WKORV and North ROFR questions

Hello;

We recently returned from WKORVN and decided to go to owner update. During the update this became clear. Westin ones a large amount of inventory at this time by taking over foreclosed properties.

I) The obvious thing was Westin waits until SVN owners pay for taxes and
maintenance fees for the year and then Westin takes over the property using
ROFR. Which allows Westin a year to sell before they are obligated to pay
maintenance and taxes on property.

: a) I have questions about this fact. Westin knows about the foreclosed
properties but does not make them known to "ALL" of the Owners
to bid on foreclosures---which would increase Westin's ROFR price.
. Westin seems to be ROFR'ing the available inventory sub rosa, by
secretly ROFr'ing the foreclosed property without owners being
aware or being allowed to bid on the foreclosures.

Why is Westin not required to make full disclosure of property
availability at foreclosed prices to ALL owners. It seems as though
Westin is managing the property and using their inside knowledge
to enrich themselves at owners expense. Failing to provide owners
opportunity to bid keeps ROFR low for Westin

b) Our owner update said Westin has over 100 units available for
sale. Why would Westin want to excercise ROFR at this time when
they have huge inventory already

c) Our updater said the Orlando people brag about how they get
Maui people to sell Maui and by Orlando. She said that was the
stupidest thing that Maui owners could do.

D) She also said that Maui will proceed with phase 3 building. I
doubt as Starwood margin calls with bankers fails to mention or
discuss any of that. however, maybe--I just don't know?


Scott&Laura

Starwood has written the rules brilliantly to benefit themselves. You can either get mad about it or you can sell. But there's no sense beating your head against the wall because there's little we can do to change it now. Seriously.

Lisa, former owner who didn't want to play their stacked game anymore

LOL

Your funny


Writing the rules and fully disclosing that at time of sale is one thing and, it is smart business to have ROFR. I don't object to that.

Jarta may shed light on this.

ROFR is a reasonable right to retain at time of sale. But excluding the Owners who collectively paid the Taxes and Maintenance fees from having any awareness or ability to bid up cost as a way to depress the ROFR cost seems to teeter totter on the fence of breaching a fiduciary duty to the owners.

Scott

jarta has not been a TUG member for more than a year.

But, if he were here, he'd tell you that Starwood has a perfect right to do anything they darn well please, and you should be grateful to have them as our management company.

They are doing a good job as a management company but they are prohibited to taking actions that are adverse to ownership interests.



Westin has maintained and kept the properties fresh so the property hasn't gone to Hell in a hand basket like so many timeshares do.


The question is simple: Defaults of ownership shift the property and burdens of taxes and maintenance fees to the owners. It is the owners best interest to maximize sales prices to benefit all the owners.

To artificially exclude and diminish the cost of their ROFR for their own benefit, seems to be a potential breach of their fiduciary as a management company.

I wonder if its a mistake, error, or bureaucratic oversight rather than a conspiracy theory. Large Company's often mess up because right hand doesn't recognize left hand's responsibilities.

Scott

Starwood's response would be that we as owners, are represented by our elected board of directors, who have approved Starwood's ROFR/reselling policies, and that many of the terms related to this issue are in the original terms and conditions that we each agreed to, when we bought a Starwood timeshare.

They are doing a good job as a management company but they are prohibited to taking actions that are adverse to ownership interests.

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Starwood is in this to make money for Starwood - they will not protect owner's interests unless they are required to by law, or it furthers Starwood's interests.

The board being our elected representatives doesn't hold water --IF-- Starwood can influence who is or is not on the ballot. They have duties to minority owners. Starwood has a voice as they are owners themselves.

Of course Starwood is in it for the money. There is nothing wrong with that and the SVN properties do reflect positively on Starwood. Starwood takes pride in them--read their margin call to bankers. Profit is not optional for any company at any time. When it is dispensed with they clog the bankruptcy courts up.

However I still wonder how the owners were not told nor were the properties made available to the owners to bid up. --or put on open market to establish price and ROFR. Starwood I think has a duty to do that.


