US Real Estate Regulations Update.

Further to the article highlighting The Property Man Bob Massi, Irene Parker informed Inside Timeshare that all States except one define VOI (Vacation Ownership Interests, points) as real estate. However Diamond‘s own contracts state (although buried within) insist that the membership is not real estate. The Diamond annual report also states they are not subject to real estate laws.

 

All this is very confusing to say the least, even Irene is confused and she lives in the US! So she kindly put me in touch with one of her contacts who was once a sales agent ILX and the after the acquisition and Diamond agent. Mark is a licenced broker, for 4 years he has been challenging the ADRE (Arizona Department of Real Estate) regarding “fraud” in the sales process of Diamond products. He has kindly sent the following information, which I have produced below, the reason is he explains it better than I could, after all I did say it was confusing. The following is his story:

 

Key to abbreviations:: ADRE Arizona Department of Real Estate. VOI Vacation Ownership Interest: AZ AG Arizona Attorney General.

 

In Arizona any sale of a property interest within the state requires licensing of ALL sales agents. All transactions are to be reviewed by the designated broker or their licensed assistant. The designated broker is liable for all transactions, and conduct of agents. The conduct of all agents is regulated by statute, Diamond has a designated broker in Sedona for all their properties.  


ARTICLE 11. PROFESSIONAL CONDUCT
R4-28-1101.
Duties to Client
A.
A licensee owes a fiduciary duty to the client and shall protect and promote the client’s interests. The licensee shall also deal fairly with all other parties to a transaction.
B.
A licensee participating in a real estate transaction shall disclose in writing to all other parties any information the licensee possesses that materially or adversely affects the consideration to be paid by any party to the transaction

While Diamond trains (requires) its sales agents to commit fraud, there is a clause in the brokers manual (which is not disclosed by broker) which states that the agent shall indemnify Diamond in the event of ANY action is taken against the company for misrepresentation, to the extent that the agent will even cover Diamond’s legal fees. I brought up the fact that the broker did not disclose this at the time he required me to sign a receipt for his manual, agreeing I understood and would abide by the terms however ADRE was not interested.

Most RE development within the state requires that all buyers receive what is called a public report It is  viewed by ADRE as a disclosure document that carries sufficient importance to the buyer, that pre- approval of its content by ADRE is required before sales can commence. Diamond and other companies selling VOI’s in the state are required to give buyers a public report.

It is important to note that it is a somewhat generic document and does not include material information regarding how a timeshare interest is structured, no explanation of the difference between a deeded interest and a VOI, or mention of relevant statue regarding sales and administration of these systems. This has left the door open for pirates like Diamond to circumvent disclosure requirements mandated by licensing, while openly committing fraud in the sales process. By alerting buyers to the existence of their RE license Diamond agents falsely present to buyers that they are being protected by RE statute.

In general real estate ALL sales must include a sellers disclosure document that requires all known material facts affecting the value of real estate being sold be disclosed by the seller. It is known as a SPUDS and intentional withholding of material information is grounds for civil litigation and other administrative penalties.. As I have been arguing repeatedly with the AZ AG and ADRE, since no SPUDS is given in connection with a timeshare, the sales presentation constitutes an oral SPUDS with appurtenant disclosure obligations.

During my 6 month tenure with Diamond I filed multiple administrative complaints against Diamond’s designated broker for lack of mandatory supervision. ADRE investigated those complaints and would not have done so if Diamond’s product was not considered real estate and subject to applicable statute. I was required to maintain an active license to sell Diamond’s poisoned pill. I have found in public records that Diamond’s broker entered into a consent order, and paid a fine for allowing an agent to continue selling VOI product after his license expired. ADRE could not have taken these administrative enforcement actions without Diamond’s VOI being legally defined as a real estate product in AZ.

This was the basis of my argument to AZ AG and ADRE that institutionalized fraud was being committed on the public by lack of enforcement pertaining to regulation and the insistence of continuing to classify VOI’s as a real estate holding when in fact Diamond’s own contracts states to the contrary and insists in clear terms (buried in an obscure place) that the membership is not a real estate interest. Clear as mud, that’s how they like here in sunny AZ.

