Poipu Point - Walk away from ownership?

[T_R_Oglodyte]

DRI, like every Developer / Management, has some flaws and overall seems to be high on the fees they tend to collect. But this is a case where, IMO, they cannot be blamed and are doing the best they can in a no-win situation for everyone involved. You wanna bet they would give up management / sales there IF they had known of the issues that have become obvious now? No one willingly gets into a mess like this - they inherited a problem and as management now have to do what they can to resolve it. The blame lies with those long gone from the picture. Doesn't make it easier to take or make DRI saints but I wouldn't blame them either.

They have to deal with it and so will the other owners as best they can.

I agree, John. I can't imagine that Diamond would have picked up Poipu as they did if they had been aware of the extent of the problem.

If they had known of it, Point at Poipu would have been treated as any other troubled asset in an acquisition, such as a property in which the environmental review indicates there's contamination on site that needs to be cleaned up. In those cases the property is either carved out of the deal or a portion of the sales price is put into an escrow account to fund needed projects - reducing the price to the sellers by that amount.

Nobody walks into a project of this type knowingly. Though I'm sure there is some scrutiny going on at Diamond as to how this wasn't caught during due diligence.

 

[teepeeca]

Weren't Diamond-Sunterra "in bed" with each other in the mid-'90's onward???

I'm not sure of the relationship, but they were "closely related", and then Diamond became the sole owner/manager of the various resorts. So "if" Sunterra was the original developer of the P@P, then Diamond "should have known" everything about the building of the resort (and it's possible defects). The "deep pockets" to fix the resort buildings, should then fall on Diamond exclusively, NOT the present owners.

Tony

 

[timeos2]

Weren't Diamond-Sunterra "in bed" with each other in the mid-'90's onward???

I'm not sure of the relationship, but they were "closely related", and then Diamond became the sole owner/manager of the various resorts. So "if" Sunterra was the original developer of the P@P, then Diamond "should have known" everything about the building of the resort (and it's possible defects). The "deep pockets" to fix the resort buildings, should then fall on Diamond exclusively, NOT the present owners.

Tony

If they were "in bed" prior to the takeover it's news to me. There was never any hint of Diamond Resorts involvement in any way with Sunterra until they bailed them out of a second near bankruptcy. Did anyone know of any prior relationship I missed?

 

[lv_maui]

Its my understanding that no one could have known about the extent of the problem unless they did extensive testing of the inner walls of the buildings. That is how Diamond found the extent of the water intrusion issue. Diamond knew about the water instrusion issues with the soffits since this was a well know problem at the resort. But it appears that Diamond did not know the extent of the problem.

Teepeeca has a right to be upset but why should Diamond pay for the units that are owned by owners. This is just the danger of owning a timeshare just like the owner of a condo unit. I have read that Diamond has to pay a big chunk of money also for the units that they own.

Weren't Diamond-Sunterra "in bed" with each other in the mid-'90's onward???

I'm not sure of the relationship, but they were "closely related", and then Diamond became the sole owner/manager of the various resorts. So "if" Sunterra was the original developer of the P@P, then Diamond "should have known" everything about the building of the resort (and it's possible defects). The "deep pockets" to fix the resort buildings, should then fall on Diamond exclusively, NOT the present owners.

Tony

 

[T_R_Oglodyte]

Weren't Diamond-Sunterra "in bed" with each other in the mid-'90's onward???

I'm not sure of the relationship, but they were "closely related", and then Diamond became the sole owner/manager of the various resorts. So "if" Sunterra was the original developer of the P@P, then Diamond "should have known" everything about the building of the resort (and it's possible defects). The "deep pockets" to fix the resort buildings, should then fall on Diamond exclusively, NOT the present owners.

Tony

If they were "in bed" prior to the takeover it's news to me. There was never any hint of Diamond Resorts involvement in any way with Sunterra until they bailed them out of a second near bankruptcy. Did anyone know of any prior relationship I missed?

Its my understanding that no one could have known about the extent of the problem unless they did extensive testing of the inner walls of the buildings. That is how Diamond found the extent of the water intrusion issue. Diamond knew about the water instrusion issues with the soffits since this was a well know problem at the resort. But it appears that Diamond did not know the extent of the problem.

