Marriotts Face Charges of Racketeering.

Last week the Orlando Sentinel published a story that Marriott Vacation Club and First American Title Co. the trustee for Marriotts, are facing a class action lawsuit which alleges racketeering.

 

It involves their points system which they started in 2010, to replace the traditional weeks system, which is governed by real estate law. The suit filed by Anthony and Beth Lennen claim they had to pay fees associated with real estate, such as closing costs and recording fees, title policy premiums and real estate taxes.

 

They also claim they were forced to purchased title insurance. First America claim that the Lennens purchased this insurance of their own volition, they have also filed their own 27 page motion to have the case dismissed.

 

Marriotts attorney has also filed a 50 page reply to the lawsuit, and claims that the plaintiffs have misread the statutes they believe have been violated. He also states that the allegations are unfounded and the Marriott system complies fully with the law. Marriott are also seeking to have the dispute transferred to a state regulator to be reviewed, Greg Crist of the NTOA said he would welcome a review of the allegations by a state regulator.

 

The term racketeering is usually associated with organised crime, so these allegations are very serious indeed, especially as Marriott do have a reputation as one of the good guys in the timeshare industry, especially in Europe.

al-capone

Inside Timeshare’s American colleague Irene Parker wrote the following:

 

Timeshare and the Definition of Racketeering

 

October 14, 2016

By Irene Parker    

 

The Orlando Sentinel yesterday reported on the proposed class action lawsuit against Marriott charging racketeering. The charges stem from a lawsuit that began May of this year claiming Marriott charges fees associated with real estate without actually owning real estate.

The charge of racketeering is intriguing. According to Investopedia, racketeering is often associated with organized crime. The example used described a group of people slashing tires in a neighborhood only to have a second group, composed of members from the first group, sell protection.

There is a clear parallel to trends in timeshare. Timeshare used to be real estate when “fixed weeks” were sold. The trend towards a points based “currency” has led to cloudy definitions as to what a timeshare really is these days.

Timeshare contracts are perpetual, meaning they are designed to extend beyond the owner’s lifetime. Contracts in perpetuity are not in essence bad, according to timeshare attorney Mike Finn of the Finn Law Group. “Perpetuity can apply to real estate or personalty. Personalty simply means personal property – something as simple as a new shirt. A primary residence or vacation home is a perpetual contract. By definition, there’s nothing wrong with that. The problem comes about in timeshare when no secondary market exists.”

This leads us back to the definition of racketeering. There is a wide assortment of timeshare scams. The practice has become so widespread, Wyndham actually provides owners with a “Scambuster’s Hotline”.

Timeshare transfer agents charge timeshare owners seeking a way out of a timeshare contract an upfront fee offering them a form of “protection” by releasing owners from timeshare contracts. The fee often ranges from $3500 to $7000 but provides a “guaranteed deed-back” of the timeshare. Transfer agent companies often have lofty sounding names like “Redemption and Release”.

What happens to the timeshare after it is transferred out of the owner’s name? The contracts are bundled 25 to 50 and sold back to developers. Some timeshare companies offer owners voluntary surrender, but the surrender is not guaranteed so owners denied are forced into the nets of transfer agents.

In an ironic twist of fate, there are double racketeering schemes in which the deed taken back is transferred to a dummy company that disappears. Thus, the timeshare resort rightfully does not honor the transfer and the surprised owner receives an invoice for maintenance fees because the transfer did not take place. The owner is out thousands of dollars while still owning the timeshare. At least in racketeering, real protection is given. It’s a sad day when timeshare becomes less honorable than racketeering.

For the original article published in the Orlando Sentinel follow the link:

http://www.orlandosentinel.com/business/brinkmann-on-business/os-marriott-timeshare-racketeering-20161013-story.html

If you have any questions or need any information about any article published, contact Inside Timeshare and we will try to answer them.

      

 


Leave a Reply