Diamond Resorts Rental Cease and Desist Orders

[monkstwo]

Has anyone in this forum received a Cease and Desist order from Diamond Resorts prohibiting rentals? If you have received such a letter and have an older contract with Diamond or Sunterra that allows rentals, please send me an email or comment on this post.

 

[T_R_Oglodyte]

I have not received one, nor have I had an issue the few times I have done a rental.

That being said, no matter what the underlying ownership deed/contract might say, if the ownership has been added the Club it may not be rented. That is because when an owner joins the Club, they surrender all of their reservation and usage rights to the Club in exchange for the ability to make reservations through the Club. And any rental of Club reservations is prohibited by Club rules.

 

[monkstwo]

Older Diamond Resorts and Sunterra contracts allowed rental of reservations made through The Club. There are laws in Nevada and Florida that prohibit Timeshare companies from banning rentals after contractually allowing them.

 

[dougp26364]

DRI will take action banking on the idea that you won't have the resources to fight them. Most don't and just let it go, some try to form a class action lawsuit and still others have a relative that runs up the cost on DRI to a point they let it go. In timeshare world, nothing, and I mean nothing, is ever guaranteed. Developers and management companies will continue to change the rules to fit their needs. When owners fight them, they simply pass the cost along to every owner in their system in the form of increase maintenance fee's.

 

[bradfordHI]

Yes, 5 years ago I got one.
I was a mega renter. I now rent a few weeks a year. It's meant for personal use. That's the reason for it.
I got a warning and agreed to lessen my rental activity.

DRI will take action banking on the idea that you won't have the resources to fight them. Most don't and just let it go, some try to form a class action lawsuit and still others have a relative that runs up the cost on DRI to a point they let it go. In timeshare world, nothing, and I mean nothing, is ever guaranteed. Developers and management companies will continue to change the rules to fit their needs. When owners fight them, they simply pass the cost along to every owner in their system in the form of increase maintenance fee's.

Yes

 

[bry4fun]

I bought points when Sunterra first started the Club and converted many of my units to points. I was just going through some of the deeds and paper work and it doesn't say anything about not renting out units.

 

[dougp26364]

I bought points when Sunterra first started the Club and converted many of my units to points. I was just going through some of the deeds and paper work and it doesn't say anything about not renting out units.

You'll find it in the latest incarnation of THE Club rules available online. Unfortunately, they seem to be able to change the rules anytime they like to fit their needs.

 

[artringwald]

I bought points when Sunterra first started the Club and converted many of my units to points. I was just going through some of the deeds and paper work and it doesn't say anything about not renting out units.

Here's what it says in the Disclosure Guide for the Club from 2015:

2.5 Member Rentals.
2.5.1 A Member is not prohibited from periodically renting the
Accommodation reserved for the Use Period or the reserved Other
Redemption Opportunity pursuant to these Club Rules. However,
the use of Points to reserve Accommodations or Other Redemption
Opportunities for commercial purposes or for any other purpose
other than the personal use of the Member or the Member’s family
and guests is prohibited. Use by a Member of public advertising or an
online website to seek renters shall be deemed a prohibited commercial
use. Members who are primary developers of Club Resorts (that is,
members of the Diamond Resorts International group of companies)
and providers of Other Redemption Opportunities are specifically
exempted from this restriction, and are entitled to use their reserved
Accommodations and reserved Other Redemption Opportunities for
promotional, rental, or other commercial purposes.

 

[bradfordHI]

I did. It's also tied to VRBO and AirBNB making it so simple.
Due to the new law in HI making VRBO illegal...where I used to rent out a lot of my units and make a lot of money I think I understand why they did this because I was making almost $12,000 every year off of $5,000 MF.

What I was told off the record is that too many people were purchasing TS solely for making money in High demand areas like Key West, Carmel,California and Hawaii.
I also just read the VRBO law in Hawaii and it's scary. $500 a day fine for doing it. Property has to be zoned and permitted (no single family homes at all!) therefore, my guess is that because timeshare is zoned and permitted for 180 day and less rentals they are the only ones that airbnb and VRBO can legally list or who people can legally rent. I am well read on Hawaii because that's where I rent mine to others.

BUT: Anyone else heard anything in other parts like San Fran, NY city or other high demand areas.
Not Orlando, Florida, Mexico or Vegas etc...Only prime areas.

Please let me know. Thanks!

