"Dead Beat" Owners

Another thread about a buyer with buyer's remorse got me to thinking about the fact that some people think and may even advise that is may be an acceptable solution to just bail out on a purchase agreement because the buyer was past the period to legally get out through rescinding.

My thought is this, if we as existing TS owners encourage others to simply ignore their legal obligation to a purchase agreement and the related fees, namely the MF's, does that not encourage and perhaps condone saddling the HOA with lost revenue and perhaps even additional expense in chasing down the dead beat owner through collections procedures?

I would not want anyone involved in any one of my timeshare resorts to simply bail out, leaving the rest of the owners holding the bag. That is not fair to the others, not unlike ourselves, who are in this thing together through the POA.

I would be interested in what other think about this concern.

I think that most TUGgers, like virtually all, are responsible TS owners. We urge rescinding or, if too late for that, paying and enjoying the purchase.

Lots of resorts, and all should, offer intervals of non-paying owners up to rent by good owners for the cost of the maintenance fee. This kind of "bonus week" lets owners enjoy more intervals than they own when they want/need to, and keeps the association from having to raise fees for everybody.

Timeshare Von said:

Another thread about a buyer with buyer's remorse got me to thinking about the fact that some people think and may even advise that is may be an acceptable solution to just bail out on a purchase agreement because the buyer was past the period to legally get out through rescinding.

My thought is this, if we as existing TS owners encourage others to simply ignore their legal obligation to a purchase agreement and the related fees, namely the MF's, does that not encourage and perhaps condone saddling the HOA with lost revenue and perhaps even additional expense in chasing down the dead beat owner through collections procedures?

I would not want anyone involved in any one of my timeshare resorts to simply bail out, leaving the rest of the owners holding the bad. That is not fair to the others, not unlike ourselves, who are in this thing together through the POA.

I would be interested in what other think about this concern.

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In the next decade or so, I think you are going to see a lot "deadbeat owners" appear who stop paying the MF. With MF's jumping at some resorts at 10% year, the MF are going to surpass the rental price that the resort charges. The cold weather resorts are the ones that will get hit the hardest. With MF for dead weeks being the same as the prime weeks, and with the dead weeks getting half the amenities and 0 rental possibilities there will be a number of owners who just stop paying.

That will make for an interesting dilemna for resorts who don't have big cash behind them. Sue or assume the ownership and the yearly MF.

Not a pretty thought.

Bill

Timeshare Von said:

Another thread about a buyer with buyer's remorse got me to thinking about the fact that some people think and may even advise that is may be an acceptable solution to just bail out on a purchase agreement because the buyer was past the period to legally get out through rescinding.

My thought is this, if we as existing TS owners encourage others to simply ignore their legal obligation to a purchase agreement and the related fees, namely the MF's, does that not encourage and perhaps condone saddling the HOA with lost revenue and perhaps even additional expense in chasing down the dead beat owner through collections procedures?....

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Yvonne, I see a big difference between refusing to follow through on a developer purchase, and walking away from a timeshare that you own and which is managed by an HOA.

I was one of the people on that other thread who advised the buyer to try to walk away. My reasoning was as follows. First, the developer most likely lied to the buyer. Virtually every timeshare salesperson I have ever spoken to has lied to me, even at high-end timeshares such as Marriott and Hilton. The only timeshare presentation I have been to where I wasn't told lies was for the Disney Vacation Club. Why are buyers morally obligated to complete a contract that was obtained through deception? The only reason they are legally obligated to complete it is because they didn't tape record the salesperson's lies, so they have no proof that the deception occurred. Second, the buyer on the other thread wasn't going to leave the developer with nothing. The developer was going to get to keep the buyer's $6,500 deposit on a $23,000 purchase. Can you show me another business where, if you walk away from a $23,000 item without ever using it, the seller gets to keep the item and $6,500? If the timeshare was really worth anything close to $23,000, the seller would have been thrilled to get to keep the timeshare and $6500; the $6500 would have been extra profit. The only reason developers aren't happy with "just" a $6500 deposit is because their product isn't worth anything like what they are charging, and they know it.

