Things to Know Before Buying a Timeshare

Delighted that the good people at the Finn Law Group used my points to illustrate the need for consumers to ask questions...pertinent questions...before buying a timeshare.

WAY too much emphasis is placed on nice beds, good views, full or partial kitchens and the number of swimming pools and not enough on the basics of owning.

Here's the link to the blog post:

http://finnlawgroup.com/learning-center/things-to-know-before-buying-a-timeshare?utm_content=buffer85ffa&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer

What questions do you wish you had asked before buying your first timeshare?

Timeshare Trial Program...A Taste of What?

Think back to the last timeshare sales pitch you went to.  If you said no...well, after the third or fourth time you said no, chances are someone tried to sell you on a trial program.

These trial programs vary from resort to resort and each uses a different term; trial program, taste of so and such resort, exit program, etc.  And while they also vary in what they offer to the consumer, they have 2 things in common in my opinion:

1)  they are designed to get the consumer back to the resort within a 1 or 2 year time frame in an attempt to sell them a timeshare again

2)  they are not a good indication of what timeshare ownership is really all about...pros and cons

What should a trial program look like?  Glad you asked!

Why not offer all the benefits and responsibilities of one week of timeshare ownership---or the points equivalent---but for a 2 year period.  Assessment of fees and responsibility to pay them. Membership to exchange company and full use of exchange possibilities---or lack thereof.  All the perks of exchange company membership.  Notification by the board and/or management company of meetings and other information.  Ability to serve on the HOA.  In short, the whole ball of wax with the stipulation that at the end of the trial program, the owner can upgrade to standard ownership at the current cost giving them a 100% credit of the money they have already paid, OR be done with it and owe nothing more.

The cost of this trial membership?  Should be no more than $1,500.

What do you think?

Guest Blogger Steve Burton Reviews Hilton Grand Vacation Club in NYC

My partner and I visited this timeshare property in the first week of May and sadly we were unlucky with the weather as the daily highs were in the low fifties which was about fifteen degrees below the usual temperature at this time of year. It also rained on most of the days which stopped us from taking the open top bus tours which is our favourite way of seeing New York city.

I found all the staff to be helpful at all times. I was pleased that I was not bothered by anybody ringing me to attend a sales presentation this can spoil a timeshare vacation if you are contacted on a daily basis which can happen at some timeshare resorts that are in active sales.

We were staying in a studio unit which was effectively a good size hotel room it had a small refrigerator which was helpful for our needs. There are also one bedroom apartments available at this timeshare resort. We were located at the front of the building so we could see lots of typical New York activity. This timeshare development is located just a couple of blocks from Central Park. It is also just a couple of minutes walk away from Carnegie Hall, the nearest subway station and a well stocked but quite expensive grocery store. We visited a number of restaurants which included the famous Carnegie deli where there are numerous photos of celebrity diners on the walls of the restaurant. Such is the popularity of this restaurant that there are usually a long line of people waiting outside for a table. The portions are very large even by American standards. I would also recommend the Brooklyn Diner for good food at reasonable prices this restaurant is located just five minutes walk from the timeshare resort as is the Carnegie deli.

It is of course expensive in terms of the exchange trading points required to book timeshare accommodation in New York city. I needed thirty eight points to make this booking but compared to the Manhattan Club where between fifty eight and sixty points are required this is good value. When I visited the Manhattan Club there was also a thirty dollar a day charge for housekeeping having said that there is not a daily maid service at this development. I had some lap top problems while in New York due to me leaving my charger at Tampa airport so I made good use of their three computers in their computer room. Sadly I made no use of their gym though of course I should have done!!!!!! I found the internet to be fast and reliable which is very important for me as I find it very annoying to be at a location where the internet signal is very weak.

I don't believe I need to give a full list of everything you can do in New York city as so much is well known even to none residents of the city. Perhaps the highlights for us were walking in Central Park, taking the free ferry to and from Staten Island and attending a service at St Patrick's Cathedral. It is always interesting walking down to Time Square not least to see if the famous naked cowboy is performing there.

I hope to return again to New York city but next time I am hoping that the weather will be warmer on my next trip.

Thanks, Steve.  Want to share your thoughts on the timeshare blog?  E-mail me at lisa@timeshareinsights.com.
 

Why Did You Buy A Timeshare?

