Tuesday, August 11, 2015

Update On The Manhattan Club Meeting

A meeting was held on August 2nd in New York City for owners of The Manhattan Club.  Here, Jeff Weir provides a recap of this meeting.

We'll post updates as they become available.

If you attended, we'd like to hear from you.

If there's another topic that you feel warrants a meeting, let us know as well.

Manhattan Club owners rally in New York, seeking understanding of legal strategies and the AGs investigation

Some 120 timeshare owners at The Manhattan Club (TMC)—representing an estimated 14,000 to 18,000 frustrated buyers rallied in New York on Aug. 2, 2015, to discuss legal strategies and the practical problems of escalating maintenance fees, reservation hassles, and resale roadblocks. The meeting, hosted by RedWeek.com, the National Timeshare Owners Association, and TimeSharing Today, was the first focused "take-action" meeting among Manhattan Club owners who are stuck in legal limbo while New York Attorney General Eric Schneiderman battles TMC developer Ian Bruce Eichner over the fate of the club and its owners, most of whom paid $20,000 to $40,000—or more for timeshares they can rarely, if ever, use.

The gathering included presentations from a New York attorney, Douglas Wasser, who is very familiar with the AG's investigation, real-estate law, and similar litigation; and Bob Schmidt, chief data officer for Sharket.com, a timeshare resale research company based in Florida. 

Wasser informed owners about the legal issues in the AG's case, while Schmidt discussed the market values of TMC timeshares, based on resale and developer sales from 2012-2015

Highlights and consensus opinions released at the TMC owners meeting include:

• Future legal actions: Launching a new legal case against the club, at this stage, would probably serve no purpose, because the AG already has a year's worth of investigative data. Wasser urged owners to show patience and evaluate their options after the AG's case comes to a head.  Three previous class-action cases already were thrown out of court.  In its most recent court filing, the AG's office said, "Nearly every week the NYAG discovers new evidence of potential wrongdoing."

• Maintenance-fee issues: Owners who want to continue using their timeshares must continue paying maintenance fees, even if they don't like the cost ($2,500 to $3,000 a year).  Many other owners have already opted out, refusing to pay due to frustration or financial considerations.  According to the AG's office, 2,265 contracts were inactive or delinquent as of March, 2015.  The club has 14,147 active contracts. Those active payers must shoulder the costs of the inactive timeshares.

• Sharket's survey of TMC resales shows that Manhattan Club sales and prices plummeted in recent years—no surprise, given all of the negative publicity about the club.  From 2012-2015, Sharket traced 144 resales with an average selling price of $2,148.  Only nine resales have been recorded in New York property records in 2015 (when the club itself was barred from transferring, selling, or foreclosing on property).

• Also during 2012-2015, the Manhattan Club took back 1,554 timeshares through buybacks or foreclosures, paying an average price of $133 per unit.  Developer retail sales, in contrast, stayed strong until the AG closed down the sales operation.  From 2012 to July of 2014, the club notched 1,521 sales worth $86 million, with an average selling price of $21,000.  Many owners noted the striking similarity of the buyback/foreclosure numbers and the developer sales.  Overall, dating back to the inception of the club in 1997, TMC claims to have sold $400 million worth of timeshares.

• A key allegation in the AG's probe is that the club deliberately oversold timeshares and rented rooms to the public while denying consistent access to owners.  Proving that, however, is a major paper chase that continues to generate heated debate in court.  In its most recent court filing, the AG says:  "NYAG has sought and still seeks to determine not only whether Sponsor (Eichner and his operating companies) had oversold any units in the timeshare plan, at any time, but also whether anyone at The Manhattan Club was keeping accurate records as to the inventory that Sponsor has sold, has yet to sell, and has bought back and re-sold."

The next court date was set for Aug. 21, but could easily be postponed.  No formal or public hearings in the case have been held since the original 2014 court order. 

TimeSharing Today will continue to follow the situation as events unfold. 

Jeff Weir is Chief Correspondent for Redweek and a contributor TimeSharing Today.

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