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

[vacationtime1]

If an HOA is required by law to take back any unit at the owner's request, it will create a "death spiral" at seasonal resorts. Mud season owners will dump their units creating huge bad debt issues for the HOA. MF's will increase, making even the "good" units into "bad" units. Eventually, the entire project will implode.

This may or may not be a bad thing (seasonal resorts are economically unsuitable to be timeshares, regardless of how the developer arranged things), but the result will be to transfer the headache from the owners of the bad weeks who will walk to the owners of the good weeks who will get to pay higher MF's in the short-term and then watch the project implode.

 

[Susan2]

I have multiple responses, which I will break up into separate posts.

First, I would like to address those resorts that are in active sales. When resorts are actively soliciting sales (and this does not include resorts which offer lists of weeks when asked, or who send them around to current owners and, possibly, renters), and offer incentives for "owner updates" or "tours" of the resort, and then charge buyers thousands of dollars for a week (or an "upgrade" or conversion to a different program), how can they possibly justify saying, "No, we don't want your week for free," or only accept a deed back with the payment of one or more years' advance maintenance fees?

This is wrong! If a resort is offering the same or a substantially similar unit for sale, it is inherently contradictory (and completely unjust) to refuse to accept a week back from an owner. They will take back the deed if an owner "upgrades" to a larger or more expensive week, or program, and then they will market it to someone else. But if they do that, even on the "second tier" offering (where they tell the person who didn't buy) that they "found additional inventory which another owner surrendered, and can offer that week at a lower price," they should take back a week for free. To do otherwise is tantamount to admitting that what they are selling is essentially valueless. And that, my friends, is fraud. Plain and simple.

There should be a law in every state that says that a resort which is actively soliciting sales must accept back substantially similar weeks which owners wish to surrender. Period. End. Exclamation point. (Those states which do not have timeshares should pass similar laws to protect their residents.)

 

[Susan2]

Second, I would like to address those resorts which are NOT in active sales, but have "mud seasons" or other undesirable times of the year. Some of you posted opinions regarding resorts that are seasonal in nature, and whined that allowing owners of unmarketable, undesirable off-season weeks to give back their weeks would be unfair, because the other owners (who presumably have more desirable weeks) would have to pay more for ther maintenance fees. BOO HOO!

My question to those owners (of the desirable weeks) is, "Why should other people subsidize your vacations?" IF the weeks (or units) are unmarketable, and the owners don't want them, why should they be on the hook for continual maintenance fees? This makes no sense to me!

NO ONE buys an a timeshare week being told, "At some point, things will all change, and our promises will be meaningless, and you will find yourself on the hook indefinitely for a week that you can't use, and don't want, so that the owners of better weeks will pay less for their weeks."

What you're saying is, "You guys got suckered in but, since I benefit, I want to keep it that way." This, in my opinion is also very wrong.

If there are mud seasons that threaten the continuance of the resort, FIND A SOLUTION. (And keep reading.)

 

[Susan2]

Third post: What is a seasonal resort, which is not in active sales, supposed to do?

Well, if the resort is part of a resort group, then the resort group should figure out a solution, or go under. Keeping people tied to weeks (and fees) that they don't want is NOT an honorable business model! For all those timeshares which sold out to other companies, those companies which purchased the contracts should be required to either make the "mud weeks" work for owners, or accept those weeks back and find another solution to keep the resort viable. If they can't do that, then that should be their problem -- not the problem of owners who bought based on programs and promises that did not last (or sometimes, ever materialize).

 

[Susan2]

Fourth: What about a resort which is NOT part of a resort group, but has a lot of owners who want out of their contracts?

Well, one very creative solution was done by Lucayan Resort in Ocean City Maryland. Faced with a resort that was falling into disrepair because of so many "non-performing" weeks (that is, weeks whose owners were not paying maintenance fees), they decided to take back any deeds which owners wanted to surrender, but they also "flipped" owners into more desirable units, to free up all 51 weeks in certain units. Then, once they owned all the weeks in a unit, they de-registered it as a timeshare, deeded to the governing body, and sold it as a condo.