The American Resort Development Association (ARDA) conducted a survey of 1,722 timeshare owners asking for "Reasons For Buying Timeshares".  The results surprised me:

[] Save money on future vacations 44%

[] Resort location 43%

[] Flexible locations, unit types, times of year 35%

[] Certainty of vacation 29%

[] Certainty of quality accommodations 28%

[] Ability to pass to heirs 27%

[] Exchange opportunities with other resorts 23%

[] Affordable price for vacation home 23%

[] Amenities at home resort 23%

[] Affordable financial terms 23%

Here's what I found surprising:

*   Unless you're buying on the secondary market or traditionally spend $300 a night on hotels, an average timeshare will not save money on future vacations...and there's nothing wrong with that

*  Only 23% noted exchange opportunities

*  While the average timeshare is in fact significantly less costly than a vacation home, you can't (and shouldn't) really compare the two

*  Financial terms of 15%, 16%, 17% or more for 7-10 years don't really sound "affordable" to me

What do you think?  Why did you buy a timeshare?

Five Timeshare Myths Debunked

1)    Timeshare Is Not A Sought After Product

Tell that to the thousands or millions of people who buy timeshare on the legitimate secondary market every year.  This myth continues to be foisted upon the industry and the public in order to maintain the outdated sales techniques still being used.

2)    Timeshares Are Real Estate-Real Estate Appreciates

If the real estate crash of 2007 taught us anything, it’s that real estate doesn’t always appreciate.  Additionally, far too many timeshares are being sold each year that aren’t backed with any real estate at all. 

3)    My Heirs Are Stuck With My Timeshare When I Die

Any decent lawyer should be able to handle this for you or your heirs.  Just like your heirs don’t have to accept grandmother’s cuckoo clock, they don’t have to accept/take over the timeshare.

4)    I Got A Great Deal On My Timeshare Because The Resort Gave Me Money For My Old One

And I have a great deal on a bridge in Brooklyn…are you interested?  So you think that the resort gave you a discount of $20,000 on the $40,000 timeshare they were trying to get you to buy based on your existing timeshare?  Your timeshare was probably only worth $2,000…the $40,000 was a made up price to see where you’d “bite” and what do you think the timeshare in Florida is going to do with your 20 year old timeshare in South Carolina?  You’ve been had.

5)    Timeshares Make Vacation Planning Easier

Unless you own a fixed week and plan on going back to your home resort, vacation planning can in some cases be more time consuming than renting a hotel.  You better start planning your vacation 12 months out if you want to get what you want, OR be able to take advantage of last minute, i.e. 30 days or less out deals.

NOW YOU KNOW

Guest Blogger Irene Parker on Diamond Resorts and Inability to Resell

The Real Meaning of “Stay Vacationed!” at Diamond Resorts International

By Irene Parker, The Peasant of Venice ireneparker377@gmail.com                             

Diamond Resort’s telephone salutation, “Stay Vacationed!” becomes a chilling demand after reading internet complaints about Diamond Resorts. The following complaint was found on the legacy Monarch owner website started by Diamond owners, upset with Diamond’s Monarch acquisition:

I am at the Cancun resort in Las Vegas and went to a breakfast where they said they would simply update me about the changeover to Diamond. I was told that I should have been invited to a dinner where I would have been given options, decided by a judge in a legal ruling against Monarch due to their bankruptcy. They proceeded to show me a print out that said when my current term expires in August. I would have to pay $573 per quarter to Monarch. They said that due to the bankruptcy, I would have no equity. That was option one. Pay more, have nothing. The other option they said was to transfer into Diamond at a cost of $12,000 plus and pay a yearly maintenance fee of $1,700. Less than the $2,292 I would soon be giving Monarch. They also told me that I would then have equity of $41,000 that I could sell. I was in tears. I do not have any extra money. In fact I have been looking for ways to get out of Monarch for over a year now. They said that was not an option and that as an owner, I was now proportionally responsible for their debt. I felt trapped and signed all the papers to transfer, with no idea how I can pay. After reading the comments above I am even more scared. I am trying to start my own business and am already in severe debt. They claimed when they ran my credit though that it looked better than most and assured me I qualified for financing. I would have to pay off, basically transfer to credit cards, which I can barely make my payments on now before I could look to sell. One of the reps assured me that she would put me in touch with someone who could help me sell my points. She even gave me her cell phone number to call after the sale/transfer is finalized. I am really scared though. Please help! We have to do something. It seems as though they have no qualms about lying to and robbing people for their own benefit.

