Proposed update to consumer protection law in Ontario - timeshare exit section!

[TheHolleys87]

May mean another disclaimer for the developer to have the Ontario resident sign when they buy a TS while the Ontario resident is not in Ontario, confirming they understand this law will not apply. Or a statement to add to the contract “If I am a resident of Ontario, I understand….”

 

[jp10558]

The problem is that many politicians propose, and even pass laws, when they don't fully understand the mechanics of how it would work. You know, those unintended consequences. Gym memberships at least have a company or business behind them and no one else is going to have to foot the bill if they cancel. Personally I have never had an issue cancelling a gym membership. Just read the contract. Just like you don't walk into a timeshare sales office to rescind, don't think you can cancel your gym membership by telling the girl at the checkin counter that you want to cancel. Sending a letter via Canada Post really isn't an unnecessary barrier to cancelling their membership.

I personally strongly believe that you should be able to cancel however you signed up to a subscription / membership. This isn't a place where I think timeshares have an issue though - at least in my limited experience you're doing a real estate transaction, with contracts, signatures, paperwork etc. You "exit" the exact same way, so this part I don't think is unfair.

Back to timeshares, especially independent ones where the developer and sales team is long gone. Exactly how do you cancel that? You own deeded real estate. Perhaps the Province of Ontario is willing to take it over and pay the annual fees?

I'm not familiar with how this works exactly, but it certainly seems to me that there should be some sort of work by these independent ones to either encourage a secondary market, or if they feel like that'd compete too much with their "developer sales" they should then be able to make any deedback almost "free money" I would think. It seems to me like some other posters here that if you can't make the timeshare attractive to new purchasers (in the secondary market, at a significant discount) then it probably isn't viable. Presumably there was some reason to go to the timeshare location...

 

[easyrider]

If they pass this today, in 25 years you could exit your timeshare contract. This law wouldn't change anything regarding contracts that were signed without this new disclosure in the contract which are all of them to date.

Bill

 

[Ken555]

I am not sure I would consider small independent HOAs "the industry". They probably have very little, if any, lobbying power in government. Now for the big developers with resorts or trusts in active sales, I do think they should all have a formal deedback program. Preferably for free or limited in the amount they can charge. $1000 - $3000 that some of them charge is ridiculous.

Was this discussion limited to small independents? And do those small independent not participate in ARDA?


Sent from my iPad using Tapatalk

 

[LannyPC]

A problem for some regarding timeshare ownership has been the exit. Many do not plan an exit other than just walking away.

For many who bought at the developer sales presentation, the exit that the sales person sold them on was to easily sell your TS for well above what was paid for at the presentation. Little did the buyer know that what (s)he was buying would be worth less than zero when trying to get rid of it.

 

[LannyPC]

I personally strongly believe that you should be able to cancel however you signed up to a subscription / membership. This isn't a place where I think timeshares have an issue though - at least in my limited experience you're doing a real estate transaction, with contracts, signatures, paperwork etc. You "exit" the exact same way, so this part I don't think is unfair.

I'm not familiar with how this works exactly...

I get what you're saying. However, the reality is, when one buys a TS, he is buying deeded property. It's just like buying a house. You can't just "cancel" the house. Someone has to be the legal owner of it.

In places like Mexico, it can work that way because you are usually buying a right-to-use (RTU) which is essentially a membership,, not deeded property. But what is happening in places like Ontario, it's deeded property so, contrary to what the scam exit/cancel/relief companies try to dupe victims into believing, you can't just "cancel" deeded property.

Unfortunately, as someone pointed out above, the law makers who are proposing this law don't seem to understand this. Nor do the people who are applauding these politicians and law makers.

Maybe I missed it but, the proposed law does not seem to indicate who must or will take possession of a TS if the owner no longer wants it and is (according to this proposed law) legally entitled to get rid of it.

 

[dioxide45]

Was this discussion limited to small independents? And do those small independent not participate in ARDA?


Sent from my iPad using Tapatalk

It isn't just about small independents, but blanket legislation like this is not usually a good thing. I go back to the lack of understanding of the product by politicians drawing up the legislation. These small independents may or may not be members of ARDA, but if they are, they are minuscule when it comes to the big behemoths in the industry. I agree that the industry does lobby to prevent such laws. I don't begrudge them for that. Politics is about lobbying these days and money is what gets potential legislation squashed. You have to play that game if you want to keep your current business model going. For the most part, this type of legislation has a bigger chance of hurting the small independents than it does the big players. The big players can afford to take back deeds if the are forced to. The small resorts can't. Kind of like how Amazon was supporting higher minimum wage laws. It helps to squash the small guy that can't afford those added costs. Amazon gets bigger as smaller companies fall.

