"Timeshare Transparency Act" new proposed bill

[dioxide45]

i am pretty sure the pushback is due to it being a much longer period in europe and that has had a huge impact on retail sales!

while im not 100% sure, I believe the law there is already 14 days...and can be up to 1 full year depending on the situation.

while I do see the argument that at some point, you have to call a sale a sale....and its not like you can just cancel your house purchase if you find out later you moved in next to the manson family/etc. but that same argument excludes a number of protections that DO exist for purchases where important things were not disclosed at the sale or similar (flood damage for instance)

for me, i have not heard a single valid argument against a 14 day rescission period that holds a lick of water, so for states that still only have 3 or 5 day periods, the industry could do a whole lot of good almost "overnight" if it put forth an effort to bring all those in line.

developers coudl also easily do this themselves without any government involvement (state or federal) by simply instituting a 14 day rescission period in all their contracts/sales offices. there would not be any law that prohibits them from making a state mandated period LONGER.

According to Dave Ramsey, changing the rescission period to 14 days would cut timeshare sales by 70%! I think he is dreaming that would actually be the case. I doubt it would even be anywhere close to that.

The bill includes a 14-day free cancellation period, which Ramsey claimed would cut timeshare sales by 70%.

It would seem one way to improve the industry would be to somehow make timeshares variable on the resale market and not worth $0 or less than $0. If they weren't impossible for many owners to get rid of, that could solve many of the problems. Make it so people actually want to acquire them to consume the resale supply. Would removing resale restrictions from certain timeshare products make them desirable? If the (former) DRI Collections didn't have the resale restrictions and had DEX access make them worth something on resale to where people can get rid of them? Would removing Westgate's heavy handed resale restrictions make people want to buy them resale?

 

[LannyPC]

The problem is that in many cases, the rescission period won't solve the problem of sales lying to buyers during the presentation. Most people find out the deficiencies in what they were told and what they were sold long after their purchase.

Yes, I agree. Of the newbies who come on these boards saying how they regret their purchase, how many do so while they're still in their rescission period?

 

[LannyPC]

It would seem one way to improve the industry would be to somehow make timeshares variable on the resale market and not worth $0 or less than $0. If they weren't impossible for many owners to get rid of, that could solve many of the problems.

True, but how do you make a TS worth more than $0 when, for 90+% of the intervals out there, the MFs exceed what can easily be fetched for a rental?

 

[TUGBrian]

i dont think it would be anywhere near 70%...thats absurd.

though i would also want to be sure that whatever the period an owner has to cancel be included in BIG BOLD PRINT or as its own line item on the proposed summary sheet for a potential buyer.

YOU HAVE 10 BUSINESS DAYS TO CANCEL THIS PURCHASE AND GET A FULL REFUND IF YOU CHANGE YOUR MIND

 

[davidvel]

● The oral representation/non-reliance clause does not belong in a timeshare contract.

If it is, it should be disclosed at or prior to the presentation, not buried in volumes of fine print.

This is the heart of the matter, everything else is mostly noise. The almost universal issue with what we call salesperson lies, which include omission of material facts, misleading claims, and out and out lies, is the contractual language making it an expensive uphill battle to win a fraudulent inducement suit.

Most of this garbage cannot be sold without fraud, and the TS companies know this. Even with all the fraud it is a tough sell for many programs. If someone wanted to protect the consumer, the law would state:

- TS developer must record the entire sales session from beginning to end. Prospective buyer also has the right to record any and all interactions with the developer's agents, including the body snatcher.

- TS developer must provide the recording at close, as well as an email link. It must be given in a prominent fashion, not hidden in other media, etc. The rights under this law must be provided in hard company, signed by the buyer acknowledging receipt of the recording.

- Buyer shall have an affirmative right of action for misrepresentation or fraud, including damages, attorney fees and rescission, if any statement at anytime by any of developer's agents is contrary to the terms of the agreement or the rules or terms of the TS program, notwithstanding any limitation in the contract. The time for such action shall be 13 months from the closing.

Problem solved and stocks would tank, understandably. Of course this would never happen because those in charge do not want to stop all the fraud, but want to protect their donors.

 

[jp10558]

Would removing resale restrictions from certain timeshare products make them desirable? If the (former) DRI Collections didn't have the resale restrictions and had DEX access make them worth something on resale to where people can get rid of them? Would removing Westgate's heavy handed resale restrictions make people want to buy them resale?