 

As you can see, things are not as clear cut as we thought, Europe is not as big a minefield as the US. But this could be a very big problem for those in Europe who did purchase in the US, especially as they would not be aware of the regulations there.

 

As more information comes in, Inside Timeshare will publish it here, thanks to Mark and Irene for their input into these articles, it has helped to clarify some important points.

 

If you have any questions or information regarding this or any other article, Inside Timeshare would like to hear from you.

More News From Across The Pond: Bob Massi The Property Man

Following on from some of the articles highlighting the problems timeshare owners have in the United States, Irene Parker sent Inside Timeshare the following link:

 

http://www.foxnews.com/leisure/2016/06/09/tired-your-timeshare-heres-how-to-unload-it-without-losing-money/

 

Bob Massi is a Las Vegas attorney known as The Property Man hosting a show aired by Fox News, who is a very determined advocate of the rights of consumers. In one case Irene points out a couple he helped resolve the issue of their bankruptcy, it took them five years to attempt to buy a house, then they found that the bank had not foreclosed in the first place.

 

He has also highlighted the problems in the timeshare world and as you can see from the video, gives the consumer some sound advice. He points out that unlike real estate, timeshare does not appreciate in value, that many owners if they are able to sell, only recoup a fraction of their original investment.

fox-news

So this is not just a problem we have in Europe, it affects timeshare owners in the US. In his article, he points out how to sell the timeshare or how to just get out, in the interviews with licenced resale brokers they explain how to safeguard yourself from the “scam artists” that promise the earth and deliver nothing. He also explains how one particular scam works, this is where you have listed your timeshare for sale on a marketing website, the next thing you know, a bogus company is in contact with you saying they have a buyer. (Think of the corporate buyer pitch or even the Russian market one, we have many buyers waiting!). Now in order to conclude this “deal” a closing fee is required upfront, guess what? You never hear from them again.

 

According to the video, timeshare is in the top 10 of scams in the US, this is probably the same for Europe. He also interviews the Florida Attorney General Pam Bondi, in this she states they worked with the timeshare industry to enact laws to curb this abuse. She points out that since the laws were put into place they have closed down numerous firms, around 41, in many cases they have also secured convictions.

 

In the US, as we have highlighted before timeshare is regulated by real estate laws, sales staff must be licensed, if not they can’t sell the product. For those in Europe who own timeshares across the pond, the problem of how to get out is even more difficult, mainly because of the differing state laws and the distance involved. There are some companies in Europe who can help to get out of the timeshare, but if you are looking to sell, this article will help. You could also contact The Licensed Timeshare Resale Broker Association, (see link at bottom of the page), it consists of 64 members and works completely within the legal framework, all members must adhere to regulations and the codes of conduct set out by the association. But remember, as stated in the video many timeshares sell for only 10% of the original purchase price, contrary to what you were told at the initial presentation.

ltrba

Irene and her husband have also recorded an interview with Bob Massi, it is hoped that this will be broadcast in the Autumn (fall in American), when it is we will publish the links here. We also look forward to more articles in The Street by Irene, including one she is working on now.

The following link is an article about Bob Massi, it gives a very good insight into the man himself, the type of work he engages in and what it means to him, Hope you enjoy it.

 

http://www.reviewjournal.com/business/longtime-lawyer-sees-himself-advocate-underdogs

 

If you require any further information about this article, or any timeshare matter, contact Inside Timeshare. If we don´t know the answer we will find out for you.

More From Across The Pond.

As we all know trying to sell your timeshare or as they like to call it today “holiday ownership”, is a bit of a minefield. Who can you trust?

 

Our friends from across the Atlantic have the same problems, you think you have got rid of your timeshare, then suddenly you receive the annual maintenance bill. The resort does not recognise the transfer. This happened to many people who ended up buying into Designer Way Vacation Club several years ago.