None of the above applies if it is the HOA that will be left holding the bag, but that was not the case here.

Look at all the factors

Yvonne -

You are correct that deadbeat owners are a serious threat to timeshare Associations. In fact I've been involved with one that nearly had to go bankrupt due to uncollected fees.

But in the case you refer to (the other thread) the Association doesn't even exist yet (it is a new development that will be Developer subsidized for years before the owners actually take control). While I am loath to advise anyone to simply walk away from a signed contract in this case the developer is the only one on the hook right now. They sold the product, the buyer has discovered it is not the "deal" they made it seem and now he wants out. If they are smart they will offer him a buy out and let him off the hook. The resort isn't built yet so they lose nothing except an obscene sales commission to the weasel that talked him into an overpriced purchase.

In fact it is these sales to uninformed and/or unqualified buyers that often lead to unhappy owners that eventually become deadbeats after the Developer is gone and the owners Association has to clean up the mess they left behind. Better to cull the potential non-payers now rather than later.

However in most cases the deadbeat owner DOES hurt Associations. If a buyer simply walks away 4 or 5 years down the road without properly transferring the ownership to a new owner it can cost everyone. If there is a mortgage then all rights to foreclosure revolve around the mortgage company and, for the "small" amounts most timeshares get loans for, they aren't going to go through the costly foreclosure process simply to get a title to a timeshare they don't want and would then be responsible for the annual fees. So they just let the past due fees pile up, they may file a lien but generally the week goes into default and no one wants to deal with it. The Associations do as they are also out the annual fees but if they foreclose they cannot take back the deed as the mortgage has first rights. If they foreclose they would be out $1000 or more and still have a delinquent owner. It is a big problem with no easy answer. The best most associations can do is rent those weeks and try to get them back over time.

The other deadbeat, the ones that can be handled, are the owners who don't have a mortgage - the week is paid off - but they decide not to pay or can't afford the annual fees anymore. The Association can foreclose on those owners but, again, the cost to do so is high and the time needed can run a year or more. Smart Associations try to negotiate the return (deed back) of those weeks to avoid the cost of foreclosure and to allow the resale of the week to a new, paying owner. Some will sell off the foreclosure rights to a third party which will pay the fees and go after the owners. If they eventually foreclose then the week belongs to that third party to use or sell. The Association is whole as they have the annual fees either way and eventually a new owner for the week.

So 99% of the time I would not advise a buyer to simply walk away from any timeshare purchase. It can and most likely will hurt their credit scores and they can be out $$$ needlessly. In a very few cases such as the one on the other thread where it is a new resort and a non-US buyer I'd tell them, as I did in that thread, to leverage the situation to get out of a bad deal. It is an unusual set of circumstances that has different options than most. It is not a course of action I would recommend to most buyers.

Care Less

Developers really don't seem to care about owners once the sale is made and it seems that HOA's aren't much better. Each should have built in mechanisms for taking deedbacks or quick foreclosures to help alleviate non-performing weeks. If not for the benefit of those who want out, then at least for there own selfish benefit.

Developers could quickly recycle the unit to inventory while in active sales.

When the developer is gone, then HOA's could offer these units to existing owners for rent or purchase so that they continue to provide some if not all of the revenue stream that was expected of them and help keep costs down.

If the unit is so undesirable that it is a burden to everyone and nobody wants to own it at any price, then you have to ask yourself why?

There is afterall only one reason why a liveable space in a resort area with heat, light, AC, telephone and TV....plus plus plus remains empty at anytime is the fact that the MF is too high. Fix the root cause of the problem and you wont have a problem.

Apply a sliding scale to the MF's based on the demand for the week and you'll balance the ownership demand for all weeks.

I believe that there should not be situational ethics . . . either you agree to meet your obligations or you don't. Just because the developer is doing pre-sales for a new resort shouldn't make it any more "right" than if it was at a resort which was open and still in active sales (in which case there would be a POA/HOA in place and impacted by someone bailing out on a purchase).