I'd suggest it'd make them more desirable for sure. I really don't get the preference of HOAs/TS companies to make it so impossible to get out. I get them wanting to keep getting MFs, and to not necessarily have to take back intervals. But they also spend money dealing with foreclosure. I get not advertising resale because they think it'll kill retail sales, but I don't get both not taking deedbacks and not making resales at least somewhat compelling so you can keep MFs coming in without needing to yourself resell intervals. I think it's just wanting to eat the cake and have it too from the developers.

True, but how do you make a TS worth more than $0 when, for 90+% of the intervals out there, the MFs exceed what can easily be fetched for a rental?

I understand this as a problem, but I also consistently fail to find these rentals (other than if I already own a TS and am looking in RCI say for not always available Extra Vacations) - at least on the open market like VRBO or the hotel sites, or RedWeek. Maybe you mean lots of rentals listed don't ever rent, but that's a different issue - the companies aren't trying to give you a rental business. As a potential renter who's not clued in - idk how you find these lower than MF rentals. This may just be a skill issue of mine, or I'm not interested in renting the cheap time / locations outside of RCI deals.

 

[TUGBrian]

zero valid reason not to accept deedbacks for any resort still in active sales.

 

[jeffox]

idk how you find these lower than MF rentals.

As a veteran I use the Armed Forces Vacation Club, I am renting a week for Spring Break for about $500 for a 1 bed with full kitchen.

 

[dioxide45]

zero valid reason not to accept deedbacks for any resort still in active sales.

I think the developers just look at how hard it is to sell each interval to start with. Sure they could take something back, but then they have the carrying costs of maintenance fees. We saw how this *didn't* work out with Wyndham at the properties they are closing. They took back all kinds of stuff and it is biting them in the butt. They could have put the deeds into CWA (and they did to some extent), but that wouldn't have prevented the eventual downfall.

I think more properties need to look at the reality of their situations. Are they viable as a timeshare property? The problem is those that are actively involved and using their ownership are the ones running the show on the BOD and actively voting. The people who want out probably aren't even thinking about it. The active owners are more than happy with off season owners continually paying the maintenance even if those inactive owners aren't using their weeks at all.

 

[TUGBrian]

but there are dozens of wyndham resorts thriving under this model and wyndham has had a free surrender program for nearly a decade now.

 

[StarSailer]

This is the heart of the matter, everything else is mostly noise. The almost universal issue with what we call salesperson lies, which include omission of material facts, misleading claims, and out and out lies, is the contractual language making it an expensive uphill battle to win a fraudulent inducement suit.

From what I've read here on Tugs the most prolific lies seem to happen at owner updates that attempt to portray a current ownership as no good. As satisfying as it would be to expose a sleezy salesman in a lie before a judge with a recording, none of the 5 presentations I've attended for new purchases so far included out and out lies, with only 1 in 5 featuring omissions and misleading claims.

The 4 out of 5 "honest" pitches were hard-sales to convince the me I would save money over the next 30 years vs a hotel (20 year ROI once past the opening offer and given the closing special), that the purchase "could" increase in value, and that I had to buy-now because the incredible savings offer would expire when I left the room. "Could increase in value" being the closest to a lie. Mostly fast talking buyers past realizing that a 20-30 year ROI is a terrible financial move made worse if financing.

The 5th used low-pressure misdirection to sell itself on the claim that a triennial would trade on RCI into 1-2 weeks a year in a 2BR when shopping discounted week sales. Technically true... they just glossed over how uselessly small the package would be for anything other than discounted clearance weeks and made optimistic statements on discounted week availability. I'm not sure how useful a recording of a salesman selling me on RCI last call and other discounted weeks would be for items never stated at all (ie the club point matrix).


Instead of giving buyers evidence to use in court I would suggest mandating an extended partial refund period, no questions asked, for developer sold timeshares. Here in Georgia property that gets sold at tax auction can be redeemed within a year at a +20% premium, or +30% in the second year. Using that as inspiration and applying that standard inverted to timeshares... mandate an 80% refund for returns/cancellations within 180 days; or 70% refund for up to 1 year after the first use period begins? Also cancel any remaining debt if the refund is less than the amount still owed and the debt financing was provided or promoted by the seller.

 

[pedro47]

According to Dave Ramsey, changing the rescission period to 14 days would cut timeshare sales by 70%! I think he is dreaming that would actually be the case. I doubt it would even be anywhere close to that.

The bill includes a 14-day free cancellation period, which Ramsey claimed would cut timeshare sales by 70%.

