If Developers Have Exit Options, Why Do So Many Exit Companies Exist?

It looks as if Florida HB 435 will not pass as was proposed, which is a good thing in my opinion. 

The bill covered many topics and many of them had to do with the so-called timeshare exit companies which have become a very lucrative business. By one estimate, one of these companies grossed over $50 million last year. That represents a lot of people who want out of their timeshare. 

The industry doesn’t seem to grasp the reason these companies exist to begin with, choosing instead to focus on the harm these companies are doing to the resorts, management companies and some gullible consumers. I will admit that there is some harm being done. However, by continuing to sell and upsell contracts in perpetuity and not providing viable exit strategies themselves, this is in my opinion a problem that could have been avoided in the first place. Don’t get me started on how these exit companies obtain massive owner lists to begin with. 

Mr. Ken McKelvey, who leads ARDA ROC, made the following statement:  “most of the developers I know and certainly most of the timeshare managers I know, and I managed timeshare properties for thirty years… every single resort had a dissolution policy, every single (one). There was a way to get out. You had to come to your management company, and based on what the board of directors instructed us (the management company) to do in the terms if they had to pay a fee or if they had to be current, whatever those situations were, we did not have a one that did not have a dissolution policy and a hardship policy….” 

If this is in fact true, my question is very simple:  

Why do so many exit companies exist?

I’m Fed Up and You Should Be As Well

If you’ve been paying attention over the past few days, you’ve undoubtedly seen the stories of elderly people being ahem, persuaded, to buy far more timeshare than anyone, much less elderly people, could possibly use.

There’s this story about a couple with $150,000 worth of timeshare:
https://www.yahoo.com/news/company-convinces-arizona-couple-nearly-170102072.html?.tsrc=fauxdal

And this story of an 88 year old man with $250,000 worth of timeshare:
https://www.consumeraffairs.com/amp/news/diamond-resorts-still-cant-explain-why-it-sold-250000-worth-of-timeshare-points-to-an-88-year-old-032919.html?__twitter_impression=true

I use the word “worth” as it refers to how much the developer charged them, not as it refers to the actual value of the product, which is nearly nothing as soon as the contract is signed.

Yesterday, I received word of yet another report of an older person being sold more timeshare using less than honest sales tactics:

My mother was talked into buying a timeshare at polo towers Vegas. She had a timeshare via another company in Arizona. She was notified it went bankrupt and that Diamond purchased her deed from them. They claimed she owned it but because it went bankrupt, there were no points to be used and she was on the hook for continued maintenance fees to Diamond for a timeshare she could NOT use for vacations. They further claimed said maintenance fees would be passed down to her children who would be just as responsible for paying money for a timeshare that could not be used. 

Long story shorter, they got her to sign a contract for $35,000 plus $2000 a year in maintenance fees -- which we are told are going to increase. This took place in August of 2018. 

Recently, Diamond contacted her via mail to invite her to a group meeting so owners could air their grievances and address concerns about their business. They claimed they wanted to help. When she was there, the representative she spoke with had her file and said her polo towers sales person lied to her about the points she purchased. That she wasn't a "true" silver member and was not eligible to take vacations to the places she expected to be able to go. He talked her into purchasing an additional points package for another $15,000. This happened last week. I found out the next day and went through the roof. I had her cancel the transaction via FAX (per their instruction) -- but I don't trust them. They can claim they never received the cancellation just as they can claim they never said any of the things they said to talk my mother into purchasing this property. 

How is it this company has fee reign to use lies and deception to sign their income away with such impunity? This is the very definition of theft by deceit. It is in fact a white collar crime. Where is law enforcement protecting and serving? WHERE IS JUSTICE?

These are all from the same company, which would lead any intelligent person to surmise that these are not isolated incidents, but demonstrate a clear pattern.

WHERE IS THE OVERSIGHT?  WHERE IS LAW ENFORCEMENT?  HOW LONG WILL THE DEFENSE OF “We are not responsible for any oral representations made by anyone” continue to be accepted?

When Does ‘Comprised Of’ Not Mean ‘Made Up Of’?

Merriam Webster defines ‘comprised of’ as ‘to be made up of.’  So, you’d think that as a timeshare owner, you would have certainly heard of an organization that is comprised of one million plus owners just like you. You’d be wrong. 

Welcome to the spin zone that’s timeshare. Read on. 

Chances are you’ve seen a line item on your annual maintenance fee bill of between $3 and $10, although I’ve heard from some owners $15, that is a voluntary contribution to ARDA-ROC. What is ARDA-ROC you ask, since many owners pay this fee without knowing that it’s voluntary or anything about the organization?

Here’s some information off of ARDA-ROC’s own website:

ARDA-ROC is comprised of one million-plus timeshare owners across the country who  voluntarily contribute between $3-$10 a year to advocate for local, state and federal policies that are beneficial to timeshare owners. 