I do understand that in the case of the situation on the other thread that got me thinking about this, the POA isn't in place and therefore will probably not be impacted. I think everyone who has been involved in TS for any length of time, would understand that inheriently. But for the newbies who come to TUG for advice and help when they face buyer's remorse, the distinction may be lost . . . I have to assume, would be lost . . . because they don't know much of anything about TS or they wouldn't find themselves in the position they are in relative to buying retail and looking to get out.

Therefore, I kept my post and thoughts broader so that it hopefully presented a more rounded position on bailing out of a contractual agreement. The fact is, the situation on that other thread with the HGVC purchase is somewhat of an exception, as I think many/most TS developer sales are in existing resorts that do have a POA/HOA in place. I based this on the number of sales presentations I take in a year and knowing that every one I've done in the past two years has been sales in expanding resorts with inventory available.

I would not want for it to appear that knowledgable and experienced timeshare owners on TUG recommend bailing out on an otherwise valid contract to purchase. So I'm speaking up with my own opinion on the matter. Agree or disagree . . . we all have the right to have our own opinions.

Suppose you have wasteful ineffieient managment and board of directors are eirther unreachable or unresponsive to the owners. the only way out might be to bail.

e.bram said:

Suppose you have wasteful ineffieient managment and board of directors are eirther unreachable or unresponsive to the owners. the only way out might be to bail.

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Then give it away and eliminate your obligation to the POA/HOA . . . but don't just ignore your responsibility to pay your fees.

Timeshare Von

JMAESD84 said:

If the unit is so undesirable that it is a burden to everyone and nobody wants to own it at any price, then you have to ask yourself why?

There is afterall only one reason why a liveable space in a resort area with heat, light, AC, telephone and TV....plus plus plus remains empty at anytime is the fact that the MF is too high. Fix the root cause of the problem and you wont have a problem.

Apply a sliding scale to the MF's based on the demand for the week and you'll balance the ownership demand for all weeks.

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You don't appear to acknowledge the root cause of the problem. You just want to keep YOUR maintenance fees down by getting everyone to pay full fees. Unfortunately, at many locations with large seasonal disparites that's just not going to happen.

Perhaps the answer is to get all units contributing what would be a fair share of the costs to run and maintain the place.

If the situation is as you say it is, then I would say it is the POA's responsibility to do something about it. As an owner and member of the POA, you (in theory) have a voice in taking action to remedy the situation yourself.

Frankly, it is not a situation that is "mine to acknowledge" or fix. If you bought a resort that has that issue then you have a vested interest in working to remedy it . . . not me!

It's up to the resorts to find a workable answer

JMAESD84 said:

You don't appear to acknowledge the root cause of the problem. You just want to keep YOUR maintenance fees down by getting everyone to pay full fees. Unfortunately, at many locations with large seasonal disparites that's just not going to happen.

Perhaps the answer is to get all units contributing what would be a fair share of the costs to run and maintain the place.

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That would be the realistic answer but in many cases it isn't possible. The documents and/or State regulations may prohibit setting different fees for different owners even if the seasonality of the area means that makes more sense. The original developer didn't want to make it clear that there were desirable and less desirable seasons so they are happy to sell all weeks with same fees. Once the resort is sold that way it would take a super majority vote to change it if it's even allowed in that state. So effectively you have the lesser demand season owners paying too much which allows the high demand season owners to pay less. A subsidy as it were.

What may happen is the low season owners will bail out leaving those fees past due, raising the fees for everyone else thus bringing fees closer to what to should be for the high season owners but making the disparity even worse for those with low season ownerships. So more may drop out.

This is where some argue that it was up to RCI/II to subsidize those low season owners by offering them upgrades to better resorts/seasons through trades. Obviously RCI/II and the owners at those more seasonally desirable resorts owe nothing to the seasonals. It is a false argument to make.

The best way out may be to get a system of sliding values for the times (ie a points system) that allows the lower valued owners to pay less and the higher value owners to pay more based on the amount of points their time is worth. Again this has to be possible under the documents or they need to be altered to allow it. Otherwise the owners of the only really valuable times will have to decide if they basically want to pay to run the resort year round for only the few months a year it is actually a desirable destination or if they all want out. What they can't expect is for RCI. II or any other exchange company to bail them out by taking the low value times and giving better times in exchange. What would they do with the dog time either? it is a problem for sure but it is up to each resort to find an answer themselves not look to others to solve it for them.