It would seem one way to improve the industry would be to somehow make timeshares variable on the resale market and not worth $0 or less than $0. If they weren't impossible for many owners to get rid of, that could solve many of the problems. Make it so people actually want to acquire them to consume the resale supply. Would removing resale restrictions from certain timeshare products make them desirable? If the (former) DRI Collections didn't have the resale restrictions and had DEX access make them worth something on resale to where people can get rid of them? Would removing Westgate's heavy handed resale restrictions make people want to buy them resale?

Would that new pending legislation that have not been acting upon and (will not be acted upon) force the timeshare industry to introduce changes in their sales practices and force them to all to introduce some form of an exit program.

I must be dreaming again. LOL

 

[LannyPC]

idk how you find these lower than MF rentals.

TUG's Last Minute Rental section. How many intervals out there have MFs lower than $800/week?

 

[LannyPC]

"Could increase in value" being the closest to a lie.

To me, that's like saying, "You could win the $100,000,000 Powerball Lottery if you buy a $1 ticket." Technically, that's not a lie. Of course you could win, but what are the chances?

 

[jp10558]

As a veteran I use the Armed Forces Vacation Club, I am renting a week for Spring Break for about $500 for a 1 bed with full kitchen.

Sure, but that is basically RCI. And you almost have to be on TUG to know about it. I don't think the average person who might be considering the valuation of a TS week is aware of that. I also think now adays the number of veterans has to be a quite small percentage of potential TS owners or renters.

If I put into a search engine say Rent week 44 of HGVC Seaworld 2BR (my home week) I get VRBO. They seem to offer that week for about $1,500 more than the MFs. I wouldn't consider Orlando a high demand area, or more there's so much supply that the rental cost should be driven down I would think. Also, I've noticed that while I usually can get amazing deals via RCI - I rarely can plan on choosing the week for an Extra Vacation or Last Call. I can wait and hope it shows up in the last 30 days, but if it doesn't I'm now screwed if I otherwise planned for the trip.

 

[dioxide45]

TUG's Last Minute Rental section. How many intervals out there have MFs lower than $800/week?

But those are really only a very small number, certainly not the 90+% you mention earlier. Those also have a distressed factor with having to be booked within 45 days of travel and also have the inherent risk associated with private rentals.

At least for the higher end systems like Hilton, Marriott and Vistana, in most cases nightly rates through most publicly available channels are higher than the annual fees. In the past Wyndham had a lot of cheap rentals with VIPs flooding the market with rentals obtained with their large VIP discounts from what were resale points. Those have mostly gone away.

 

[jp10558]

TUG's Last Minute Rental section. How many intervals out there have MFs lower than $800/week?

I guess I should have been clearer - how many rentals would a non TUGger find when naively comparing (if they even were) rental vs MFs? How many of them would be comfortable renting from an otherwise unknown to them forum from strangers?

Beyond that, how many of those rentals realistically substitute for the booking and exchanging abilities of an owned week?

I do think all this sort of points to an issue with some of the resorts - people aren't finding the weeks worth the cost in MFs. I do wonder if there's some way to perhaps alleviate that by shutting down during mud weeks say - caretaking is (at least according to Wyndham resort wind down info) a lot cheaper than operations, so while there's some number of "dead weeks" that must be carried by the other owners, we both do that now through delinquencies, and probably have to cover "full operations costs" for that time. I know some hotels in like Maine are not open in the winter. It just seems to me that there's obviously ways to make short term rentals and hotels work all over the country ... so it's hard for me to believe that resorts just can't work outside of basically Florida and ski areas.

 

[andre10056]

Don't know whether this bill will succeed but anything that might inform more people that timeshares rely upon blatant fraud as part of their overall business plan is a good thing. Here's yesterday's yahoo! finance article, apparently a reprint of a benzinga article:

https://finance.yahoo.com/news/dave-ramsey-says-85-timeshare-153052703.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuYmluZy5jb20v&guce_referrer_sig=AQAAACQSzfX1ymIYav4cDWeG8zl_Ew7bP_yHGnQP57e3-TADqCeKVKBQdjH2WhG6SNKrAZ7llhm_CNlhIQ92zGLeEtaOrxlmlwIXf4Nb-RoiO08Hk7Z0nYTMVxkKlEIOh0Vhz9QOjl7fhQpSpHJf5TSgnkW1MHWTO7n4J_rFnNqNezbj

Of course, without that fraud adding to the timeshare entity's bottom line, most timeshare entities' maintenance fees will have to increase.

