Transferring a timeshare to an LLC to dispose of

[DeniseM]

How and where do you get that information?

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You should get a yearly budget from your resort showing delinquencies and rental income.

 

[ronparise]

I'm paying $60 per year for bad debt, according. To the last CWA budget. Ron, do you know if there are agreements with the different HOAs Wyndham manages to rent delinquent accounts? Also, if so, is the income shown somewhere?

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As I recall at the last Board meeting I attended delinquent accounts account for about 3% of the CWA budget. Understand that isnt a hard number, Its a set aside against bad debt,, some folks that fall behind catch up. and in the case of CWA wyndham I believe makes the club whole whan they sell a foreclosure.

There is something to be said for developer control of a board.

Having said that

There is no "rental" of delinquent accounts. I dont have a budget here. so I cant answer you directly, But understand CWA is not a resort, CWA is a club that own deeds at resorts. and delinquent accounts at the resorts dont show directly in the CWA budget

If you own CWA your maintenance fees are higher because of defaults at the resorts but you dont have a line item in the CWA budget to point to. You have to drill down to the individual resorts to see the real bad debt and how its handled. . For example The Avenue Plaza Budget (which I have in front of me as I write this) shows $926000, bad debt and that bad debt is reflected in the maintenance fees and of course CWA pays the fees for every interval they own

In the case of Avenue Plaza (managed by Wyndham and with a Wyndham controlled HOA) there is another line item in their budget called "other income".. it' s $951,085 and it more than offsets the bad debt

How do they generate that other income, I thought you would never ask. An owner at Avenue Plaza is entitled to a "right to use" week for every week they own,, they just have to pay the mf. So basically they just rent the delinquent weeks to the owners. By the way, the bad debt number at Avenue Plaza is getting smaller because Wyndham is taking all the foreclosures and putting them into CWA or Worldmark

Bringing this tangent back to the subject at hand. We might disagree on the whether we would prefer a developer controlled board or an independent or a self managed resort like the Quarter House . But I hope what we could all agree on, is the requirement for good management. Until recently I argued that good management meant accepting deedsback, rather than letting owners deed their ownerships to a Viking ship... Now Im not so sure of myself.. Good management may mean doing whatever is needed to terminate a timeshare, and sell the assets.

 

[TUGBrian]

I think they probably meant rentals of intervals that have been foreclosed on or deeded back to the HOA...vs owners who are just delinquent.

 

[am1]

Now Im not so sure of myself.. Good management may mean doing whatever is needed to terminate a timeshare, and sell the assets.

If done properly a lot of money can be made for all. But a Wyndham controlled board wants to keep selling cwa at retail prices. At least that keeps them from forcing owners into selling/giving back their weeks so the management company can profit from taking over the resort.

 

[AwayWeGo]

Title By Adverse Possession ?

I think they probably meant rentals of intervals that have been foreclosed on or deeded back to the HOA...vs owners who are just delinquent.

It is not reasonable for title of a unit loaded onto a Viking ship to remain in legal limbo indefinitely.

How many years must a timeshare HOA rent out an abandoned unit in order to retake legal title via adverse possession ?

-- Alan Cole, McLean (Fairfax County), Virginia, USA.​

 

[ronparise]

I think they probably meant rentals of intervals that have been foreclosed on or deeded back to the HOA...vs owners who are just delinquent.

Brian

I have the policy around here somewhere I'll post it for you

 

[raygo123]

I think they probably meant rentals of intervals that have been foreclosed on or deeded back to the HOA...vs owners who are just delinquent.

Actually, I meant both. Wyndham has an associate resort I wanted to go to in Maryland. I was told that available units will not show up until they knew who paid their MFs. That is was spurred the question. I received from Wyndham the impression that they received any units that were delinquent.

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[ronparise]

found it

Here is the Collections Policy from one resort Managed by Wyndham
Item III near the bottom is the relevant section

 

[raygo123]

found it

Here is the Collections Policy from one resort Managed by Wyndham
Item III near the bottom is the relevant section

Thanks Ron, more competition for you. Even though a LLC defaults there is still a way for HOA to recoup funds

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[dominidude]

Just my personal opinion.
There are legal things that are nonetheless unmoral (slavery, for example).

That I'm aware of, the law only provides a few categories of debt (back taxes, student loans, etc) that are non dis-chargeable. Every other debt is by law dis-chargeable, either in bankruptcy or through other processes.

By law, a lender of an unsecured loan SHOULD do its due diligence because the lender is on the hook if the borrower fails to pay.

So, explain to me how a viking ship is not a legal process to legally get rid of a timeshare that an HOA refuses to take back?

This is similar to filling out a loan application with false information. If the Bank lends the money, the onus is on the lender to prove they were defrauded (a tall order most times).

Amoral yes, but until proven guilty, viking ships seem quite legal to me. Of course, viking ships only work when resorts acknowledge the ownership transfer, which these days seems to be getting harder and harder.

Also, I think that an HOA that does not have a process to take back deeds behaves both legally and amorally.