Keeping Yor Head In The Sand.

Timeshare Von said:

Frankly, it is not a situation that is "mine to acknowledge" or fix. If you bought a resort that has that issue then you have a vested interest in working to remedy it . . . not me!

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It's somebody else's problem, is that it? Well this situation is true at every resort that exists that charges MF's strictly on unit size to one extent or another.

If you have a large DEADBEAT issue at your resort then it is effecting your resort to a greater extent.

It may not be easy to get a sliding scale for MF's implemented or another fair share system, but that is what it will take to keep all units worth owning and eliminate one of the biggest issues that lead to DEADBEATS.

You obviously have missed the general gist of my original post. I was speaking of "dead beats" as in those who buy and rather than honoring their purchase agreement, choose to bail out and ignore their financial obligations.

Part of the due diligence I would recommend to any TS owner would be something along the lines of risk assessment for the very issue you cite in terms of inequity of MF's or other SA's that may occur. In each of the three resale purchases that I have made, I have been very careful to pay attention to that very issue. I'm feeling pretty insulated from any significant risk of owners simply abandoning their obligations due to inequities with MF's.

I realize that FF points vs. fixed weeks provides some relief of risk as a week worth 126,000 points will pay more in MF's than a week worth just 77,000 points . . . so the equity is somewhat balanced. The fact that I own a fixed week, however, does mean that I pay the same fee as every other owner of the same sized unit as me. That is why a resale purchase of a fixed week should always shoot for the highest demand time possible . . . and/or a time of the year, when if you can't exchange you will be happy vacationing there for many years to come.

While I believe that FF Kingsgate does have some dead beat owners issues, I also believe the POA is doing a decent job in seeking remedy including taking the weeks back and reselling them. I don't see any evidence of dead beats with FF Flagstaff . . . and Lifetime in Hawaii is such a bargain, they have no trouble in turning around any ownership agreement that is relinquished in lieu of payment of MF's. Many owners buy up additional weeks when there is an auction of available contracts.

I'm sorry that it sounds like you have a bad situation JMAESD84. You have somehow made this thread very personal. Unless you are an owner who signed a purchase agreement and subsequently decided to bail out and not pay your loan or MF's, then you aren't someone I would be referring to here. If however, you're a disgruntled owner dealing with MF inequities . . . or in a POA dealing with dead beats, then that is your situation and not mine, to fix. That was what I was trying to say in my 1:59p post today.

Nothing personal

Timeshare Von said:

You obviously have missed the general gist of my original post. I was speaking of "dead beats" as in those who buy and rather than honoring their purchase agreement, choose to bail out and ignore their financial obligations.

Part of the due diligence I would recommend to any TS owner would be something along the lines of risk assessment for the very issue you cite in terms of inequity of MF's or other SA's that may occur. In each of the three resale purchases that I have made, I have been very careful to pay attention to that very issue. I'm feeling pretty insulated from any significant risk of owners simply abandoning their obligations due to inequities with MF's.

I realize that FF points vs. fixed weeks provides some relief of risk as a week worth 126,000 points will pay more in MF's than a week worth just 77,000 points . . . so the equity is somewhat balanced. The fact that I own a fixed week, however, does mean that I pay the same fee as every other owner of the same sized unit as me. That is why a resale purchase of a fixed week should always shoot for the highest demand time possible . . . and/or a time of the year, when if you can't exchange you will be happy vacationing there for many years to come.

While I believe that FF Kingsgate does have some dead beat owners issues, I also believe the POA is doing a decent job in seeking remedy including taking the weeks back and reselling them. I don't see any evidence of dead beats with FF Flagstaff . . . and Lifetime in Hawaii is such a bargain, they have no trouble in turning around any ownership agreement that is relinquished in lieu of payment of MF's. Many owners buy up additional weeks when there is an auction of available contracts.