Hmmm, I hear you saying. That’s pretty cool that more than 1 million timeshare owners comprise the organization. You had no idea that so many owners were involved in timeshare advocacy. Of course you didn’t, because that’s not really how the organization works. It seems that the phrase ‘comprised of one-million plus timeshare owners...’ doesn’t mean that ANY owners are involved in ROC’s activities. 

Again, from their own website is a list of companies that participate:

ARDA-ROC Participants 

ARDA wishes to thank the following companies and their owners for participating in ARDA-ROC and/or ARDA-ROC PAC. 

Bluegreen Corporation	Breckenridge Grand Vacations	Carriage House
Christie Lodge Owners Association	Daily Management, Inc.	Defender Resorts, Inc.
Diamond Resorts	Eastern Slope Inn Resort	East West Destination Hospitality
Exploria Resorts	Festiva Development Group	GoodManagement, Inc.
Harbor Ridge Condominium Association	Hilton Grand Vacations Company	Holiday Inn Club Vacations
Hyatt Vacation Ownership, Inc	Kenoyer Real Estate Corp.	Las Olas Resorts, Inc.
Legacy Vacation Club	Marriott Vacations Worldwide Corporation	Royal Aloha Vacation Club
Royal Islander Club	Royal Suites IOA	Scottsdale Camelback Resort.
Silver Lake Resort, Ltd.	SPM Resorts, Inc.	Stoneridge Resort.
Trapp Family Housing Cooperative, Inc.	Trapp Family Housing Cooperative Two, Inc.	Vacation Resorts International
Vistana Signature Experiences	VSA Resorts	Welk Resorts
Wyndham Destinations

Wait, I hear you say. You own a timeshare at one of these timeshares and have never been told anything about ROC, never been asked if you’d like to participate in what they do or been kept up to date on what they’re doing?  Imagine that. 

Surely, there must be an average owners, or better yet an owners’ advocate sitting on ROC’s Board that is standing up for owners’ rights. Wrong. Here, again directly from their own website is a listing of their Board Members:

ARDA-ROC Board

Ken McKelvey CPA, RRP, ARDA-ROC Chairman, Defender Resorts, Inc.

John Albert, Marriott Vacations Worldwide

Travis Bary, RRP, Capital Vacations 

 Ada Grzywna, Bluegreen Vacations

Janice Feirstein RRP, Daily Management, Inc.

Jon Fredericks, RRP, Welk Resorts

Don Harrill RRP, Holiday Inn Club Vacations 

Neil Hutchinson RRP, Hilton Grand Vacations Company 

William Ingersoll RRP, Holland & Knight 

 Robert Miller, RRP, Marriott Vacations Worldwide

 Richard Muller, RRP, VRI Resorts

 Ron Naves, Welk Resorts

 Tom Nelson, Holiday Inn Club Vacations

 Howard Nusbaum RRP, ARDA

 Geoff Richards, Wyndham Destinations

 Lisa Siegert-Free RRP, Christie Lodge

 Robert Spottswood, Spottswood Companies, Inc.

 Sverre Thomassen, Marriott Desert Springs Villas

  Kimberly Tramontana RRP, Breckenridge Grand Vacations

 Chris Van Ruiten RRP, Comerica Securities, Inc.   

  Mark Wang, Hilton Grand Vacations

  Robert Webb Esq., RRP, Baker & Hostetler 

  Stephen Weisz, RRP, Marriott Vacations Worldwide

No owners. No owners groups. No owner advocates. Just timeshare industry people. Taking the low number, ARDA-ROC obtains $3,000,000 from voluntary owner contributions annually. It’s probably closer to $5,000,000. 

And what does ROC do with these funds?  Recently they had one of their lobbyists in Arizona working hard against legislation that would give more protections to owners and prospective owners. They also were hard at work in Florida last week, petitioning legislators to mandate that a consumer be given 24 hours to look over and review a contract from any company or individual who claimed to be able to get someone out of a timeshare. Which sounds good, if you overlook the fact that they’re unwilling to mandate that same review period to anyone purchasing a timeshare. 

Now, I’m not saying that ROC hasn’t done owners any good. What I am saying is that consumers and legislators alike had better start paying more attention to anything and everything timeshare related. 

Imagine if 1,000,000 plus owners stopped voluntarily contributing unless/until they knew for certain their voices were being heard. 

Here’s the first thing owners should do:  Go back and review your last 5 years of maintenance fees and see how much you’ve unknowingly ‘voluntarily’ contributed to ROC. Then call both your resort and ARDA-ROC and ask why you’re not being kept up to date on what is going on with your contributions. 

When Is A Timeshare a “401-V”?

