee to allow guests.
And even if the Board cites its authority to set fees under Bylaws Section 5.1(a)(3)(iv), Rules, those fees must be reasonable. The Club has non-profit status. Charging $100, $200, or more for guest certificates or guest certificate changes far exceeds the few dollars it costs to change the names and maintain the software/hardware system. This is clearly is not a “reasonable” fee when viewed by “an ordinarily prudent person”. In our opinion, guest certificates should be free and unlimited -- or at the worst, changeable at any time, without incurring an additional fee.
Second, let's briefly review the planned elimination of the manual credit restoration policy. This change is to an “actual”, if somewhat informal, cancellation policy, but one that has benefited all Members since the Beginning of Time. Currently, it is described in Guidelines Section 22, Cancellation, “If (a reservation is) canceled in less than the required number of days, the Owner will be charged the applicable number of Vacation Credits and/or Bonus Time fees for that use, to the extent that other Owners cannot use the same period” (emphasis added).
Similar to the guest certificate rule discussed above, this is also clearly a cancellation policy. Therefore, changing or deleting it also requires a majority vote of the Members (per Declaration Section 2.11). However, we would argue for leaving it unchanged, as it is a fair and equitable policy as currently written. It enables owners a chance to be made whole, allows other Members to get last minute/Bonus Time space, and overall is neutral to Club finances. We strongly suggest leaving it alone, but we could understand imposing a reasonable service fee, say $25, to cover the extra time used by Owner Care to field phone calls and do the paperwork resulting in restored credits.
Finally, we have been members for a long time. We knew what to expect when we bought into the Club. Over the years, with time and experience, we have learned how to use our Membership and to live within the rules. We became used to the policies and reasonably expected them to remain the same. The recent spate of guideline changes have upset the norms resulting in severe dislocation and loss of ownership values. Worldmark credits now sell for as little as 10 cents on eBay. We think it's fair to conclude that your Member-unfriendly actions have a lot to do with that crash in credit resale prices.
We, as all Members should, just want to be on a level playing field, not have our ownership rights or use abridged, and not have its value destroyed. That is not too much to ask.
All in all, it's our opinion these changes are both a transparent money grab by Wyndham and an effort to “eliminate the competition” from anyone with the nerve to do a handful of rentals. In summary, your “bad acts” include:
- Taking credits, fees, and cash from Members without compensation.
- Charging any/multiple guest fees.
- Acquiring prime inventory by forcing people to “cancel now or lose your credits”, so that Wyndham can then grab that space and rent it at market rates (and I am sure you'll be doing so without charging yourself guest fees). And if you think I'm being paranoid, note, I can read – Wyndham's rental program is facilitated by Declaration 2.5, Declarant, which states, “Declarant shall not reserve any occupancy period earlier than 45 days before the first day of that period...” ). You will grab that prime time and rent it!
Don't think we don't see or know what you're up to over there at Wyndham!
I will expect to hear from you by August 1. Failure to resolve my issues may result in litigation on our behalf, as well as seeking to establish class action status for all other owners.
Thank you for your attention.