 

[TUGBrian]

Older Diamond Resorts and Sunterra contracts allowed rental of reservations made through The Club. There are laws in Nevada and Florida that prohibit Timeshare companies from banning rentals after contractually allowing them.

bringing this back up as involved in a current debate on the subject...

do you have any references or can point me to a starting point to look into these laws? thanks!

 

[T_R_Oglodyte]

I bought points when Sunterra first started the Club and converted many of my units to points. I was just going through some of the deeds and paper work and it doesn't say anything about not renting out units.

You'll find it in the latest incarnation of THE Club rules available online. Unfortunately, they seem to be able to change the rules anytime they like to fit their needs.

Here's what it says in the Disclosure Guide for the Club from 2015:

2.5 Member Rentals.
2.5.1 A Member is not prohibited from periodically renting the
Accommodation reserved for the Use Period or the reserved Other
Redemption Opportunity pursuant to these Club Rules. However,
the use of Points to reserve Accommodations or Other Redemption
Opportunities for commercial purposes or for any other purpose
other than the personal use of the Member or the Member’s family
and guests is prohibited. Use by a Member of public advertising or an
online website to seek renters shall be deemed a prohibited commercial
use. Members who are primary developers of Club Resorts (that is,
members of the Diamond Resorts International group of companies)
and providers of Other Redemption Opportunities are specifically
exempted from this restriction, and are entitled to use their reserved
Accommodations and reserved Other Redemption Opportunities for
promotional, rental, or other commercial purposes.

I have a copy of the Club Sunterra Rules dated June 2005. The language regarding Member Rentals, also in Section 2.5, is identical with that posted by artringwald, except that it does not include the sentence regarding public advertising or use online website.

Section 2.1.7 also says "The Club Rules may be modified or deleted and additional rules may be added by the Club Manager from time to time."

******

In this discussion, it's very important to note the distinction between ownership and Club Membership. They are not the same thing, but many owners erroneously conflate them. You can have an ownership interest at a resort without being part of the Club. In that circumstance the Club Rules don't apply. The ownership and usage rules that apply are those associated with that ownership (deeded week, trust interest, other?).

When an owner joins the Club, they surrender their reservation rights to the Club. At that point, their usage becomes governed by the Club rules. Which means that even if the underlying ownership allows rentals, when an owner joins the Club the owner no longer has those rental privileges for as long as they are members of the Club.

 

[pedro47]

This statement Above is true as long as The Club member pay their Club Dues correct? Can a deeded owner by pass this rule and thus rent their deeded week to a rental?

 

[TUGBrian]

im trying to figure out how DRI would even police this...

 

[vacationhopeful]

A renter takes the developer's tour (for the food and loot) and PROCLAIMS to all, how smart they are .. renting for $100 nightly and not paying 10s of THOUSANDS of dollars for a lousy timeshare. Or just sits around the pool or at the resort recreation area ... bragging ... to stir the pot with owners, by claiming they rented the unit with weekly $1500+ MF cost for ONLY $100 per night (or less).

 

[T_R_Oglodyte]

This statement Above is true as long as The Club member pay their Club Dues correct? Can a deeded owner by pass this rule and thus rent their deeded week to a rental?

When an owner is not part of the Club, their usage rights are governed by the rules attached to their ownership.

So, in the case of a deeded week owner, the owner could reserve a week and rent it, provided that timeshare usage program at the resort allows that. In the case of a trust, the owner could make a reservation and rent it, provided the rules of the trust allow that.

 

[TUGBrian]

A renter takes the developer's tour (for the food and loot) and PROCLAIMS to all, how smart they are .. renting for $100 nightly and not paying 10s of THOUSANDS of dollars for a lousy timeshare. Or just sits around the pool or at the resort recreation area ... bragging ... to stir the pot with owners, by claiming they rented the unit with weekly $1500+ MF cost for ONLY $100 per night (or less).

cant imagine hes broadcasting his name or the room number hes staying in etc etc...i can see a valid argument if he divulges said info during a sales presentation though. still...the rule appears to be against renting thru an online site...maybe the guy rented off facebook or thru the newspaper etc etc. much like with RCI/II exchanges, I think this would literally have to be reported (and that report get to someone who actually cared) before any action was taken.

Clearly however action DOES get taken as ive heard of at least 2 situations (both non US nationals afaik) where DRI did suspend their memberships after they were caught renting their points online. however as someone else pointed out, id take an educated guess that the majority of DRI owners are not aware the club rules prohibit this.


Just another reason why DRI ownerships are worth so little these days, certainly glad they still take unwanted intervals back, or some owners would really be stuck!