A lender in this country and quite a few others just does not have the right to permanently collect from their debtors against the debtors wishes, except for back taxes, student loans, etc. HOAs may try to confuse this reality by making relatively minor legal points, but there is, to my knowledge, no legal basis for an HOA's claim that timeshare owners MUST continue to pay their maintenance dues in perpetuity.

I hope new regulations from he CFBP will include a timeshare owners right to deed back a timeshare to an HOA at any point, regardless of whether a loan is owed on the timeshare.

Financial Regulators Are Looking Into America’s Largest Timeshare Seller

https://www.buzzfeed.com/matthewzei...argest-times?utm_term=.eqBd8okWx1#.ijKle3AwQL

 

[Saintsfanfl]

That I'm aware of, the law only provides a few categories of debt (back taxes, student loans, etc) that are non dischargeable.

Income taxes are discharged in a Chapter 7 bankruptcy. The IRS takes a number just like every other creditor. There are a few requirements like was a return filed and is it at least 3 years old but for most honest people it would be discharged.

 

[Saintsfanfl]

So, explain to me how a viking ship is not a legal instrument to legally get rid of a timeshare that an HOA refuses to take back?

This is similar to filling out a loan application with false information. If the Bank lends the money, the onus is on the lender to prove they were defrauded (a tall order most times).

Goodness! Intentionally lying on loan documents is absolutely fraudulent in every possible way. You are saying it is legal because they will have a hard time proving it? That is ridiculous.

 

[DeniseM]

Goodness! Intentionally lying on loan documents as absolutely fraudulent in every possible way. You are saying it is legal because they will have a hard time proving it? That is ridiculous.

It's only wrong if you get caught.

 

[AwayWeGo]

The Scammers' Official Motto.

It's only wrong if you get caught.

Latin translation of that appears on the official crest & seal of the upfront fee timeshare scammers.

-- Alan Cole, McLean (Fairfax County), Virginia, USA.​

 

[ronparise]

Thanks Ron, more competition for you. Even though a LLC defaults there is still a way for HOA to recoup funds

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That's not competition for me
It's my inventory I own 14 weeks here and I routinely "rent" 14 more

 

[Saintsfanfl]

It's only wrong if you get caught.

And it's only stupid if you leave a trail a bread crumbs pointing to clear and willful intent

Like posting on a public message board or creating an LLC that has no business activity.

 

[ronparise]

Morality has nothing to do with it. Bankers have been trying to convince us that it is of that for years. There are consequences for defaulting on a debt and they are clearly spelled out in the loan documents signed by both lender and borrower. And there are consequences for not paying condo fees and maintenance fee and these are spelled out in the condo docs. In ever set of docs I've seen the only thing you risk is loss of use of the common elements and in the case of timeshares loss of use and ultimately foreclosure. Base the example of a timeshares policy I posted above There is no moral judgement made

But it is not legal to transfer the deed to anyone with the intention of avoiding a debt. No different in my estimation than if I deeded my timeshare to a dead guy or a homeless guy or my dog. The transfer is probably legal but the fraud is not

But as the poster says try to prove it. And as Denise says; from a practical standpoint, " its only illegal if you get caught"

I think I would transfer it to an llc and pay a year or two of the fees before I considered walking away and I don't think I'd tell anyone what I was up to, much less announce my intentions on a public forum

 

[raygo123]

Just my personal opinion.
There are legal things that are nonetheless unmoral (slavery, for example).

That I'm aware of, the law only provides a few categories of debt (back taxes, student loans, etc) that are non dis-chargeable. Every other debt is by law dis-chargeable, either in bankruptcy or through other processes.

By law, a lender of an unsecured loan SHOULD do its due diligence because the lender is on the hook if the borrower fails to pay.

So, explain to me how a viking ship is not a legal process to legally get rid of a timeshare that an HOA refuses to take back?

This is similar to filling out a loan application with false information. If the Bank lends the money, the onus is on the lender to prove they were defrauded (a tall order most times).

Amoral yes, but until proven guilty, viking ships seem quite legal to me. Of course, viking ships only work when resorts acknowledge the ownership transfer, which these days seems to be getting harder and harder.

Also, I think that an HOA that does not have a process to take back deeds behaves both legally and amorally.

A lender in this country and quite a few others just does not have the right to permanently collect from their debtors against the debtors wishes, except for back taxes, student loans, etc. HOAs may try to confuse this reality by making relatively minor legal points, but there is, to my knowledge, no legal basis for an HOA's claim that timeshare owners MUST continue to pay their maintenance dues in perpetuity.

I hope new regulations from he CFBP will include a timeshare owners right to deed back a timeshare to an HOA at any point, regardless of whether a loan is owed on the timeshare.

Financial Regulators Are Looking Into America’s Largest Timeshare Seller

https://www.buzzfeed.com/matthewzei...argest-times?utm_term=.eqBd8okWx1#.ijKle3AwQL

I dont understand what the HOA has to do with the legality of selling to a Viking ship. The legal transfer comes when the county recorder files the transfer of ownership. The HOA just wouldn't let them use it, and at that point who cares.