I’ve previously written about the pending legislation in both Florida and Arizona. In the case of the pending legislation in Arizona, I’ve quoted Don Issacson who is a lobbyist for ARDA as saying, “The state should not step in to protect people who didn’t bother to understand the nature of the deal.”  He continued, “You are buying real estate, you are buying it as an adult. You read the documents and unless there is fraud, you are bound to that particular purchase.”

I’d love to hear what Mr Issacson has to say about this encounter with a sales agent:

“Sales agent Eric told us that we were buying points at a low rate, less than $4 per point, and that “at this price the point value can only go up.” We could sell some points at a profit and keep the original base points for travel. Ultimately getting our entire purchase for free, he called it a “401-V”.  He said he would lock the price for one year in case we decided to get more points later to utilize our “401-V”. We have since learned REDACTED DEVELOPER NAME points are virtually worthless on resale.

The forms were long and extensive. We asked for time to review the documents but were pressured into signing “today” or not get the price per point offered.  After seven hours, my husband got upset and left. Eric followed us to our room insisting that we sign. We thought that Eric must be telling the truth, because if he wasn’t, there would be some sort of regulation. We incorrectly put our faith in Eric.”

This is an example of why consumers need more protection from unscrupulous sales personnel 

If you live in, own timeshare in, or just feel it’s important as I do, contact the legislators in those states. A call to Mr Issacson might be in order as well. 

Arizona Certainly Is Paying Attention

This is HUGE news. 

Things are getting quite interesting in Arizona, which while not quite the hotbed of timeshare activity that Florida is, is still an important state. 

House Bill 2639 which has already passed  UNANIMOUSLY out of the House Committee on Regulatory Affairs contains some major points. Among them:

>It would make it possible for people who buy a timeshare and keep it for at least ten years to simply walk away from it if they no longer want it

>Doubling the current rescission period from 7 days to 14 days

> Another quasi-rescission period that would a secondary ‘rescission’ period which would allow buyers to opt out within 14 days of actually using their timeshare and be entitled to 90% of their money back (Someone has obviously read my blog about a “timeshare restocking fee”

You can read the entire Bill here:

https://legiscan.com/AZ/text/HB2639/id/1898414

ARDA; the organization that represents the timeshare industry, is very much against the bill, or at least large portions of it to no one’s surprise. Don Isaacson, one of ARDA’s lobbyists was quoted in an article by the Arizona Capitol Times which you can read in it’s entirety here https://azcapitoltimes.com/news/2019/02/19/timeshare-bill-passes-out-of-house-committee/

“This bill goes too far. No state allows someone to simply give back a unit after 10 years.”

More telling and insane he said “The 

state should not step in to protect people who didn’t bother to understand the nature of the deal.”  He continued, “You are buying real estate, you are buying it as an adult. You read the documents and unless there is fraud, you are bound to that particular purchase.”

BUYING REAL ESTATE?  READ THE DOCUMENTS?  Seriously? The vast majority of timeshares being sold by developers these days have little to no relation to real  estate, they’re simply an allocation of points that allow the purchaser, and the general public alike, the right to access an oftentimes Byzantine reservation system. No one is given the full set of documents until after they’ve signed on the dotted line. I wonder if Mr Isaacson has ever been on the receiving end of a timeshare sales pitch. I’m kidding of course, I don’t wonder at all. 

In another article, Mr Issacson was quoted as saying, “The state should not step in to protect people who didn’t bother to understand the nature of the deal."  I couldn’t make this up if I tried. 

If you live in Arizona, or quite frankly own timeshare in Arizona, I urge you to contact one or more of these legislators and let them know your thoughts on the subject. 

Bolick, Shawnna  (602) 926-3244 SBOLICK@azleg.gov         (Bill sponsor)

Biasiucci, Leo (602) 926-3018 LBIASIUCCI@azleg.gov

Blackman, Walter (602) 926-3043 WBLACKMAN@azleg.gov

Carroll, Frank (602) 926-3249 FCARROLL@azleg.gov

Dunn, Timothy M. (602) 926-4139 TDUNN@azleg.gov

Fillmore, John (602) 926-3187 JFILLMORE@azleg.gov

Finchem, Mark (602) 926-3122 MFINCHEM@azleg.gov

Grantham, Travis (602) 926-4868 TGRANTHAM@azleg.gov   (Committee Chair)

Kavanagh, John (602) 926-5170 JKAVANAGH@azleg.gov

Payne, Kevin (602) 926-4854 KPAYNE@azleg.gov

Roberts, Bret (602) 926-3158 BROBERTS@azleg.gov

Toma, Ben (602) 926-3298 BTOMA@azleg.gov

Weninger, Jeff (602) 926-3092 JWENINGER@azleg.gov

I’m glad that someone in Arizona at least is paying here. Consumers have gotten the bad end of a deal for too long. It’s about time to increase consumers’ rights and bring some transparency to timeshare. 