 

[eggmansr71]

I'm personally glad they are doing this and wish it applied to DRI also as this provides inventory for flexible options. This is the problem with Marriott. All booked up at 12m but I can rent off redweek 2m before I want to go.

 

[dandjane1]

Here's what it says in the Disclosure Guide for the Club from 2015:

2.5 Member Rentals.
2.5.1 A Member is not prohibited from periodically renting the
Accommodation reserved for the Use Period or the reserved Other
Redemption Opportunity pursuant to these Club Rules. However,
the use of Points to reserve Accommodations or Other Redemption
Opportunities for commercial purposes or for any other purpose
other than the personal use of the Member or the Member’s family
and guests is prohibited. [

IMHO, the underlined words solve the problem - I don't advertise my rentals COMMERCIALLY, and I only rent to GUESTS, so I feel safe in doing limited rentals. I'm not a mega-renter (of my Diamond inventory), and only do 13-month early reservations, and only for special events.

 

[dandjane1]

IMHO, since I don't advertise commercially, and only rent to GUESTS, am not a megarenter, and only rent for special events with 13-month advance reservations, I'm "legal". Unless DRI sees my E-Bay or Craigslist or other ad, how can they know what I'm doing?

 

[tschwa2]

I have heard that DRI is quite persistent in checking online advertising through ebay, craigslist, redweek and other places like VRBO and AirBnB. They also point blank ask those with guest certs when checking in are you renting from an owner. How annoying is it to rent and have to explain to the renter that they have to tell the resort they are friends of the owner vs a renter when that isn't the case. It makes a renter feel like the owner doesn't have a right to rent it out and will be suspicious about the process.

It sounds like it might be owner friendly and it could be if DRI didn't commercially rent out so much themselves. They aren't trying to make 60 day inventory more available to their owners they are trying to make 60 day inventory more available to themselves so they can rent it out as allowed by their bylaws.

 

[DRIless]

....... They aren't trying to make 60 day inventory more available to their owners they are trying to make 60 day inventory more available to themselves so they can rent it out as allowed by their bylaws.

I've seen more and more cases where 60 day inventory for weeks and 30 day inventory for nightly has not been discounted! And The Club rules are written so that this is ok.

 

[ralphieo]

Don’t Trust DRI. I was on the board of directors for 16 years at Cypress Pointe and we kept maintenance fees within 4-5 %per year, then they decided to take control and they immediately gave their selves a 16% raise (because they can). Dump DRI as soon as you can.

 

[DanZale2000]

Don’t Trust DRI. I was on the board of directors for 16 years at Cypress Pointe and we kept maintenance fees within 4-5 %per year, then they decided to take control and they immediately gave their selves a 16% raise (because they can). Dump DRI as soon as you can.

I think DRI also gave themselves big raises when they took over the Gold Key resorts. Please share with us anything you can about DRI taking control of your resort.

 

[jasahl]

If this is true, DRI would be nudging people toward walking away by preventing folks from renting units they can't use (not that it's right, but if folks can't recoup their maint fees, it would become a more tempting option - selling/giving away a timeshare that the new owner can't rent doesn't seem like it would be an easy task)

Bluegreen seems to have been moving in the opposite direction - I remember in the old days, rentals were a big hush hush - and the reps would never discuss at the owner updates - lately, it's felt like "here are some ways you can rent your points/units"

Allowing folks to rent them out makes your resort more attractive - especially since long term owners (ie ones who keep paing maint fees year after year) will most certainly have years where they can't use

 

[clifffaith]

If this is true, DRI would be nudging people toward walking away by preventing folks from renting units they can't use (not that it's right, but if folks can't recoup their maint fees, it would become a more tempting option - selling/giving away a timeshare that the new owner can't rent doesn't seem like it would be an easy task)

Re: selling/giving away DRI. In July 2016 we gave back two US contracts, keeping 3 Hawaii. At that time you just contacted Loss Mitigation and they sent you paperwork, you paid $250 per contract, had the paperwork notarized and were done. Just in the last week DRI seems to be advertising for those who want out with a new program called Transitions that is displayed on the home page. Seems to work the same way in that you have to be approved to give back points, can't have an outstanding loan, be past due on maintenance fees, etc. I don't know if they were taking resale contracts back previously, but now it specifically states they won't take back a resale contract. Maybe that is a scare tactic, maybe giving resale points back has a different program name, but by putting in writing that you can't divest yourself of resale points I'd think fewer people would want to acquire them that way, and thus DRI themselves becomes the beneficiary of all points changing hands.