You can’t sell Diamond points through licensed timeshare brokers. I contacted licensed timeshare resellers Magical Realty in Orlando and Island Consulting Realty in Sarasota. They will not buy or sell, in good conscience, Diamond points, due to the restrictions Diamond has placed on the use of secondary points. They know of no licensed reseller who will. Unlicensed resellers, often described as advertisers or transfer agents, have no scruples concerning the sale of Diamond secondary points. The restrictions mean Diamond will not allow purchasers of secondary points to use THE Club. In effect, this represents the bulk of the Diamond program. The licensed resellers will sell Diamond’s competitor points, like Marriott Vacation Worldwide, Wyndham or Hyatt. They have restrictions, but not so severe as to prevent a secondary market. Diamond has done everything in its power to restrict the use and sale of secondary points. An “organized and fluid secondary market” is listed as a potential risk in Diamond’s annual report to shareholders.

FOX news aired a segment about selling timeshares on “Property Man” April 30, 2016. Florida Attorney General Pam Bondi appeared on the show warning viewers to stay away from listing and transfer agents. The show urged viewers to use licensed timeshare brokers. Diamond’s restrictions steer owners who want to sell Diamond points into the nets of the listing and transfer agents.

In a Barron’s article written by David Englander entitled “Diamond Resorts Is a Bargain among Time-Share Concerns”, written from a stock investor’s perspective, Diamond CEO David Palmer is quoted as saying, “We can perpetually resupply our inventories through inventory reclamations to support $800 million to $850 million in annual VOI (point) sales.” How is this achieved?

The goal can be achieved by not allowing a legitimate secondary market and being the gatekeeper for owners who want out of their contracts through voluntary surrender. In 2015, Diamond reported a 17.3% increase in Vacation Ownership Interest point sales to $624 million. This represents an increase of $115.9 million over 2014, offset by $23.6 million in Diamond’s provision for uncollectible vacation interests. In other words, 25% of the net sales increase is predicted to be uncollectible. For all of 2015 sales, $80 million is set aside as uncollectable. People falling on hard times are forced to own an asset they often can’t sell or give back, obligated to pay maintenance fees increasing at about 10% per year with an 18% interest rate beginning the day the maintenance fee is due until paid in full. If financed, an average 14% interest rate applies. Points foreclosed revert back to Diamond at no value to the consumer. It costs Diamond $1,500 to take back the points, which they resell at an average price of $27,434. The transaction is not subject to local real estate laws, so it is easy and profitable.

I used to give seminars at the University of Hawaii, Hilo, Kona and Maui campuses. My seminar was called, “Understanding Financial Statements for the Small Business Owner.” One of the reasons I have put so much time and effort pouring over Diamond’s financial statements and reports; is because I could not understand them. In Diamond’s 2015 annual report, it states a Diamond customer has a credit score of around 750. If this is the case, why a 25% provision for uncollectable vacation interest (point) sales? Why a 14% interest rate?

The answer lies buried in one of the 5,000 complaints I read about Diamond resorts. Basically, the complainant admitted he had a 600 credit score. After studying this complaint, I surmised there are two types of prospects. The first are people like me. People with a high credit score who become a client after being acquired by Diamond. We owned a week at ILX in Arizona prior to Diamond acquiring ILX. The second group represents people who respond to the telemarketing calls letting the consumer know they have won a trip, or a trip that can be taken very inexpensively. Often this person would not be able to afford a vacation without help. They may even be given a $100 gift card for attending the sales presentation or “tour” to help with expenses. At the presentation, the consumer is shown how they can own this vacation for life thanks to Diamond’s finance department and credit cards. In all likelihood, someone with a credit score of 600 to 700, financing a vacation package at 18%, will default. Good money people generally do not finance a vacation at 18%. According to SEC filings, Diamond’s default rate on its loan portfolio has increased from 6.6% in 2012 to 7.7% in 2015 for loans delinquent over 180 days. If figures were publicly available for loans delinquent for a shorter period of time, the default rate would be higher. Diamond’s 180 day delinquency period before foreclosure is the longest, or one of the longest in the industry. Diamond can foreclose in 180 days, pay $1500 to take back the points, and resell them at an average price of $27,000. Transfer agents, advertising a guaranteed deed-back, can bundle 25 to 50 properties and resell them. This is known in the industry as “The Diamond effect”. It typically costs the beleaguered time share owner $5,000 to $7,000.

