RCI resort closing doors?

[hexadecimal]

I have a week in an RCI resort, whose webpage is not up `because of financial difficulties' and whose phone has been disconnected. Can a resort just close its doors like that? What happens to the share and the weeks already deposited, not to speak of the annual RCI membership fees (we are paid up for several years to come)? We had this timeshare for over 10 years now, it was pleasant (we went there a couple of times) and it was a good trader. Can this even
happen? This is in Europe, so it's probably impossible to sue the management but there ought to be a law against dispossessing owners.

Hex

 

[JoeMid]

I have a week in an RCI resort, whose webpage is not up `because of financial difficulties' and whose phone has been disconnected. Can a resort just close its doors like that? What happens to the share and the weeks already deposited, not to speak of the annual RCI membership fees (we are paid up for several years to come)? We had this timeshare for over 10 years now, it was pleasant (we went there a couple of times) and it was a good trader. Can this even
happen? This is in Europe, so it's probably impossible to sue the management but there ought to be a law against dispossessing owners. Hex

I'm not a lawyer and I don't play one on TUG but, RCI does not own your resort and your statement that this is an RCI affiliated resort is immaterial to your problem. If the resort has shut it's doors you have an issue with the developer and/or management of your resort, not with RCI. On the separate issue of what happens to your RCI deposit if, in fact, the resort has shut it's doors to guests, in the past where RCI has accepted a deposit for a resort that is subsequently closed for reasons such as storm damage, they have honored the previous deposit, ymmv.

 

[Keitht]

I don't know which resort you are referring to, but for the purpose of this discussion it's not really relevant anyway. The resorts are businesses in just the same way that hotels, shops or travel companies such as XL. If they are in a situation where they don't have the finances to continue trading they collapse and close, just like any other unfortunately.
As with any other business failure all you can do is join the line of creditors and see what happens. I suspect the reality is that your money is gone and you won't get anything back.
You may be able to get back from RCI the cost of the unused, and unusable, proportion of your membership.

 

[hexadecimal]

JoeMid: you are right of course, RCI doesn't in any way own this resort. They
may perceive some damage to their brand and they may initiate their own
action for all I know, certainly I will suggest this to them.

KeithT: when I bought I was under the impression I bought some fraction of real estate not shares in a business (and frankly, it would have never occurred to me to buy shares in a hotel or similar enterprise). The business may lose viability but the land and improvements are still there, I suspect mortgaged to the hilt, but can they take out a mortgage over my property legally?

Seeing how badly people in other resorts can be treated (reading TUG is *very* educational) I doubt there is any hope here, but I will hava a lawyer look at the fine print of the original sales agreement.

Thanks both of you,
Hex

 

[timeos2]

Timeshares can and have closed down.

JoeMid: you are right of course, RCI doesn't in any way own this resort. They
may perceive some damage to their brand and they may initiate their own
action for all I know, certainly I will suggest this to them.

KeithT: when I bought I was under the impression I bought some fraction of real estate not shares in a business (and frankly, it would have never occurred to me to buy shares in a hotel or similar enterprise). The business may lose viability but the land and improvements are still there, I suspect mortgaged to the hilt, but can they take out a mortgage over my property legally?

Seeing how badly people in other resorts can be treated (reading TUG is *very* educational) I doubt there is any hope here, but I will hava a lawyer look at the fine print of the original sales agreement.

Thanks both of you,
Hex

In the US a resort cannot mortgage the property as it does in fact belong to the individual owners not the Association. But the Association may have been mismanaged to the degree that the debts exceed what a sale (assuming the owners agree to that) will bring in. A failing timeshare is a mess to liquidate or otherwise handle. If it has in fact closed that makes things worse. Good luck but don't waste too much money trying to find out what happened if the information isn't readily available.

 

[Jya-Ning]

What resort? You may find some owners in this board or people know that situation a little bit.

Jya-Ning

 

[Carolinian]

In the US a resort cannot mortgage the property as it does in fact belong to the individual owners not the Association. But the Association may have been mismanaged to the degree that the debts exceed what a sale (assuming the owners agree to that) will bring in. A failing timeshare is a mess to liquidate or otherwise handle. If it has in fact closed that makes things worse. Good luck but don't waste too much money trying to find out what happened if the information isn't readily available.

Actually, in many cases in the US, the debts of a resort are probably owed by the HOA which is usually a non-profit corporation and are not liens on the resort property. Depending on local laws, reorganizing under a new non-profit corp may allow the resort to move forward and shed such debts if it is otherwise financially sustainable. Even contractor's liens are almost impossible to enforce as a practical matter against resorts that operate under the condominium laws that predate the Uniform Condominium Act. The result on contractor's lien is different if the resort was organized under the Uniform Condominium Act, but not as to other debts.

Similar principles may also apply elsewhere. I had a resort manager at a resort in the French Caibbean, which operated under French law tell me that if the association got in trouble, the same result would apply there. They could organize a new association and shed the debt. It would not be a lien on the resort property.

 

[theo]

A good sense of humor...

RCI.... may perceive some damage to their brand...

:hysterical: :hysterical: :hysterical:

You're just joking, right? What possible "damage to brand" could ever approach, meet or exceed that which RCI has already inflicted upon itself in myriad ways and in so many consistently ongoing instances?

 

[JudyS]

Hi, Hex, welcome to TUG!

It is hard to say what will happen in this situation, both because we don't have information on the specific situation facing the resort, and because most of us here aren't familiar with European laws. You might want to also post your question on www.timesharetalk.co.uk where participants will be much more aware of European laws.

That said, the situation here is not necessarily as bad as it may look at first. If the timeshare were truly worthless (say, in the Canary Islands and facing high annual fees), then if it goes bankrupt, you have lost little (since it wasn't worth anything to begin with). Plus, you will probably be out from under any obligations you had, such as the annual fees. Since timeshares are currently VERY much a buyer's market, you will be easily able to pick up another timeshare for little or no cost. Now that you have found TUG, you can use the advice here to get the most value for your annual fees, which may save you quite a lot over what your old timeshare was charging.

As for your RCI membership and deposited weeks, any weeks that have already passed their check-in date will almost certainly be honored. As for weeks in the future, that is less clear. Have you already paid the dues for future weeks? (For example, have you paid your 2009 and 2010 dues?) If you have not paid the dues on future weeks, then you really haven't lost anything if those weeks aren't honored. Once you use up any deposited weeks, your paid-up RCI membership can either be refunded, or you can keep it and use it for access to RCI's last-minute rental deals, which are often very good.

Ironically enough, owners of poorly-performing timeshares can be better off if the timeshare closes than if it continues. The real question is (as Timeos2 notes) how easy it will be for the timeshare to liquidate. I don't know about the laws in your country, but hopefully you can just walk away, having lost nothing but a share in a resort that was worthless to begin with. Then, since it sounds like timesharing has fit your needs well, you can use the resources here on TUG to make a fresh start in a timeshare that is a much better value.