 

[pedro47]

I liked the reading in 3 Termination by Consumer ..

 

[dioxide45]

Maybe I missed it but, the proposed law does not seem to indicate who must or will take possession of a TS if the owner no longer wants it and is (according to this proposed law) legally entitled to get rid of it.

I proposed that perhaps the province of Ontario should take the deeds back, the taxpayers can pay for them. This seems that it would only impact timeshares owned for more than 25 years. That takes out a huge chunk of timeshare owners and most new resorts that are viable. If they somehow impose that the HOA must take these back, then they are perhaps just forcing the hand of older independent resorts to do what happened at Carriage Hills and Carriage Ridge and sunset the resorts and sell to developers. Perhaps the big developer companies are behind this to give them a method to step in and pick up these old resorts on the cheap?

 

[Ken555]

It isn't just about small independents, but blanket legislation like this is not usually a good thing. I go back to the lack of understanding of the product by politicians drawing up the legislation. These small independents may or may not be members of ARDA, but if they are, they are minuscule when it comes to the big behemoths in the industry. I agree that the industry does lobby to prevent such laws. I don't begrudge them for that. Politics is about lobbying these days and money is what gets potential legislation squashed. You have to play that game if you want to keep your current business model going. For the most part, this type of legislation has a bigger chance of hurting the small independents than it does the big players. The big players can afford to take back deeds if the are forced to. The small resorts can't. Kind of like how Amazon was supporting higher minimum wage laws. It helps to squash the small guy that can't afford those added costs. Amazon gets bigger as smaller companies fall.

I really don’t have any sympathy for any timeshare developer or HOA, large or small. The entire business is built upon the knowledge that for most timeshares, some people will receive less than others and/or for a myriad of other reasons regret buying. We need laws and/or systems which promote a more fair method, and if one of the means to encourage timeshares to get there is by requiring them to take back a deed upon request after x number of years, then so be it. A timeshare and its HOA needs to be both financially sound and have an implicit value, otherwise it’s a shell game.


Sent from my iPad using Tapatalk

 

[dioxide45]

The entire business is built upon the knowledge that for most timeshares, some people will receive less than others and/or for a myriad of other reasons regret buying.

Common now Ken, You seriously can't be taking this as a moral issue when you yourself are a big benefactor of how timeshares work. You, I and many others here are the "others" in your statement. This is kinda like a Ponzi scheme in that we are at the top of pyramid and those people receiving less are at the bottom. You even call it a shell game. One way you can help effect change is to get out of the game.

 

[easyrider]

 

[SueDonJ]

I really don’t have any sympathy for any timeshare developer or HOA, large or small. The entire business is built upon the knowledge that for most timeshares, some people will receive less than others and/or for a myriad of other reasons regret buying. We need laws and/or systems which promote a more fair method, and if one of the means to encourage timeshares to get there is by requiring them to take back a deed upon request after x number of years, then so be it. A timeshare and its HOA needs to be both financially sound and have an implicit value, otherwise it’s a shell game.


Sent from my iPad using Tapatalk

I don't think sympathy should be at play with any real estate transactions, especially not ones that have stipulations in the governing docs that require any and all "co-owners" to assume the Bad Debt expense of owners in default. I don't know about any other systems but that's how it works with Marriott timeshares - it's not Marriott who will be on the hook for owners who choose to walk away. Unless the legislators write new laws to address that before they manufacture an easy exit out of thin air, I'm not in favor of an easy exit for anybody who bought and wants out but isn't suffering financial hardship that makes it impossible for them to keep up with their voluntarily-assumed obligations. (The people who can legitimately prove such hardships already have an out - bankruptcy.)

It's always so weird to me that here on TUG the prevailing sentiments are so much at odds - on the one hand we want to buy and use timeshares at the least cost to us, but on the other we rail against all the stipulations and requirements that when enforced can uphold the value of our timeshares! Why do we think we should have it both ways?!?!

 

[Ken555]

Common now Ken, You seriously can't be taking this as a moral issue when you yourself are a big benefactor of how timeshares work. You, I and many others here are the "others" in your statement. This is kinda like a Ponzi scheme in that we are at the top of pyramid and those people receiving less are at the bottom. You even call it a shell game. One way you can help effect change is to get out of the game.

I never said I would not utilize the system as it is because it unfairly, in my opinion, punishes certain buyers.