Teepeeca has a right to be upset but why should Diamond pay for the units that are owned by owners. This is just the danger of owning a timeshare just like the owner of a condo unit. I have read that Diamond has to pay a big chunk of money also for the units that they own.

I've tried to stay on top of the ins and outs of the dealings through the years, and I'm not aware of any relationship between Diamond and Sunterra prior to DRI taking over when Sunterra was spiraling toward it's second bankruptcy filing. Diamond's involvement at that point has always seemed to me a case of a savvy buyer (Stephen Cloobeck) picking up assets on the cheap from a troubled operator.

Prior to being taken over by Diamond, Sunterra had been trying to sell Point at Po'pu and Ka'anapali Beach Club to raise cash. About eight years ago it seemed that a sale of those resorts to Hilton seemed imminent. After that, Sunterra was going to hook up with Radission - Sunterra even changed its stock ticker to SNRR, where the RR was supposed to represent Radisson Resorts. It was only after those arrangements fell through that Sunterra dropped the Embassy names and rebranded Ka'anapali and Po'ipu as Sunterra resorts.

*******

Even if you think that Diamond and Sunterra may have been in cahoots, how would you pin them with responsibility for construction that occurred in 1991-1992 when Sunterra wasn't involved at the site until 1997, which is when Sunterra acquired Marc Resorts.

 

[Passepartout]

I have no skin in this game, and maybe I'm missing something, but isn't there insurance on the structures? If not, why not? Seems like structural damage should be covered by some kind of umbrella policy.

Jim

 

[kwilson]

I nearly took a "free" Point at Poipu unit from a fellow Tugger a month or so ago. Thanks goodness for procrastination, as I am now a very happy non-owner at the Point!

Please name the Tugger who tried to unload on you. If they knew of the assessment and tried to unload on a fellow Tugger they should be be ostrasized.

 

[T_R_Oglodyte]

I have no skin in this game, and maybe I'm missing something, but isn't there insurance on the structures? If not, why not? Seems like structural damage should be covered by some kind of umbrella policy.

Jim

Filed an insurance claim but the claim was denied. Commenced litigation about the decision, but dropped the claim after attorneys advised there was a low probability of success.

 

[bogey21]

Please name the Tugger who tried to unload on you. If they knew of the assessment and tried to unload on a fellow Tugger they should be be ostrasized.

That is a big "if". You want the Tugger named and you aren't sure of the facts. I thought we were fair on this board.

George

 

[MommaBear]

Please name the Tugger who tried to unload on you. If they knew of the assessment and tried to unload on a fellow Tugger they should be be ostrasized.

I actually think person giving the unit was actually innocent of any wrong doing. The fellow's wife had died and she handled all the timeshares- he didn't even know what season or view they owned. I looked back at our correspondance and this was actually 8 weeks ago- so I am going to think the best and assume no malicious intent on the Tugger's part.

 

[TUGBrian]

hoa letter regarding the insane special assesment of over $5000 this year

https://www.diamondresorts.com/hoa/20111005/PoipuOwnerLetterandInserts.pdf

The total amount of the water intrusion assessment, which includes all construction costs, legal and consulting fees, permits, Hawaii general excise tax and other items is approximately $65.8 million, or $5,893.32 per interval.

 

[Kona Lovers]

This is just outrageous and insane.

 

[rifleman69]

As owners they have accepted the obligations so it is all legal to report.

That's what I was getting at, how is Diamond ruining their credit? Seems to me it's the OP that's ruining their own credit.

 

[Passepartout]

hoa letter regarding the insane special assesment of over $5000 this year

https://www.diamondresorts.com/hoa/20111005/PoipuOwnerLetterandInserts.pdf

If this whole deal isn't enough to sink the entire timeshare industry, I don't know what is. Not that it is healthy by any stretch anyway.

The insurance carrier who disclaimed responsibility after accepting premiums for years should be held responsible by Hawaii state insurance regulators. That is what insurance is for.

This is not just insane- it is criminal!

Jim Ricks

 

[Kauaigrl00]

If this whole deal isn't enough to sink the entire timeshare industry, I don't know what is. Not that it is healthy by any stretch anyway.