Something’s Fishy With This Broker’s Fiduciary Responsibilty

Look at these listings, the first page of many, that I found on a timeshare broker’s site for Wyndham points at their Bonnet Creek property. 

POINTS    PRICE

400,000  $48,500 

154,000   $1,900

126,000    $17,000

105,000    $11,000

189,000     $21,000

 64,000      $12,000

 84,000       $10,352

320,000     $21,900

 84,000      $152,258

126,000      $8,500

105,000      $10,500

168,000      $11,281

105,000      $8,600

128,000      $15,832

 84,000       $12,277.70

511,000       $60,000

525,000      $28,000

 84,000        $12,507

166,000       $12,130

I don’t know about you, but these listings make absolutely no sense and send a clear warning sign that something is amiss. All of these listings are for the same resort and all are for points. Points, for those of you unfamiliar with timeshare, are the ‘currency’ whereby an owner has access to a reservation system. You don’t actually own much of anything. So while no one house or condo is exactly the same-difference with lot size, view, layout, floor of building, etc. , points at a resort are all exactly the same. 

Now how is it that in this broker’s exact words from their own website; “15 years of experience and an outstanding reputation in the timeshare industry, our licensed real estate agents are vacation ownership experts and we promote timeshare listings using extensive digital marketing

that provides exposure to prospective buyers from across the globe” they can charge such drastically different prices for the exact same product while all the while, operating with the seller’s fiduciary interests at heart?

One of the reasons I tell people to work with a broker when selling their timeshare is that in theory, a broker will help owners determine a sensible price to list their timeshare for in order to maximize their chances of a sale. 

If these insane listings aren’t bad enough, a quick glance at Sharket.com will clearly show that the average selling price of a timeshare at Wyndham Bonnet Creek dating back from 2012 is $1,000 based on more than 1,000 verified sales. 

Something is fishy here and this broker has some questions they need to answer. 

There Aren’t Enough Cliches To Describe These Proposed Laws

The people who run the very large timeshare industry in Florida have proposed some significant changes to the existing laws as they pertain to the so-called timeshare exit companies. 

You can read the entire proposed bill here:  http://m.flsenate.gov/session/bill/2019/435/billtext/filed/pdf

Now while I agree that consumers are being ripped off at an alarming rate by the vast majority of these firms, some, if not most of the proposals being put forth are laughable. If this isn’t a case of the pot calling the kettle black, I don’t know what is. 

While these proposed rules and oversights directed at timeshare exit companies, are well intended and do provide some protection for consumers, I feel strongly that they go above and beyond current rules and oversights in place for the timeshare industry. If the legislature chooses to implement these rules, I ask that similar rules be implemented for the timeshare developers engaged in the sale of timeshare interests, whether weeks or points. 

In particular I find that if the consumer is to be provided with a copy of the agreement to review at least 1 business day before the purchaser is to sign the agreement (Lines 316-318), the same methodology must be implemented by the developer attempting to sell a timeshare interest. It’s important to remember that the current paradigm of a “90 minute sales presentation after which the consumer is forced to make a purchasing decision or forfeit their right to make a decision in the future without benefit of seeing, much less reading the contract, POS, etc.” was instituted 40 years ago by the timeshare industry and can be easily changed if they wanted to change it. 

Additionally I find that if exit companies are to perform “random recording and testing of the oral representations made by employees or independent contractors

engaged in sales or other customer service functions, if the provider uses telemarketing” the timeshare developer should do the same as a way to protect the interests of the consumer. 

If a consumer is to be informed about options before dealing with an exit company, then should timeshare developers not give out similar options to consumers, such as AirBnB, etc?  At the very least, the timeshare seller should be required to make it clear that they are working in the interests of the developer, such as a real estate agent must disclose they are a seller’s agent. 

These are just a few of what I consider salient points of this proposed legislation that deserve a very careful review. As I said, at first glance it seems both innocuous and a boom to consumers. Read it again. 

Of course, none of these proposed rules and oversights would be necessary for timeshare exit companies if in fact the timeshare developers themselves offered viable alternatives for consumers who for one reason or another, do not want their timeshare interest any longer. The timeshare industry has done everything in its power to suppress a secondary market, thereby opening the doors for these exit companies to thrive as consumers feel they have no other choice. 

If you feel strongly about this, as I do, here’s who you should contact

Senator Travis Hutson

http://www.flsenate.gov/Senators/s7

Representative Mike LaRosa

https://www.myfloridahouse.gov/Sections/Representatives/details.aspx?MemberId=4546

Representative Wyman Duggan

https://public.lobbytools.com/legislators/716