Sent from my iPad using Tapatalk

 

[Ken555]

I don't think sympathy should be at play with any real estate transactions, especially not ones that have stipulations in the governing docs that require any and all "co-owners" to assume the Bad Debt expense of owners in default. I don't know about any other systems but that's how it works with Marriott timeshares - it's not Marriott who will be on the hook for owners who choose to walk away. Unless the legislators write new laws to address that before they manufacture an easy exit out of thin air, I'm not in favor of an easy exit for anybody who bought and wants out but isn't suffering financial hardship that makes it impossible for them to keep up with their voluntarily-assumed obligations. (The people who can legitimately prove such hardships already have an out - bankruptcy.)

It's always so weird to me that here on TUG the prevailing sentiments are so much at odds - on the one hand we want to buy and use timeshares at the least cost to us, but on the other we rail against all the stipulations and requirements that when enforced can uphold the value of our timeshares! Why do we think we should have it both ways?!?!

I would hope the system would adapt to permit certain qualifying owners to get out of their deed so that others are not punished in. The manner you suggest. As I commented earlier, one way to accomplish this is to have the intrinsic value of the timeshare be realistic so that new owners would acquire those weeks, and then obviously pay the maintenance fee for them. Without such balance, I would agree with you.


Sent from my iPad using Tapatalk

 

[TUGBrian]

its certainly not black and white for sure...

on one hand, i agree you shouldn't be able to walk away penalty free just because you "dont want to pay anymore" or other similar change of heart.

on the other, its absolutely ridiculous for folks in the situation of not only never being able to actually utilize the ownership anymore, but havent been able to do so for years....have no options other than default.

I dont care if resorts implement a tiered system for the relinquishment of a resort based on length of ownership, or situation, or whatever. If I offered ANY resort my paid off mud week back plus a check for 50,000 dollars, id bet id find success 100% of the time in every situation. so what we are talking about is negotiating a reasonable penalty/fee/whatever you want to call it on the resort level.

exit/cancellation companies have extracted MILLIONS from owners using this business model for over a decade, and as a consequence of those involuntary defaults have probably cost resorts exponentially more than that in both unpaid dues/assessments, and foreclosure costs. There is no surprise that major developers are beginning to adopt this model and even ones that originally offered it completely free are now charging thousands (im looking at you holiday inn).

Id expect this trend to continue and evolve with more resorts charging hefty fees for exiting (paid off ownerships)

 

[SueDonJ]

I think that unless they're legislated into providing an exit that doesn't take advantage of owners, the developers/managers are going to keep offering only what they offer now - and that's the big guys with deep wells willing to do deedbacks on select high-demand intervals, for less than the prices that the resale market already supports and without any guarantee that they'll take back today what they took back yesterday. But it's a pipe dream to think that any consumer agency will be able to force the issue, IMO, because the system as is benefits the industry leaders and they're the ones that have the legislators' ears.

What I would like is a resale model similar to used cars, with a Blue Book-type clearinghouse of valuation and realistic expectations from buyers and sellers alike! I think that the advent of the internet should have made it easier for something like this to develop but again, I put some of the blame for that not happening on savvy buyers doing whatever they can to depress the resale market pricing. And of course, on the postcard companies who managed to get their acts together and figured out how to fleece desperate owners long before the majority of owners started seeing the need. But we're getting there, slowly but surely.

 

[dioxide45]

In Ontario, what I understand from watching a video about what happened at Carriage Ridge and Carriage Hills is that it is in fact very difficult to foreclose on a timeshare in Ontario. This increases costs significantly for a timeshare that wants to sunset. It makes for a long legal process to wind down. Ontario should look at modifying foreclosure and other laws to make it easier for these older aging resorts to sunset. Should a resort need a majority of owners to agree to terminate the timeshare when in reality if only 30% walked away the timeshare is no longer viable? Writing a law that made it easier for these older resorts to sunset without significant legal costs that chip away at the residual values that ultimately get paid out to owners in the end would be a better way to fix things than to just somehow force HOA (other owners) to pay their bills instead.

I mention mostly about Ontario because for the most part, this will only permit owners in Ontario of Ontario timeshares to "cancel". Sure they can say that if you bought while sitting in Ontario but that timeshare is in another country the law applies but do they really have any actual authority to force the transfer of a deed? It also all comes back to a deed. A timeshare isn't a contract you can cancel. The deed lives forever, or as long as the property is a timeshare. It doesn't go away like a gym membership.

 

[LannyPC]

It also all comes back to a deed. A timeshare isn't a contract you can cancel. The deed lives forever, or as long as the property is a timeshare. It doesn't go away like a gym membership.