I'm sorry that it sounds like you have a bad situation JMAESD84. You have somehow made this thread very personal. Unless you are an owner who signed a purchase agreement and subsequently decided to bail out and not pay your loan or MF's, then you aren't someone I would be referring to here. If however, you're a disgruntled owner dealing with MF inequities . . . or in a POA dealing with dead beats, then that is your situation and not mine, to fix. That was what I was trying to say in my 1:59p post today.

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I meant nothing personal in my posts and I don't have a bad situation as I'm guilty of understanding the inequities that exist and have positioned myself on the side of the advantaged.

Since you started a thread about DEADBEATS and how it affects those of us in it for the long haul, it came across that you sought to blame them exclusively. While I choose to highlight that there are some fundemental injustices in the industry and that the DEADBEATS are those that have been taken advantage of and simply want out.

You can blame the DEADBEATS for making poor decisions and allowing themselves to be taken advantage of, but the final action to become a DEADBEAT is often because they're left with almost no choice at all.

JMAESD84 said:

Since you started a thread about DEADBEATS and how it affects those of us in it for the long haul, it came across that you sought to blame them exclusively.

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I was only attempting to get some dialogue going on the merits of experienced TS owners possibly giving advice to newbies who are experiencing buyer's remorse, to bail out and walk away from an obligation if they are beyond the contracted term to rescind.

If the issues are as have been stated by other posters here, that some fraud has taken place in the sales pitch, then hopefully there is enough that they can so to seek some other remedy including legal action. With that being said, I also know the reality that developers have made sure to cover their butts putting in writing that nothing stated or said that is not in writing in the contract and related documents is enforceable.

The TS industry is frought with issues, inequities and real scum. Whether it is the lying dog sales rep, the high pressure closer at the sales office, the predatory resale company like Strohman, or the exchange companies who seem to be engaged in practices that are to the detriment of their core members . . . someone must ask all of us "Why in the hell did you get in bed with these people and companies????"

The truth is, those of us who continue to use and enjoy the benefits of TS ownership have learned to take advantage of those opportunities that we can . . . and to steer clear (or run) away from those that are less than favorable or honorable.

Timeshare Von said:

I believe that there should not be situational ethics . . . either you agree to meet your obligations or you don't. ...I would not want for it to appear that knowledgable and experienced timeshare owners on TUG recommend bailing out on an otherwise valid contract to purchase. ....

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As you say, Yvonne, people may have different opinions on this. To me, the fact that developers lie in order to get purchasers to take on an obligation makes a huge difference. Yes, you should live up to your obligations, but what many purchasers have agreed to pay for is, say, a week that costs them $15,000 to buy but will trade for any resort in the RCI "wish book." What they are receiving is something else entirely. The buyer isn't getting what they agreed to buy, so what is the basis of their moral obligation?

I suspect that if most people who purchase from the developer could prove what the developer told them, their contract would not hold up in court. Therefore, I have a hard time seeing most contracts to purchase from a developer as "a valid contract."

timeos2 said:

... The documents and/or State regulations may prohibit setting different fees for different owners even if the seasonality of the area means that makes more sense. The original developer didn't want to make it clear that there were desirable and less desirable seasons so they are happy to sell all weeks with same fees. Once the resort is sold that way it would take a super majority vote to change it if it's even allowed in that state.....

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John, I know that there are some resorts in Colorado where off-season fixed or floating weeks have lower MFs than peak season weeks. Do you know which, if any, other states are set up to allow this?

I wonder if selling right-to-use contracts might be one way for HOAs to get around the problem that their state and/or sales documents require all weeks to pay the same fees. I know that many resorts take their HOA-owner weeks and use them to offer "bonus time" rentals to owners at a discounted rate. The problem with this is that each year, the resort needs to find renters again, so it doesn't guarantee a steady stream of income. I'm wondering if resorts could instead rent that time in the form of a right-to-use contract, where the purchaser of the contract is promised use for say, five or ten years, and agrees to pay a certain sum each year, which is adjusted annually for inflation. Because there would be no ownership of real estate involved, perhaps there would be no requirement that these RTU contracts be charged the same annual fees as the deeded weeks.