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[Saintsfanfl]

I dont understand what the HOA has to do with the legality of selling to a Viking ship. The legal transfer comes when the county recorder files the transfer of ownership. The HOA just wouldn't let them use it, and at that point who cares.

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Actually the legal transfer occurs when there is a purchase agreement and a signed deed. Recording at the county is a way to display the transfer publicly but it is an optional step.

Some resorts will require a recorded deed but not having one doesn't change the legal transfer. One time I had to get a prior owner to record a deed that was transferred years ago.

 

[AwayWeGo]

One More Ownership Transfer Step Required After Deed Is Recorded.

The legal transfer comes when the county recorder files the transfer of ownership. The HOA just wouldn't let them use it, and at that point who cares.

All the timeshares I'm familiar with (i.e., the few where we've been owners) charge ownership transfer fees completely separate from the process of preparing, signing, & recording the deeds. Some are nuisance fees (less than $100). Others are semi-steep ($250).

Until those fees are paid & the process is complete, the timeshares do not recognize transfer of ownership -- meaning that viking ship LLCs have 1 more step to complete before setting sail into the sunset.

Any chance resort management can use that last transfer step to scuttle the viking ship LLCs ?

-- Alan Cole, McLean (Fairfax County), Virginia, USA.​

 

[VegasBella]

The open question is; are defaults and Viking ships a problem for your associatin or not And if yes, is refusing to take back unwanted worthless deeds the right thing to do or not

Exactly.

In some cases the defaults are NOT a problem. The resort is managed well enough and there's enough demand that most/all the default weeks get rented out. (See below: Avenue Plaza and San Clemente Inn as examples)

In the cases it is a "problem," (even if the costs are simply passed along to other owners) it's worth remembering that often the increased MF is still a better value than renting the equivalent accommodations from a resort at market value. Essentially, over the long-haul these defaults are likely to simply erase the market inefficiency that currently exists in deeded weeks timeshares - it's the process of making the timeshare market more efficient.

I agree they should manage it and minimize the expense to the owners. In reality they do not care and any expense is passed on to the owners anyway so they have little to no motivation to improve the situation.

It's true that in some cases they don't care. That doesn't absolve them of their responsibility to manage the resort appropriately. Furthermore, it's in everyone's interests to get those weeks rented out or sold asap.

An owner at Avenue Plaza is entitled to a "right to use" week for every week they own,, they just have to pay the mf. So basically they just rent the delinquent weeks to the owners. By the way, the bad debt number at Avenue Plaza is getting smaller because Wyndham is taking all the foreclosures and putting them into CWA or Worldmark

I own at a small owner-controlled resort that does something similar (San Clemente Inn). Not only do they have a profitable year-round rental program for the general public, they also have let owners rent "bonus weeks" during the off-season at a lower rate than they'd rent to the general public. The supply comes from:
- owners who pay MF but don't use or exchange but rather participate in the rental program
- owners who have defaulted on their weeks
- owners who simply don't show up to use their weeks (check in is Sunday, if you don't show up or call by Tuesday they rent the unit out)

Looking over the budget it appears that rental income at SCI is more than double the bad debt expense.

I hope what we could all agree on, is the requirement for good management. Until recently I argued that good management meant accepting deedsback, rather than letting owners deed their ownerships to a Viking ship... Now Im not so sure of myself.. Good management may mean doing whatever is needed to terminate a timeshare, and sell the assets.

100% agree.

 

[raygo123]

The resort management is not the last step. That has already happened. The HOA has a right to go after the Viking ship for non compliance, just like the LLC, but how can they overturn a legal transfer of property? In both cases, additional litigation to prove fraud is necessary to determine whether the initial transfer was fraudulent, ie the original owner to the Vikingship.

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[Saintsfanfl]

The resort management is not the last step. That has already happened. The HOA has a right to go after the Viking ship for non compliance, just like the LLC, but how can they overturn a legal transfer of property? In both cases, additional litigation to prove fraud is necessary to determine whether the initial transfer was fraudulent, ie the original owner to the Vikingship.

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This is precisely why many resorts are no longer allowing transfers to LLC's. People can argue the validity of the refusal ad nauseam but the conundrum you describe is enough of a reason for the resort to cry foul before recognizing the transfer. Although if they took deed backs it would be a moot point.

 

[raygo123]

This is precisely why many resorts are no longer allowing transfers to LLC's. People can argue the validity of the refusal ad nauseam but the conundrum you describe is enough of a reason for the resort to cry foul before recognizing the transfer. Although if they took deed backs it would be a moot point.

I totally agree. The original poster is running a proprietorship which he wants to turn into a LLC.
A self made vikingship. The problem is he is also the "seller". The old apple doesn't fall far from the tree.
A bite of the forbidden fruit, if you would. One better, run it for a few years, as Ron said. Me, I'd be sweaten bullets.

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[TUGBrian]

lets not split moral hairs here, the purpose of the viking ship/fake llc is not to get rid of a timeshare, that can be done by simply stopping payment at any time.

the purpose is to avoid the negative financial ramifications that result in such a default.