The San Clemente Inn has reached a point of dissolution. What happens when a timeshare reaches dissolution?

[T_R_Oglodyte]

I'm trying to dig back in my memory, for some reason I thought I heard that most timeshares were sold in 50 week blocks, allowing a couple of weeks for maintenance. But I could be wrong.

Digging back into my memory banks, that is generally correct in resort where ownership is recorded using deeded weeks. Some resorts may have sold 51 weeks.

The contrast would be resorts that were sold as undivided interests . In those cases, the sum of the sold interests would be something less than 100%, so that there would be a reserve for maintenance and repair.

 

[TUGBrian]

yep, its very common for resorts to have a single week or two unsold for scheduled maint/repairs/refurb/etc.

 

[skimble]

If there are 50 units, wouldn't that be x 52 weeks = # of owners?

They never sell all 52. They need down time in every unit for maintenance.

 

[skimble]

Curious - if that's the case, then why are you trying to give away your unit away in the free marketplace instead of keeping and collecting $7k. Something isn't making sense.

I need to take that down. That was before I knew about the dissolution.

 

[chapjim]

That is solid advice. It is something that I have always considered. The San Clemente Inn has no value on timeshare resale. However, anyone who knows the real estate market in the area could tell you that one unit in that complex would be worth a conservative estimate over $500k even in the condition that it is in. And in the pool, the restaurant, the extra real estate and the amenities, and each unit is probably worth about 200K more. Divide that by 50, and you have a value of about $7000 per unit.
I’m actually really sad to see this dissolution. It is has been the most cost-effective coastal California Resort.

"Cost-effective" because maintenance has been under-funded, maybe?

 

[dioxide45]

If each unit has a value of about $700,000 after adding the value of the unit and the additional parts of the total property like the restaurant, and you divide that by 50 units, each owner should get about $7000.

You may be ignoring all the legal and consulting fees involved in such a transaction. That may eat up 50% of sale proceeds.

 

[GrayFal]

Bluebeard's Castle Villas 1, USVI, was dissolved a few years ago. Hurricanes blew the roofs off and left it in bad shape. Owners decided not to rebuild, sold the buildings for $400k, took the insurance money and from what I heard they ended up with about $15,000 per week. Many of them thought they should have gotten more.

What happened to the actual buildings?
Did the new owners rebuild? Is it a hotel or other use.
Just curious. I used to own at Bluebeards Beach Club - Limetree Beach Resort.
@Alindoo

 

[skimble]

Sad. We were original owners. Purchased while construction from hotel to timeshare was going on, the same year we joined TUG. We spent many great summers there..Although debt and expense is high the property should sell rapidly and it would surprise me if owners would not receive a pretty good residual.

Honestly, I think there are other solutions. Like, since the HOA controls half. Could they sell a building or 2 as separate apartments, and use the proceeds to make repairs? Or, could they work a little harder on the Inn attributes, and bolster nightly rentals? Could the hoa sell the restaurant?

I realize there were not enough hoa dues (reserved) collected to keep up with long term repairs, but I also believe raising dues by 20% annually for about 3 consecutive years is a death blow to any timeshare. We dumped VRI in favor of a Hilton affiliated Grand Pacific. So, we have a 3 star Inn, and we are going to mingle on par with 5 star resorts?

We jacked up fees, brought a wine and cheese social, live music, margaritas by the pool and complimentary coffee, but we still have 3 star accommodations . Units and service are being brought up to the Grand Pacific standard. Great, except… the bones of the place are still over 50 years old. So then, why Grand Pacific? Why not Vacatia, Capital or even stay with VRI? The board feared an affiliation with Capital could result in a hostile takeover. So they chose Grand Pacific where… let’s face it, IMO… I think this whole thing is a takeover.

Looking at the bigger picture, Grand Pacific has steadily maneuvered themselves into controlling the majority of all So Cal Coastal timeshare resorts. Literally, there are only a few that are not under their control, and it’s probably just a matter of time before they are. They got 2 board members installed and increased fees by 20% annually. Justified or not, this is a recipe for enhancing delinquency, NOT increasing revenue.

I believe this dissolution was plotted, primed, planned. The buyer likely already has a plan for the future of the property.

 

[bnoble]

Every single timeshare has to face these questions eventually. Buildings age and become obsolete, and while it is maudlin to point it out, so do the people who own the intervals. Unless the location is truly one-of-a-kind, at some point terminating the timeshare plan and disposing of the property is going to be one of the better options, if not the best one. There are a variety of ways to delay it--and @skimble mentions quite a few. But they are band-aids and not permanent solutions, because Father Time is undefeated.

And from where I sit, that's probably fine. The original owners have had many many years of vacations, and have gotten their value out of it. Resale buyers (in most cases) paid much less, and so there is less at risk and a shorter time interval required to make good on the purchase. In short, I think of a timeshare as a consumable, not an asset---or at best, a depreciating asset.

We're seeing this happen more and more, and it makes sense. Timesharing in the US got its start in the 70s, and those buildings are (at least) 50 years old at this point. It will only become more common.