By doing so, they not only very substantially decreased the percentage of "non-performing" units, they made the paying owners happy by giving them more desirable units and, best of all, they made enough money to make much-needed repairs (like repaving the parking lot, siding the units, etc.) and have money left for the reserves. A smaller resort now, but healthier and in better shape.

There is no reason why other resorts can't do the same thing, rather than close. It seems that Carriage Hills, for example, was faced with much the same situation. And now Carriage Hills consists of wholly-owned condos. Why couldn't it have been mixed use, for both timeshares and wholly-owned condos? Several resorts have mixed usage, such as the Cliffs at Princeville, The Jockey Club, Lucayan Resort, just to name a few.

This solution might not work for every resort, but it would work for some. And there are other possible solutions which should be explored. (Keep reading.) Trying to hold people to timeshare purchases they made but no longer want is NOT the right solution. It gives the whole timeshare industry a bad name -- for good reason.

(NOTE: Some of my recitation may be flawed, and I may have left out a step or two. I was not -- and am not -- and owner at Lucayan Resort, but I heard about this at a presentation at a Timeshare Board Members Association conference some years ago. I have been disappointed not to see this model repeated elsewhere.)

 

[Susan2]

Fifth: What about very seasonal resorts? What do they do?

Again, I will take you to Ocean City, Maryland. This time to a VERY small resort: Sandy Square. Sandy Square is the smallest resort I have heard of, consisting of three (count 'em three) units, all of which have three bedrooms and balconies overlooking the ocean. The remainder of the units in the building are wholly-owned condos.

Now, beaches in the northeast have very definite seasons, and some weeks are highly sought-after, whereas others are in very light demand. Yet, by law, every week must be charged the same maintenance fee for the same ownership interest, regardless of desirability. One solution used by some resorts is to move to a points-based exchange program, but sometimes that is not practical or desirable -- particularly since owners of the best weeks have no desire to surrender any of their rights. And why should they?

Closing down for the season was an option, but then staff and cleaning services tend to leave, necessitating re-hiring each spring. And other costs -- such as utilities and property taxes -- continue. Furthermore, leaving the property closes up can cause mold to form, and that "musty" smell that people with summer cottages may recognize.

But, what to do? Sandy Square offered owners the option of swapping from the winter weeks into better weeks, thus making owners happier (and more willing to pay their maintenance fees), and took the unmarketable weeks, and put them into a "right-to-use" program. Because the law requiring all weeks to be charged the same maintenance fees only applies to the "same ownership interest," Sandy Square was then free to offer much lower maintenance fees (about 30%) to the people in the "right to use" program (15-year commitment by the resort, cancellable by the user on two years' notice).

Now, at 30% of the cost of an owned summer week, suddenly the winter weeks were marketable --especially with an exit strategy. And the costs of maintaining the units over the winter are covered, so that the units get used, cleaned, and kept up all year. And the staff doesn't get laid off. (Most people probably deposit those weeks for exchange, but some people want to get away, especially when they live within driving distance. And other people exchange for them.)

The point is, there ARE solutions out there. Management needs to exercise more imagination. Or close down. As I have said repeatedly, refusing to accept back deeds from owners who don't use their units and can't get rid of them without paying substantial money (like closing costs and advance maintenance fees -- sorry, Brian) is NOT a proper business model IMO.

 

[LannyPC]

First, I would like to address those resorts that are in active sales. ....There should be a law in every state that says that a resort which is actively soliciting sales must accept back substantially similar weeks which owners wish to surrender.

This sounds good in principle but there is this one thing to consider. Is the resort's developer or HOA actively soliciting? Remember, as has been brought up many times in these discussions, the developer, the "resort", and the HOA (as well as the management company and the TS company) are all separate, different parties.

So who should be barred from selling if the HOA is not accepting deed backs? The HOA? The developer?