Meanwhile, aging baby boomer clients like me are finding they can’t or don’t want to travel any more due to illness, age, or disappointment with Diamond’s acquisition. Mr. Palmer stated in his SEC K-8 rebuttal to Ms. Morgenson’s New York Times article about Diamond’s hard sell, “I wear the fact that 60% of sales comes from existing owners as a badge of honor.” At least three disgruntled owner websites, representing thousands of owners, have been launched by existing owners, including legacy Monarch, Hawaii at Poipu, and DRIP. DRIP stands for Diamond Resorts International Protestors and was launched by over 1,000 British owners trying to get out of their contracts.

My husband and I did not know Diamond timeshare was a lifetime commitment because the Diamond contract states that points can be resold. Christine Dargon, our Diamond “counselor”, told us that Diamond has a “hardship” department that would take back our points should the need arise. After consulting Finn Law Group, a law firm specializing in timeshare relief, we learned that, according to timeshare defendants, hardship is not considered a legal defense.

Front Four Capital and ADW own large blocks of Diamond stock. In a letter to David Palmer they recommend what translates to a leveraged buyout so that they and others will earn an expected 30% rate of return. I am not against venture capitalists or CEOs earning millions a year in compensation.  David Palmer earned $19 million in two years. However, consumers should be outraged by profits generated through exploitation. At least two law suits have been filed claiming elder abuse and senior exploitation.

It sounds like the subprime mortgage people have reinvented themselves in a new timeshare twist. The Consumer Financial Protection Bureau has issued a civil investigative demand (CID) against Westgate timeshare. While I’m encouraged by the CFPB Westgate investigation, I hope the Attorney Generals of all nine states Westgate operates in will initiate their own inquires. I hope the CFPB expands the scope of their investigation to include Diamond Resorts, because many of the issues that are likely to be uncovered in the Westgate investigation are also issues at Diamond. Sadly, from an owner’s perspective, the Diamond acquisition of Gold Key and Intrawest starts the whole process over again.

 

 

 

After retiring from Edward Jones, Irene Parker worked as a CASA supervisor, writing and editing court reports on behalf of children in foster care. She is a former Ombudsman Advisory Board Member, advocates on behalf of patients in nursing homes. Irene holds an MBA from St. Louis University and completed the Certified Financial Planner Professional Education Program.   

 

 

    

 

 

 

Latest Legal Developments in The Manhattan Club Case

More developments in this important case.  I say important because even if you don't own there, there are important issues at stake here.

 

Apparently, the NYAG is once again seeking to take depositions of defendants/respondents. Defendants have asked the court to stop the depositions—same arguments as earlier made, except this time NYAG will waive negative inference from asserting the 5th amendment, thereby eliminating the whipsaw effect.

You will recall that this issue was briefed back in December/January and there was supposed to be a hearing on it but NYAG backed off when TMC withdrew its motion. AG wanted to depose the defendants. TMC said if they were deposed they would have to take the 5th amendment (I refuse to answer on the grounds it may incriminate me in the criminal case)—that is how we first learned that there, indeed, was a criminal investigation. The effect of taking the 5th amendment can be used against TMC in the civil case to prove fraud. If TMC testifies in the civil case and does not assert the 5th, then that testimony can be used against them in the criminal case (hence the whipsaw). Courts will often stay a civil action so the criminal action can go forward and defendants are not prejudiced in the civil case by taking the 5th amendment in the criminal case. It is more fair.

TMC has the better argument on that one.

NYAG may be worried that the Judge will find they haven’t done enough discovery and the court may let the individual defendants out of the case. AG may also be worried that the judge will rule in TMC’s favor on the standard of care for the injunctive relief that was recently briefed and argued and that NYAG will face a long drawn out appeal before they can take any more discovery.

 

https://iapps.courts.state.ny.us/nyscef/ViewDocument?docIndex=AtsuSZ_PLUS_7HqT6rDUtAJZroQ%3D%3D