One of the resorts where I own uses RTUs as a way to get around the need to foreclose on deadbeat owners. When they have deadbeat owners, the resort sells the deadbeat owners' weeks to other owners as RTUs. If the "deadbeat owner" ever pays the overdue fees and reclaims their week, the RTU owner has a choice of selecting a different week as their RTU instead, or of getting a refund of the money they paid for their RTU. The resort gets the dues paid, the RTU owner gets use of a week for just the annual fees and a small one-time RTU fee, the deadbeat owner isn't foreclosed upon, and everyone is happy (I assume.) However, the RTUs pay the same annual fees as the deeded weeks. I don't know if any resort has tried charging a "sliding scale" annual fee to RTU owners.

I find a bit of fault with the notion that in the other thread we assume the t/s salesman lied...because "they all lie."

Admittedly this is an industry which can make used car salesmen look good but in fact we don't know that the salesman lied and there was no reference by the purchaser of that...only that he realized he could purchase a week for much less than he agreed to.

I do know that in the HGVC presentation I did sit through in January the rep painted some very nice pictures and did a good job in presenting the best image of their system and abilities to trade. Did he sell the sizzle?? YOU BET. Did he lie? No not that I picked up on. Was I moved to buy? Yes I was moved...but I didn't buy. And I knew nothing at the time of an independent resale market or tug for that matter. I stumbled upon it with an ebay search I did on my own after we returned on a whim.

I'm very uncomfortable with that buyer walking away based soley on buyers remorse. I hope he speaks with Hilton and they work out something as I'm sure they have dealt with pleanty of these before.

And for the record, I'm no fan of developers & their sales tactics.

Lee B said:

Lots of resorts, and all should, offer intervals of non-paying owners up to rent by good owners for the cost of the maintenance fee. This kind of "bonus week" lets owners enjoy more intervals than they own when they want/need to, and keeps the association from having to raise fees for everybody.

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That would be illegal many places.

Most resorts in my area take deedbacks, which is a way of bailing out. From the HOA standpoint, a deedback is a whole lot cheaper than having to go through a foreclosure. Most resorts make the owners deeding back pay for the cost of the deed and recording, so the HOA only loses any past due m/f's.

JudyS said:

I wonder if selling right-to-use contracts might be one way for HOAs to get around the problem that their state and/or sales documents require all weeks to pay the same fees. I know that many resorts take their HOA-owner weeks and use them to offer "bonus time" rentals to owners at a discounted rate. The problem with this is that each year, the resort needs to find renters again, so it doesn't guarantee a steady stream of income. I'm wondering if resorts could instead rent that time in the form of a right-to-use contract, where the purchaser of the contract is promised use for say, five or ten years, and agrees to pay a certain sum each year, which is adjusted annually for inflation. Because there would be no ownership of real estate involved, perhaps there would be no requirement that these RTU contracts be charged the same annual fees as the deeded weeks.

One of the resorts where I own uses RTUs as a way to get around the need to foreclose on deadbeat owners. When they have deadbeat owners, the resort sells the deadbeat owners' weeks to other owners as RTUs. If the "deadbeat owner" ever pays the overdue fees and reclaims their week, the RTU owner has a choice of selecting a different week as their RTU instead, or of getting a refund of the money they paid for their RTU. The resort gets the dues paid, the RTU owner gets use of a week for just the annual fees and a small one-time RTU fee, the deadbeat owner isn't foreclosed upon, and everyone is happy (I assume.) However, the RTUs pay the same annual fees as the deeded weeks. I don't know if any resort has tried charging a "sliding scale" annual fee to RTU owners.

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Doing that an HOA is stepping outside the resort's Declaration of Covenants and may be on a slippery slope legally.

Carolinian said:

That would be illegal many places.

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??? Every state I know of allows delinquent time to be rented - in fact many require that best efforts be made to maximize income (usually rent) to offset the fees due. Offering it to paying owners for the annual fee is a great way to rent the time. The resort gets some, not all, of the fees due (there is overhead in renting, often commissions due and costs in processing delinquent notices, etc) but, especially if they rent the full week, get as much or more than they are likely to see in daily rentals.