 

[dioxide45]

Fifth: What about very seasonal resorts? What do they do?

Again, I will take you to Ocean City, Maryland. This time to a VERY small resort: Sandy Square. Sandy Square is the smallest resort I have heard of, consisting of three (count 'em three) units, all of which have three bedrooms and balconies overlooking the ocean. The remainder of the units in the building are wholly-owned condos.

Now, beaches in the northeast have very definite seasons, and some weeks are highly sought-after, whereas others are in very light demand. Yet, by law, every week must be charged the same maintenance fee for the same ownership interest, regardless of desirability. One solution used by some resorts is to move to a points-based exchange program, but sometimes that is not practical or desirable -- particularly since owners of the best weeks have no desire to surrender any of their rights. And why should they?

Closing down for the season was an option, but then staff and cleaning services tend to leave, necessitating re-hiring each spring. And other costs -- such as utilities and property taxes -- continue. Furthermore, leaving the property closes up can cause mold to form, and that "musty" smell that people with summer cottages may recognize.

But, what to do? Sandy Square offered owners the option of swapping from the winter weeks into better weeks, thus making owners happier (and more willing to pay their maintenance fees), and took the unmarketable weeks, and put them into a "right-to-use" program. Because the law requiring all weeks to be charged the same maintenance fees only applies to the "same ownership interest," Sandy Square was then free to offer much lower maintenance fees (about 30%) to the people in the "right to use" program (15-year commitment by the resort, cancellable by the user on two years' notice).

Now, at 30% of the cost of an owned summer week, suddenly the winter weeks were marketable --especially with an exit strategy. And the costs of maintaining the units over the winter are covered, so that the units get used, cleaned, and kept up all year. And the staff doesn't get laid off. (Most people probably deposit those weeks for exchange, but some people want to get away, especially when they live within driving distance. And other people exchange for them.)

The point is, there ARE solutions out there. Management needs to exercise more imagination. Or close down. As I have said repeatedly, refusing to accept back deeds from owners who don't use their units and can't get rid of them without paying substantial money (like closing costs and advance maintenance fees -- sorry, Brian) is NOT a proper business model IMO.

Did any of these properties/HOA utilize the services of Lemonjuice?

 

[Susan2]

This sounds good in principle but there is this one thing to consider. Is the resort's developer or HOA actively soliciting? Remember, as has been brought up many times in these discussions, the developer, the "resort", and the HOA (as well as the management company and the TS company) are all separate, different parties.

So who should be barred from selling if the HOA is not accepting deed backs? The HOA? The developer?

No one should be "barred" from selling. But whoever is actively soliciting sales, and offering incentives, should be required to take back -- for free -- the types of units they are marketing.

After all, if they sell these units for thousands of dollars, how can they justify refusing to accept them back for free?

This doesn't include HOA units that resorts offer to current owners as a courtesy. It's about entities who actively marketing to the public. (And most often, as we know, making misrepresentations.)

 

[Susan2]

Did any of these properties/HOA utilize the services of Lemonjuice?

I have no idea. I doubt it, as I understand that everything was handled internally. But I do not know anything about Lemonjuice, whatever that is.

 

[MikeGio]

Folks,
I am testing this new Ontario legislation, enacted into law in December 2023.
See my post at ...
https://tugbbs.com/forums/threads/o...u-terminate-a-contract-after-25-years.362438/

 

[Fido Chuckwagon]

Folks,
I am testing this new Ontario legislation, enacted into law in December 2023.
See my post at ...
https://tugbbs.com/forums/threads/o...u-terminate-a-contract-after-25-years.362438/

Ooh, good luck, let us know how it goes.

 

[timeshare trader]

After all this time it seems obvious now that 1. Resorts can never exit sales 2. Having a developer on-site probably provides a better sales mechanism than independent sales companies who might not produce the volume 3. A need for savvy revenue management to monetize the unsold weeks. Most older timeshares may have a management company who is good at a handful of things but, there seem to be very few sales solutions out there.

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.

er