 

[skimble]

Every single timeshare has to face these questions eventually. Buildings age and become obsolete, and while it is maudlin to point it out, so do the people who own the intervals. Unless the location is truly one-of-a-kind, at some point terminating the timeshare plan and disposing of the property is going to be one of the better options, if not the best one. There are a variety of ways to delay it--and @skimble mentions quite a few. But they are band-aids and not permanent solutions, because Father Time is undefeated.

And from where I sit, that's probably fine. The original owners have had many many years of vacations, and have gotten their value out of it. Resale buyers (in most cases) paid much less, and so there is less at risk and a shorter time interval required to make good on the purchase. In short, I think of a timeshare as a consumable, not an asset---or at best, a depreciating asset.

We're seeing this happen more and more, and it makes sense. Timesharing in the US got its start in the 70s, and those buildings are (at least) 50 years old at this point. It will only become more common.

I just stayed a few nights in a timeshare in Waikiki that was a total dump. The place had green circa 1980 carpet and countertops. There was rust everywhere. Upkeep… none. I know, leasehold contract likely has a defined expiration, and the hoa won’t improve it. This is an extreme example of an HOA that has chosen to forgo the upkeep in favor of functionality. They prioritize their expenditures.
The San Clemente Inn has a few problems. It’s older, but viable. I have seen a lot of challenges with dry rot, water intrusion, foundation settling, roof leaks.

Despite the challenges of age, the HOA has managed to install an elevator in the lobby, remove the conference room and convert it to the manager’s offer. (this was a disgusting expenditure. Literally, they gave up revenue from small conferences and weddings in order to expand storage and expand the office space for the manager and assistant manager. There is no unit in the complex that you would walk into and say it is the dilapidated.
The front desk an entire lobby have been updated recently, and they are spectacular! It’s modern! We have four big screen TVs linked together, projecting the same show/music video/sport. There is a super modern restaurant off the lobby too.

Yes, there are problems that have come with age. But then, there are priorities. Why would you prioritize the upgrading of a lobby and office space when there’s obvious dry rotten places on the property? The board has put a priority on an image that cannot be sustained to the detriment of long-term maintenance.

In terms of location, the San Clemente Inn is the only place in San Clemente that can have that many guests. When it comes to coastal California properties, there are less than a handful in Orange County. In fact, there are two in Laguna, and both are very small. There is one other in San Clemente, but it is tiny. Other than that, Orange County is fairly devoid of coastal timeshare. So, do I question their motivation? Yes! Like I said above, I think this is an intentional move, and I think they already have a buyer in mind.

 

[mauiwowie]

I just stayed a few nights in a timeshare in Waikiki that was a total dump. The place had green circa 1980 carpet and countertops. There was rust everywhere. Upkeep… none. I know, leasehold contract likely has a defined expiration, and the hoa won’t improve it. This is an extreme example of an HOA that has chosen to forgo the upkeep in favor of functionality. They prioritize their expenditures.
The San Clemente Inn has a few problems. It’s older, but viable. I have seen a lot of challenges with dry rot, water intrusion, foundation settling, roof leaks.

Despite the challenges of age, the HOA has managed to install an elevator in the lobby, remove the conference room and convert it to the manager’s offer. (this was a disgusting expenditure. Literally, they gave up revenue from small conferences and weddings in order to expand storage and expand the office space for the manager and assistant manager. There is no unit in the complex that you would walk into and say it is the dilapidated.
The front desk an entire lobby have been updated recently, and they are spectacular! It’s modern! We have four big screen TVs linked together, projecting the same show/music video/sport. There is a super modern restaurant off the lobby too.

Yes, there are problems that have come with age. But then, there are priorities. Why would you prioritize the upgrading of a lobby and office space when there’s obvious dry rotten places on the property? The board has put a priority on an image that cannot be sustained to the detriment of long-term maintenance.

In terms of location, the San Clemente Inn is the only place in San Clemente that can have that many guests. When it comes to coastal California properties, there are less than a handful in Orange County. In fact, there are two in Laguna, and both are very small. There is one other in San Clemente, but it is tiny. Other than that, Orange County is fairly devoid of coastal timeshare. So, do I question their motivation? Yes! Like I said above, I think this is an intentional move, and I think they already have a buyer in mind.

This does seem to be a pattern for GPX to take over management of timeshares that are struggling and facing potential dissolution, so you're probably correct to a certain extent. They may not have a buyer yet, but they are clearly expecting to profit from the situation and getting involved in properties where the underlying land has very good resale value potential.

In addition to SCI, GPX is involved with Tahoe Sands in Tahoe Vista (which is going through dissolution) and recently took over management of Club Tahoe in Incline Village in NV (which is also struggling financially)

I really question whether the fees that they charge exchangers and other rental guest actually get credited to the association or go to the management company

 

[jackio]

@skimble your Waikiki stay sounds like where I own and am deeding back. The management has been taken over by Capital Vacations and although the fees keep going up, the delinquency rates are so high there is no money for improvements to the units.
These are sister resorts located at the Waikiki Banyan hotel. The hotel keeps raising the fees to the timeshares and the HOA cannot keep up. There are 9 more years on the leasehold and I can’t see them sustaining it.

 

[Luanne]

GPX is the company that now manages our timeshare that Is undergoing dissolution.