Scott

Scott&Laura said:

However I still wonder how the owners were not told nor were the properties made available to the owners to bid up. --or put on open market to establish price and ROFR. Starwood I think has a duty to do that.Scott

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I understand that you feel that way, but Starwood has no legal obligation to do so, which means they won't.

They are making a killing re-selling confiscated inventory - they have no motivation to give owners more info. about that process.

I disagree.

Starwood has numerous legal obligations as managers and board involvement. There is a body of law and court decisions that discuss minority ownership rights and duties and obligations of managers and the boards to businesses. Sarbane -Oxley is one. they do not have to mention it at sale but they are bound by it.

companies do error, can be ignorant or act maliciously. I am wondering about how they go about ROFR

Scott

OK - but if you are talking about forcing them to do something, you are talking about a lawsuit, which doesn't seem very likely to me.

I have some previous experience in this area: In 2009 when Starwood made massive changes to the Interval rules, which were detrimental to owners, and gave Starwood much more control over the inventory, there were no law firms who work in the timeshare arena, who were interested in taking on Starwood.

BTW, Scott - I agree with you completely. But based on years of experience with Starwood, I just think that the cards are stacked against you...

Legal Info

Scott&Laura said:

Hello;

D) She also said that Maui will proceed with phase 3 building. I doubt as Starwood margin calls with bankers fails to mention or discuss any of that. however, maybe--I just don't know?

Scott&Laura

Click to expand...

Where does one find this info?

Scott&Laura said:

The obvious thing was Westin waits until SVN owners pay for taxes and maintenance fees for the year and then Westin takes over the property using ROFR. Which allows Westin a year to sell before they are obligated to pay maintenance and taxes on property.

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I think you're getting your scenarios mixed up. At WKORV/N, Starwood can acquire new units via several methods:

1) Owners voluntarily exchanging their VOI for another in the Starwood network.

2) ROFR -- ROFR, at resorts where it's in place, allows Starwood (the developer) to circumvent any purchase contract from a Starwood owner to a third party and essentially substitute themselves as the buyer. However, just like any other real estate transaction, the owner has to have clear title before Starwood will process the sale. If they don't (e.g. because they have outstanding MFs and/or taxes), proceeds from the sale will be used to satisfy those liabilities FIRST. So the HOA should not lose anything on third party sales that Starwood exercises its ROFR on.

3) Foreclosures - This is a forced acquisition of a VOI by either the HOA for non-payment of MFs or by Starwood for non-payment of Starwood-financed loans. There is no sales contract in place, so ROFR doesn't apply here.

It is up to the individual HOA's discretion how quickly they foreclose (it was taking YEARS for Starwood to foreclose on deadbeat owners; I have no idea whether they've corrected that), and how they dispose of inventory gained via foreclosures due to non-payment of MFs.

Some HOAs (SDO?) have passed formal resolutions that allow Starwood (the developer) to buy these properties for a pre-established price. Other HOAs hold occasional fire sales. (WKV recently held such a sale. WKORV/N had such a sale a few years ago.) But except for these advertised exceptions, most owners have no knowledge what the HOA's plan is because they don't communicate their plan to owners. (Do they sell them on ebay? Do they hold private sales for their friends? Who knows!)

Now the HOAs SHOULD be trying to make themselves whole on outstanding MFs from the proceeds of the sales, whether they sell the VOIs back to Starwood or to a third party. However, this may not always be possible because legal fees (it takes attorneys to foreclose on someone) and transfer fees may eat up the entire proceeds of the sale, especially owners of smaller units/low season owners/owners who are years behind.

IF the HOAs are foreclosing within a reasonable amount of time, then the HOAs (and other owners) shouldn't be hurt too badly by deadbeat owners, especially at properties like WKORV where even the smallest unit SHOULD have enough resale value to pay off legal/transfer fees AND outstanding HOA dues. However, we really don't know what arrangements they've worked out or how expensive it is to foreclose.

As owners, we can and should demand that the HOA forecloses as quickly as legally allowed because owners are left holding the bag, at minimum until that foreclosed unit is sold.