The insurance carrier who disclaimed responsibility after accepting premiums for years should be held responsible by Hawaii state insurance regulators. That is what insurance is for.

This is not just insane- it is criminal!

Jim Ricks

Jim I agree! Luckily I only own 1 week a year which is bad enough. Seems like our hands are tied, I really do feel sorry for the retiree's that own multiple weeks. I have always loved the Point at Poipu but as our retirement nears it does scare me. I wonder what every one is going to do? It also says that water intrusion is a big problem on Kauai - I sure would like to know what other establishments have the same problem since the Point at Poipu is actually built on volcanic rock.

 

[Karen P]

Diamond damaging credit?

I don't believe Diamond can damage an owner's credit. I have bought many Diamond properties over the years, and they have never asked me for a Social Security Number.

Additionally, it is unlikely that they're interested in damaging your credit. I think their agenda is to either get the unit back from you, or have you pay the special assessment.

I heard from another source (yahoo finance?) that Diamond acquired their resorts on a line of credit. My first impression is they need to pay off a note, and this is their way of doing it.

 

[MOXJO7282]

So are the owners just at the mercy of these HOAs who can charge anything they want for these assessments?

What if it was $7500, $10k, are owners just stuck paying? That just seems wrong. There should be a cap on these things and if it exceeds a death blow vote can take place and the TS dissolved and sold for return to owners.

That may be to simplistic but it just seems like the littel guy owner again gets the short end and the corporation with the deep pockets is spared.

 

[Kauaigrl00]

So are the owners just at the mercy of these HOAs who can charge anything they want for these assessments?

What if it was $7500, $10k, are owners just stuck paying? That just seems wrong. There should be a cap on these things and if it exceeds a death blow vote can take place and the TS dissolved and sold for return to owners.

That may be to simplistic but it just seems like the littel guy owner again gets the short end and the corporation with the deep pockets is spared.

But it is that and more for some owners that own multiple weeks! Let it dissolve I will take the loss and be rid of it. Let them close it down, bulldoze it etc.

 

[LisaRex]

That may be to simplistic but it just seems like the littel guy owner again gets the short end and the corporation with the deep pockets is spared.

In theory, the HOA is supposed to elected and representative of the owners. Just like your state or fed representative is supposed to represent your interests. That is the checks and balances on corporate greed.

Many timeshare HOAs, however, are hand-picked by the corporations, which flies in the face of the checks and balances. It is very difficult, if not impossible, to get a truly independent HOA installed when the developer controls the election process. I'm not sure if that reality has ever been tested in the courts.

That being said, I'm not sure that it matters in this particular case because the HOA is responding to a situation that they didn't create. Yet they are obligated to handle it in the manner they deem the most appropriate.

If you don't like it, then I suggest that before simply abandoning your unit, you at least communicate to them your unhappiness, and perhaps offer up an alternative solution. For instance, they should not pay for a contractor up front, but should negotiate for them to be paid after certain milestones have been met. Perhaps they could offer up installments for owners so that they are not bit by these huge burdens all at one time. Most certainly, they could have been more sensitive and less abrasive in their communications with owners.

In any event, you have my sympathy for whatever it's worth. It seems that someone -- the builder, the inspector -- let you all down. And what stinks even more is that the very people who built the structure may be hired to fix the problem. I'm sure skilled labor on Kauai isn't that plentiful.

 

[lv_maui]

Lets set the facts striaght.

Much of this is false. Let me set the facts.

Sunterra never tried to sell the two Hawaii properties. They were key locations for their system.

The sale to Hilton was only the Kaanapali piece, and Sunterra was totally against it and fought it. It was because Goldman Sachs, their partner in Maui, thought it was time to sell at top dollar, which was really a correct decision on their part and Hilton approached them.

Sunterra trying to hook up with Radison is correct, so much so that the deal was approved by their Board but did not get signed by their CEO Nick Benson. Benson came from Europe and knew that if Sunterra branded with Radison, his baby, Europe, was going to suffer badly because of how low and dirty Benson and Europe was sold to customers. Bottomline, Benson sold out USA for benefit of his croniies working in Europe.

As for SNRR and Radison, that is the first time I have heard of that and now you have me wondering if that was correct.