Exactly! As was mentioned before, this is a point that the law makers of this proposed law and citizens who are applauding this law don't seem to understand.

Sadly, it's also a point that owners who go seeking the "help" of these exit/relief/cancel companies don't seem to understand either.

 

[TUGBrian]

think we are muddling a few things here. while the deed itself isnt going away as its the record of ownership for a tangible property/real estate... the discussion is how to end that ownership.

Owners dont want to eliminate the deed, they just dont want to be the owner of it anymore and with no valid recourse to accomplish that task themselves that leaves default and eventual foreclosure as the only viable solution to transfer the ownership to another party (the association).

heck its almost a dead split on US states for which ones require judicial foreclosure vs the non-judicial process and for good reason...much like in ontario the actual judicial foreclosure process in the US is absurdly long and expensive!

this chart was one id not previously seen, but holy smokes!

im not sure why any hawaii resort would not make an effort to work directly with an owner to surrender back willingly vs eat 6 years worth of maintenance fees waiting on foreclosure.

 

[LannyPC]

think we are muddling a few things here. while the deed itself isnt going away as its the record of ownership for a tangible property/real estate... the discussion is how to end that ownership.

Yes, I'll agree. I think what the problem is is that the law makers who are proposing that owners, under certain circumstances, be able to quickly and easily end that ownership, don't realize that someone else has to take ownership. Unless I missed it, the proposed law does not address that problem.

So the question remains, if this proposed law is enacted, who becomes the next owner(s) of these unwanted properties that the current owner(s) can legally relinquish?

PS: Sorry if I sound like a broken record.

 

[dioxide45]

think we are muddling a few things here. while the deed itself isnt going away as its the record of ownership for a tangible property/real estate... the discussion is how to end that ownership.

Owners dont want to eliminate the deed, they just dont want to be the owner of it anymore and with no valid recourse to accomplish that task themselves that leaves default and eventual foreclosure as the only viable solution to transfer the ownership to another party (the association).

heck its almost a dead split on US states for which ones require judicial foreclosure vs the non-judicial process and for good reason...much like in ontario the actual judicial foreclosure process in the US is absurdly long and expensive!

this chart was one id not previously seen, but holy smokes!

View attachment 83109

im not sure why any hawaii resort would not make an effort to work directly with an owner to surrender back willingly vs eat 6 years worth of maintenance fees waiting on foreclosure.

But they could still end up with 6 years of unpaid dues in the event they are taking back low season weeks that they can't resell or rent. The main thing a resort needs to avoid is too easy of a giveback program. If they open the flood gates they could end up with bigger problems.

 

[TUGBrian]

as someone responsible for the resort/ownership, id rather have the option to try to monetize the unit over 5 years vs having it tied up in court on top of paying an attorney to handle the foreclosure process.

even if it sat vacant for 5 years, im still ahead in terms of money because of the cost of foreclosure itself!

 

[falcon]

I admit I am not fluent in the application of Canadian laws and this appears to only really impact Ontario vs all of Canada? but I like that its even being proposed! would like to shake the hand of whatever politician is spearheading this particular initiative!

Ontario Newsroom

news.ontario.ca

Ontario Newsroom

news.ontario.ca

This is the will of the people and our government bodies actually listening for a change. Many of us from the Carriage Hills debacle filled out forms and answer questions about the consumer protection act and we were actually listened to. I know this doesn't reach Beyond Ontario but this is a great big win and we are all very pleased!

 

[Arusso]

while im not a fan of it actually being a law.... thats more because I feel that it shouldnt HAVE to be.

all resorts should provide at least SOME some sort of owner exit option especially if its paid off.

The proposed "law" IMO would be a last resort (pun intended). Let's ask a simple question: Why does this problem even exist? IMO, the answer lies in the business model the industry created 50 years ago. I'm referring to only TS ownerships holding a deed of real property which the owner either uses for the time interval purchased or leases it to the developer in exchange for points. It would not matter how the current owner acquired ownership because the original owner had to have paid retail.

By not having instituted a buy-back program, an ownership automatically devalues upon execution of the contract. However, if the industry offered a buy-back program and each developer sets a percentage of the retail price a buy-back program could be feasible. The intrinsic value is set by each developer. This also facilitates the capitalist market forces of competition and supply and demand. The TS market would mimic the real estate market with a costa associated with the transfer of ownership.

I would love to see an economist opinion regarding the pros and cons to the TS industry and the consumer if such were to happen. If a revamping of the TS business model were to occur, there would be no need to create the legislation proposed.