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Owner Depositing A Rental Reservation In II At The Renter's Request?

kds4

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Okay, so this is a new one to us. Hoping there are some 'expert TUGgers' who have dealt with this question before. We have a Spring Break 2020 points reservation that was rented from us through Redweek. The renter is asking us to take that reservation and deposit it in II for them to use as an exchange at some point in the future with them paying us the exchange fee at the time they want to use it. Sounds simple enough. However, we don't know what the ramifications of doing that are as far as Redweek is concerned to ensure we will still receive payment of the rental fee (that is currently in escrow with Redweek). While we are happy to assist the renter as they are asking us to, we don't want to take any action that will interfere with our being paid for the Redweek rental. Help?
 

Steve Fatula

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Well, one problem to solve is you *may* get in trouble. II explicitly prohibits renting out an exchange. Others will know the details, but, there have been reports of people who have been caught just by publicly posting or advertising. The penalties are severe, don't recall what they are. Note I have no personal experience doing this but have read about it quite a few times on Tug. I am sure others more familiar will chime in, just forewarning.

Here's an example thread:

https://tugbbs.com/forums/threads/renting-out-an-interval-exchange-week.264992/
 

kds4

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We do understand the prohibition on renting II reservations. However, from our perspective, the rental is between the renter, Redweek, and us. The 'free' II exchange is just something we would be doing voluntarily to give them some compensation for not being able to check-in for their scheduled Redweek rental with us. Our only concern is that there may be no way for us to modify the reservation (including depositing it in II) that won't invalidate the rental agreement with Redweek.
 

Saintsfanfl

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From my perspective the Redweek rental is separate. There needs to be a gentlemen's“agreement” between you and the renter. You get paid by redweek per the terms of the contract and the renter needs to go along with it. Then you have a side unofficial agreement to get the renter an alternative week in II for free.

This is not without its own issues. Does the renter fully understand the limitations and restrictions of an II exchange?
 

kds4

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From my perspective the Redweek rental is separate. There needs to be a gentlemen's“agreement” between you and the renter. You get paid by redweek per the terms of the contract and the renter needs to go along with it. Then you have a side unofficial agreement to get the renter an alternative week in II for free.

This is not without its own issues. Does the renter fully understand the limitations and restrictions of an II exchange?
I think that's the rub. The renter is asking us to somehow take the actual reservation they rented from us through Redweek and deposit it into II for them to 'redeem' at some point in the future (as an 'alternate' reservation to the one they actually booked with us through Redweek - because they 'probably' don't want to travel next month when their rental is scheduled). If we had any other deposits in II already, it would be a non-issue for us. We could leave the existing reservation 'as-is' and do as you suggest in providing an alternate week in II from one of our week deposits. Unfortunately, we don't have any other deposits in II and this involves DC points not deeded weeks.
 

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We do understand the prohibition on renting II reservations. However, from our perspective, the rental is between the renter, Redweek, and us. The 'free' II exchange is just something we would be doing voluntarily to give them some compensation for not being able to check-in for their scheduled Redweek rental with us. Our only concern is that there may be no way for us to modify the reservation (including depositing it in II) that won't invalidate the rental agreement with Redweek.
I would caution you that it's irrelevant what you think, it only matters what II thinks. I understand what you are saying, but...
 

Saintsfanfl

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I think that's the rub. The renter is asking us to somehow take the actual reservation they rented from us through Redweek and deposit it into II for them to 'redeem' at some point in the future (as an 'alternate' reservation to the one they actually booked with us through Redweek - because they 'probably' don't want to travel next month when their rental is scheduled). If we had any other deposits in II already, it would be a non-issue for us. We could leave the existing reservation 'as-is' and do as you suggest in providing an alternate week in II from one of our week deposits. Unfortunately, we don't have any other deposits in II and this involves DC points not deeded weeks.
It is problematic. If you deposit then the rental is no longer available. No longer available can mean full refund from Redweek to the renter. I was actually proposing you deposit the rental but that requires full cooperation from them. And I don’t know if Redweek is verifying the reservation validity. Even if they didn’t before they might be now to make sure owners are not depositing reservations and then not reporting a refund due to the renter.
 
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Fasttr

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I’d offer them the ability to rebook (based on availability) within the 120 day holding restriction that will happen if you cancel the points ressie, points from which now don’t expire until 12/31/21. It’s the cleanest way to go.
 
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kds4

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I’d offer them the ability to rebook (based on availability) within the 120 day holding restriction that will happen if you cancel the points ressie, points from which now don’t expire until 12/31/21. It’s the cleanest way to go.
If they had paid us directly, I think that would be a fine way to go. However, since the rental fee is in escrow with Redweek Payments, canceling the reservation will simply result in them receiving a full refund. We may just offer them a partial refund of the rental amount that was above our maintenance fees (profit) if they decide not to go. At least that would mitigate some of their 'loss' for choosing not to go.
 