Now there states that don't allow different owners at the same resort to pay different fees based on season or use value. But even those allow different fees if the time is identified as lower value in points or unit size. In any case once the fee is set as equal for all units it is very hard to change it. That is the dilemma facing many seasonal resorts where the poor demand times simly aren't worth the annual fees if all weeks pay the same.

As to weeks with more supply than demand, resorts need to be creative in marketing. This situation can indeed result from being dead offseason like the dead of winter in coastal New England or hurricane season in the Caribbean or Florida or it can come from an area being overbuilt like Orlando or the Canary Islands.

On the OBX, our worst weeks are January and February plus the 3 weeks after Thanksgiving and before Christmas. Even late February is picking up a bit these days. Some approaches that resorts have taken with some success:
- the original developer at The Windjammer did targeted marketing of such weeks to Canadians. To them, January in North Carolina is warm compared to back home, and many own to use in that period.
-the offseason corresponds to duck hunting season, and is also fairly good for some types of fishing. Ocean Villas HOA has done some targeted marketing to sportsman.
- off season is good for golf. Seascape, which is located beside a golf course at which their owners have golf priveleges has marketed these off season weeks to golfers.
- owners have use of resort facilities yearround, which is a good perk for locals who would like to use the pool and other facilities. Outer Banks Beach Club HOA has done targeted marketing to local folks.

While I suspect that an HOA renting floating time may be permissable, the HOA has no rights to rent a deeded week until they foreclose. After foreclosure, of course, there is no problem.

timeos2 said:

??? Every state I know of allows delinquent time to be rented - in fact many require that best efforts be made to maximize income (usually rent) to offset the fees due. Offering it to paying owners for the annual fee is a great way to rent the time. The resort gets some, not all, of the fees due (there is overhead in renting, often commissions due and costs in processing delinquent notices, etc) but, especially if they rent the full week, get as much or more than they are likely to see in daily rentals.

Now there states that don't allow different owners at the same resort to pay different fees based on season or use value. But even those allow different fees if the time is identified as lower value in points or unit size. In any case once the fee is set as equal for all units it is very hard to change it. That is the dilemma facing many seasonal resorts where the poor demand times simly aren't worth the annual fees if all weeks pay the same.

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Be creative about poor times and delinquents

JudyS said:

John, I know that there are some resorts in Colorado where off-season fixed or floating weeks have lower MFs than peak season weeks. Do you know which, if any, other states are set up to allow this?

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No, I don't. But it works against timeshare owners when resorts are forced to split costs equally over all weeks when in most areas there are very limited seasons and the remainder of the use year carries a much lower value. It is almost a given that the lower value time owners are going to get tired of supporting the better weeks and look to get out. Many times that means turning the week in or simply abandoning it. The better owners end up paying the costs even if the state doesn't allow variation in billed fees.

JudyS said:

One of the resorts where I own uses RTUs as a way to get around the need to foreclose on deadbeat owners. When they have deadbeat owners, the resort sells the deadbeat owners' weeks to other owners as RTUs. If the "deadbeat owner" ever pays the overdue fees and reclaims their week, the RTU owner has a choice of selecting a different week as their RTU instead, or of getting a refund of the money they paid for their RTU. The resort gets the dues paid, the RTU owner gets use of a week for just the annual fees and a small one-time RTU fee, the deadbeat owner isn't foreclosed upon, and everyone is happy (I assume.) However, the RTUs pay the same annual fees as the deeded weeks. I don't know if any resort has tried charging a "sliding scale" annual fee to RTU owners.

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That is a creative way around the problem especially where there are mortgage liens on weeks so it doesn't make sense for the Association to spend money to foreclose. If they bundle up a properly constructed RTU offering they can resell those use rights. There is always churn in delinquent accounts, if one account in the RTU pool gets paid up another can take it's place. This tends to work better in a float time resort than it would at a fixed week type. But either could do it and it is one creative way to overcome the problem of "permanently" delinquent weeks.

Resorts/Boards have to be proactive with these things and not sit back, wring their collective hands and expect exchange systems to bail them out. It is up to each resort to be viable - exchanges are only for resorts in good operating condition and in demand.