Unfortunately for most timeshare newbies, I don't think a 14 day rescission period will make that much of a difference.

All in all, I think it's better to own at a mature resort whose fraudulent timeshare selling days are long past. Hence, I'm happy that I sold my Hyatt recently.

 

[pedro47]

IMHO, the only bad thing about owning a timeshare is trying to sell a timeshare after paying off a timeshare with no mortgage .

Owning a timeshare give awesome families vacations with some excellent resort amenities . IMHO

 

[andre10056]

IMHO, the only bad thing about owning a timeshare is trying to sell a timeshare after paying off a timeshare with no mortgage .

Owning a timeshare give awesome families vacations with some excellent resort amenities . IMHO

I think what's bad about owning most timeshares is recognizing that your timeshare entity may rely upon destroying the lives of others in order for you to enjoy your family vacation and excellent resort amenities. Or. as I like to say, you' re "standing on the graves" of others.

 

[TUGBrian]

If the world has taught us anything its that there is little hope that anyone is going to protect you better than you can protect yourself by researching a financial investment ahead of time!

if you ask a politician for a solution, the answer is always going to be more laws with no real effort or focus on punishment or enforcement of existing laws.

 

[jp10558]

Of course, without that fraud adding to the timeshare entity's bottom line, most timeshare entities' maintenance fees will have to increase.

As I understand it, most MFs are set by the HOAs, based on the actual cost to run things. So I'm really not sure about any direct connection between the fraudulent sales and MFs as it's not like the sales are paying MFs except in the most indirect way of the currently unsold units. MFs are already higher to carry defaults though from what I understand. Maybe you mean the likely lower profits would lead the big companies to increase their management fees.

 

[jp10558]

If the world has taught us anything its that there is little hope that anyone is going to protect you better than you can protect yourself by researching a financial investment ahead of time!

I'm all for encouraging people to do research. I just think "do research" when someone's lying to you and basically committing fraud is something we should as a society, i.e. legally, do something about. It's one thing IMO if someone sells you something you understand but doesn't give you the best price. Most salespeople aren't claiming to get you the best price among competitors, at best they'll say it's the best price they can offer today or something like that. They don't know what competitor is pricing a similar thing for (in TS what even is a "similar" offering between the major developers - there's a debate right there). They also likely don't know what's actually available on the resale market, or what that's going for, nor would they tell you. A new car saleperson doesn't suggest you would be better served getting a 3 year old off lease car from the used car dealer down the street.

Where's it's a problem is when they sell you something fake, that doesn't exist. And we get reports all the time of outright lies. The other analogy I have is it's like buying meat at a grocery store. I doesn't really seem reasonable for me to somehow test the specific steak before buying it to make sure it's safe to eat - no, we just regulate that and do inspections by people who have the skills and testing equipment to reasonably do so.

if you ask a politician for a solution, the answer is always going to be more laws with no real effort or focus on punishment or enforcement of existing laws.

It really would depend on the politician - a legislator of course is going to say new laws - it's what they do. That's like being surprised that if you ask a TS salesperson how to fix some issue, the solution is to buy more points. Ideally a governor or DA or the like is going to be more likely to consider enforcement of existing laws, but it's possible that existing laws as interpreted in courts make said enforcement almost impossible. In that case, a new or amended law clarifying things might be the best option. It's also possible that it'll come down to resources - again, the current systems apparently require a lot of resources and court time to try and prove fraud.

 

[andre10056]

....it's not like the sales are paying MFs except in the most indirect way of the currently unsold units...

That seems to me to be a very direct way, not at all "indirect".

But accounting for these types of things is "fungible" so that you can be sure that the resort entity will find a way to keep maintenance fees low (not low, but lower than they perhaps should be) so that they won't enter into a death spiral of a large percentage of owners defaulting. And revenues from sales will no doubt be used to keep maintenance fees lower and, in turn, keep default rates manageable.

 

[jp10558]

That seems to me to be a very direct way, not at all "indirect".

Well, I guess what I mean is if it's not a rather new resort, much of the inventory will have been sold. I guess I don't really know (at least for "healthy resorts") what the average unsold inventory would be. Note I'm talking about "never sold", because I am counting delinquent separately - because that's already a line item in MFs so sales isn't subsidizing that as far as I can tell. That said, I'm also assuming that the HOAs aren't doing a lot of creative accounting, which it seems like you disagree with from the "fungible" comment.