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I'd agree that II is judge, jury and executioner but I think it's reasonable. I'd make sure everyone was clear on exceptions, changes, cancelations, who's paying the fees and the like. I'd likely ask II about it directly as even the other party paying the exchange and guest certificate fee could be problematic. I'd also want payment in full on the rental before proceeding if I did move forward. Personally I'd likely just say no even if I had to eat part of the rental. Hopefully the escrow agreement doesn't force you to refund the portion you've been paid already.
 

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It seems both you and they are trying to make the best of this situation, but it is unclear if redweek will play along. You need to draft an agreement with the renter, that is contingent on Redweek agreeing in advance, in writing, to pay you for the week. Basically:
-owner agrees that they are are trying to help renter, due to current conditions and acknowledging the non cancellation clause
- renter agrees that all funds in escrow will be paid by redweek to owner upon the following occuring (either owner depositing to II, or owner agreeing to make new points reservation subject to all limitations)
-redweek expressly agrees to the above, despite the future reservation not having been made (through DC or II) , and subject to risk that II feels this is an improper rental, etc.
 

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If your doing the honor system ,,,
I’d ask the renter to ok Redweek to give the money to the owner to work out this II deal between them if they are ok with this extra aggravation to help.
RedWeek in the middle can sure muck up the water trying to do something that is not suppose to happen.
Got to have some trust - both ways !

Dave
 

kds4

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Thanks for all of the good feedback. After trying to 'delicately' research the issue with Redweek, there is no way to accomplish what the renter is requesting. Any 'modification' to the reservation will invalidate the rental agreement and trigger a full refund to the renter by Redweek. (They have the full rental amount in escrow.) Having Redweek in the middle (as Tank noted) is preventing us from having the 'Gentlemen's Agreement', that Saintsfanfl suggested.

We have come to the best resolution we could by offering to rebate to the renter the 'profit' we were receiving from their reservation if they do not check-in and we disclosed our costs for the reservation in MFs and Redweek fees to them. I know it will be a small consolation to them if they don't go, but it is the most we could offer without 'injuring' ourselves. We really appreciate Fasttr's idea of using the cancellation/rebooking offer. For future rental listings, we may avoid using Redweek Payments to keep the rental proceeds between us and the renter (which would give us the flexibility to offer what Fasttr suggested).

Another great learning opportunity for us here on TUG. Thanks, all.
 

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Thanks for all of the good feedback. After trying to 'delicately' research the issue with Redweek, there is no way to accomplish what the renter is requesting. Any 'modification' to the reservation will invalidate the rental agreement and trigger a full refund to the renter by Redweek. (They have the full rental amount in escrow.) Having Redweek in the middle (as Tank noted) is preventing us from having the 'Gentlemen's Agreement', that Saintsfanfl suggested.

We have come to the best resolution we could by offering to rebate to the renter the 'profit' we were receiving from their reservation if they do not check-in and we disclosed our costs for the reservation in MFs and Redweek fees to them. I know it will be a small consolation to them if they don't go, but it is the most we could offer without 'injuring' ourselves. We really appreciate Fasttr's idea of using the cancellation/rebooking offer. For future rental listings, we may avoid using Redweek Payments to keep the rental proceeds between us and the renter (which would give us the flexibility to offer what Fasttr suggested).

Another great learning opportunity for us here on TUG. Thanks, all.
What this tells us is Redweek is either not a true fiduciary escrow, or it breached its duties to you both by outright refusing your proposed joint amended instructions.

A true escrow is bound by the joint instructions of the parties, including subsequent instructions that change. A true escrow must follow what you both tell it to do.

If I were the renter, I'd point this out to Redweek.
 

csalter2

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What this tells us is Redweek is either not a true fiduciary escrow, or it breached its duties to you both by outright refusing your proposed joint amended instructions.

A true escrow is bound by the joint instructions of the parties, including subsequent instructions that change. A true escrow must follow what you both tell it to do.

If I were the renter, I'd point this out to Redweek.
Yes, this is true. However, if you are asking any escrow company to break or circumvent the rules, they can’t and shouldn’t do it.
 

kds4

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What this tells us is Redweek is either not a true fiduciary escrow, or it breached its duties to you both by outright refusing your proposed joint amended instructions.

A true escrow is bound by the joint instructions of the parties, including subsequent instructions that change. A true escrow must follow what you both tell it to do.