The Embassy name was taken off becuase Sunterra made a decision to NOT be a branded company as per the above and because Sunterra did not like paying the franchise fee to Embassy. Embassy also wanted out of the deal for a long time. IN fact, the Embassy relationship was handled by the Hilton Timeshare people in Orlando who Gennuso knew very well from the old days. Without Gennuso on Sunterra side, Embassy/Hilton would have asked to get out much earlier.

Prior to being taken over by Diamond, Sunterra had been trying to sell Point at Po'pu and Ka'anapali Beach Club to raise cash. About eight years ago it seemed that a sale of those resorts to Hilton seemed imminent. After that, Sunterra was going to hook up with Radission - Sunterra even changed its stock ticker to SNRR, where the RR was supposed to represent Radisson Resorts. It was only after those arrangements fell through that Sunterra dropped the Embassy names and rebranded Ka'anapali and Po'ipu as Sunterra resorts..

 

[ocdb8r]

I'm sorry, but I don't agree with all the defense of Diamond. Bottom line is that the developers should be on the hook for this. If Diamond bought from Sunterra and assumed the role of developer, they should be held responsible. If they didn't it may be a bit blurry for those who bought from Sunterra. I understand that maybe those who bought from Sunterra may only have them to hold accountable (depending on exactly what the relationship between Sunterra and Diamond was when Diamond stepped in), but certainly Diamond should be on the hook to anyone who they sold units to.

Just because the defects would have been hard to detect doesn't mean Diamond should be let off the hook. THEY are the supposed experts here...THEY are the ones with property development experience....THEY should have properly diligenced what they were purchasing.

 

[GTStone]

Developer Responsibility

This really depends on how you hold the deed. If you own a fractional deed, tied to the property, then you carry the financial liability for work that must be done.

It would appear the original developer had some serious construction issues. Probably some contractors went "cheap" and later it caught up with them.

Liability usually expires after 10 years. Any litigation against a builder must be brought in the first 10 years. I don't know this property, but it would appear it is older then that, so the developer has no financial liability.

The HOA runs the property on behalf of the owners. If the work needs to be done, there are probably no cheap solutions. When demolition of damaged materials is involved, the cost goes way up. Its not just the cost of new construction.

When you purchase the deed for any property, either as a residence, or a timeshare, you accept financial responsibility for it. This is simply the cost of ownership. If it was simply buying vacation time somewhere, it would be different ( a vacation club, non-deeded ).

Hopefully the HOA is having an excellent job done to restore the site and provide the maximum value to the owners. There is nothing malicious about long term planning that benefits the majority of people.

Your personal financial issues cannot relieve you from your contractual responsibility, but you can likely work out an arrangement that benefits both parties. Try approaching them with "I don't have that type of money due to the shifts in the economy. How can we work together to resolve this problem. Then, listen.

 

[T_R_Oglodyte]

Liability usually expires after 10 years. Any litigation against a builder must be brought in the first 10 years. I don't know this property, but it would appear it is older then that, so the developer has no financial liability.

In their letter to owners, the Board of Directors did mention the 10-year statute of repose as regards inability to pursue relief from the builder.

 

[LauritaM]

Points VS Weeks

Hey -we haven't rec'd a special assessment notice, we own points through The Hawaii Collection DRI which includes Point Poipu, Kaanapali, and some locations in Nevada and Arizona. I REALLY hope that we will not be a part of this. When we first bought a week at Kaanapali through Embassy - later Sunterra we got a whopping special assessment for remodeling.

Does anyone know about if points are different than weeks? I prepaid our 2012 MF a couple months ago as we were booking for June and no mention was made then of any extra owed.

I know this doesn't help the OP, but knowing if there is a difference will help me and hopefully others. Thanks!

 

[T_R_Oglodyte]

The way I see this is that everyone who has a deed to the property, which includes the Hawaii Collection trust, should be looking this from the aspect of what is the best option to deal with the property based on what is known right now.

Some significant information that has not been presented is what the cost would be to simply close the resort, clear the property, and put the land up for sale. How much would that cost, and how much of an assessment would be needed to make that happen? What would be the procedural issues involved to terminate the timeshare program?