If I were the renter, I'd point this out to Redweek.
You raised a good point. So, I should clarify. I've probably used the word 'escrow' inaccurately. This rental does not involve a legal 'escrow' service. Redweek offers 'escrow services' through a 3rd party, but that isn't what happened here. When we listed our rental we agreed to utilize what is called "RedWeek Online Booking System" (formerly "Redweek Payments"). Part of that agreement with Redweek includes them acting as the payment processor of our rental. The renter pays Redweek and they hold the funds like an escrow service until approximately 3 days after the check-in date before releasing payment to the owner. All of this is part of their terms and conditions. Any deviation invalidates the entire agreement. Redweek describes their service this way - "RedWeek's online booking system was custom-designed to make rental transactions safer and easier for both parties. We provide the rental agreement, collect and disburse the payment, and assist with any disputes." We didn't have to agree to have them as the payment processor when we listed our rental, but because we did there is now no way for us to make any changes to try and accommodate our renters. Just something to be aware of for anyone choosing to offer rentals through Redweek in the future.
 

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Yes, this is true. However, if you are asking any escrow company to break or circumvent the rules, they can’t and shouldn’t do it.
No you missed the point. The "rules" are set by the parties to the escrow, and can be changed by them by mutual agreement. An escrow company does not set the rules. That is why Redweek is not a true escrow, despite them making it seem as they are.
 

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You raised a good point. So, I should clarify. I've probably used the word 'escrow' inaccurately. This rental does not involve a legal 'escrow' service. Redweek offers 'escrow services' through a 3rd party, but that isn't what happened here. When we listed our rental we agreed to utilize what is called "RedWeek Online Booking System" (formerly "Redweek Payments"). Part of that agreement with Redweek includes them acting as the payment processor of our rental. The renter pays Redweek and they hold the funds like an escrow service until approximately 3 days after the check-in date before releasing payment to the owner. All of this is part of their terms and conditions. Any deviation invalidates the entire agreement. Redweek describes their service this way - "RedWeek's online booking system was custom-designed to make rental transactions safer and easier for both parties. We provide the rental agreement, collect and disburse the payment, and assist with any disputes." We didn't have to agree to have them as the payment processor when we listed our rental, but because we did there is now no way for us to make any changes to try and accommodate our renters. Just something to be aware of for anyone choosing to offer rentals through Redweek in the future.
I understand now, and that is why I made my point. As you note, "like an escrow" does not an escrow make.

Good for people to know you are not in control of your rental, but shifting the power to Redweek when you utilize their service.

Thanks for the updates which hopefully are helpful to others.
 

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Is the renter a timeshare owner? Does he understand the limitations of trading in Interval? As we all know, getting what you want in II is part work part luck, he may not like the result of this arrangement and that may create additional frustration and possible still ask for a refund later.
 

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No you missed the point. The "rules" are set by the parties to the escrow, and can be changed by them by mutual agreement. An escrow company does not set the rules. That is why Redweek is not a true escrow, despite them making it seem as they are.
No, I understood exactly what you said and I didn’t miss the point. I was merely stating that if the parties set rules that a illegal o inappropriate that a reputable escrow company will not continue with the deal.
 

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Upon further thought on Fasttr's idea, I think we have found an arrangement that is better for all. We were able secure another points reservation at the same resort in the same view type for later in the year. The renter has agreed to the new dates. No additional monies will change hands and no dispute with Redweek will be filed. So, we should still be paid the funds Redweek is already holding for the rental (assuming continued solvency of Redweek). We are just awaiting instructions from Redweek on how to 'swap' the reservations with them.

Once the reservations are swapped with Redweek, we will cancel the original rental reservation and let those points go into the 'extended holding account'. We have another reservation coming up for our own use this summer. Once we are between 120 and 60 days of check-in for that reservation, we will have Owner Services 'swap' the holding account points into that reservation and return the points we originally used to book that reservation into our account (with no restrictions).

Not exactly a 'puck-trick', but it gets the job done and we save these rental proceeds from falling through.
 

Fasttr

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Upon further thought on Fasttr's idea, I think we have found an arrangement that is better for all. We were able secure another points reservation at the same resort in the same view type for later in the year. The renter has agreed to the new dates. No additional monies will change hands and no dispute with Redweek will be filed. So, we should still be paid the funds Redweek is already holding for the rental (assuming continued solvency of Redweek). We are just awaiting instructions from Redweek on how to 'swap' the reservations with them.

Once the reservations are swapped with Redweek, we will cancel the original rental reservation and let those points go into the 'extended holding account'. We have another reservation coming up for our own use this summer. Once we are between 120 and 60 days of check-in for that reservation, we will have Owner Services 'swap' the holding account points into that reservation and return the points we originally used to book that reservation into our account (with no restrictions).

Not exactly a 'puck-trick', but it gets the job done and we save these rental proceeds from falling through.
Are you sure MVC will swap in the Holding Account points on a ressie booked before those Holding Account points would have been able to have been used to book the original ressie. They may see that as gaming the system. You may want to get it in writing from MVC that you will be able to do that.
 

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No, I understood exactly what you said and I didn’t miss the point. I was merely stating that if the parties set rules that a illegal o inappropriate that a reputable escrow company will not continue with the deal.
Illegal, of course not, but they don't get to refuse "inappropriate" instructions. It's up to the parties--not escrow.
 
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