 

With this particular scheme, you “sold” your timeshare to DWVC but had to pay many thousands of pounds to become a member of their club. The perks, well, you could stay in the same resorts for a fraction of the cost, discounts on flights, and off course no more maintenance bills. Oh yes, I almost forgot, you also were given a “cashback” certificate, this was for the value of your timeshare plus a bit extra for the cost of your membership. Then after registering it (which was a nightmare task), you had to wait around 5 years for it to mature. If you were lucky you may have got a few quid back, that’s if you claimed correctly.

 

Then after finding that the so called “discounts” were not what you were told at the presentation, (actually costing more), you suddenly received a maintenance bill for several years arrears. All this with the threats of legal action by a debt collecting agency. DWVC did not transfer your timeshare, or the resort did not recognise it.

 

This has also happened to one old lady who owned a MacDonalds timeshare, Yes, I am referring to Mrs B. Her timeshare has been sold for 1euro, (she actually paid the company around £7,500 to relinquish, not sell it). MacDonalds is now chasing for maintenance arrears because they do not recognise the transfer.

for_sale

Following is an article written by Tom Tubbs, an advisory member of The National Timeshare Owners Association, the American equivalent of TATOC. In this article he clearly shows how some companies in the US operate and how it affects the resorts and owners. This was sent to me by my American colleague Irene Parker.

 

By Tom Tubbs

Island Consulting Realty – NTOA Advisory Board Member

 

We’ve all heard the radio commercials, received the postcards in the mail, seen the TV ads, seen the web sites:

 

“Get out of your timeshare now! Call us today. Guaranteed or your money back!”

 

“You own a timeshare you can’t sell? We guarantee to get you out”.

 

“Dear friends. This is ‘Mr/Ms. Celebrity’. I trust these people”.

 

Now, think back. Remember the similar ads we heard from different companies years ago? Where are those companies now? What happened to them? Are these just new companies who rose up to fill in the gap? Hmmm…..

 

So, how is it that you could sell your timeshare but continue to be on the hook for the maintenance fees? What I’m going to share with you is a real story that is taking place right this minute. The names are changed, obviously. The way it’s being handled is not brand new, but relatively so and it’s happening more and more and more. Read the story and make sure you don’t fall victim to this.

 

So we’ve told you in the past about “transfer companies”. You pay them $3500 or so and they take your time share from you and they promise that your days of owning a timeshare and paying the maintenance fees are done. Many of these are perfectly good timeshares that could be sold and money put into the pockets of the owner, but if you’re a reader of this newsletter you know the stories the transfer companies tell you to convince you to give up your money. These companies for the most part have no real estate license so that they don’t have to worry about a state agency looking over their shoulder. Many of them come and go quickly…..with your money.

 

But there’s a new sheriff in town. A company called Timeshare Transfer Registry (real name) monitors timeshare transfers. They are especially suspicious about transfers going into the name of an LLC or Trust. Suspicions go up when they see 10, 20, 50, 100 or more timeshares being transferred into the same name. Resorts can register with TTR to try to protect themselves from being deceived by the transfer company.

 

So here’s what happened. “ABC Resort” (names are changed now) gets a copy of a recorded deed showing one of their owners sold their timeshare to “Whoopie Doo, LLC”. The resort contacted Timeshare Transfer Registry and learned that Whoopie Doo owns a LOT of timeshares. It’s looking pretty obvious that the LLC will never pay the resort a maintenance fee and the resort at some point will have to foreclose (that’s what happened to your timeshare). You don’t care, right? You’ve sold your timeshare and the deed is out of your name, right? Wrong……to an extent. You’re definitely going to care. Here’s why.

 

The resort notified the LLC that they noticed the LLC has purchased a LOT of timeshares and it looks like an obvious case of a transfer company about to dump the timeshares on the resort; costing the resort a ton of money. The resort refused to acknowledge the transfer.

 

In an interesting twist, the LLC contacted the resort and swore up and down they were not the same “Whoopie Doo, LLC” that owns so many time shares. Seriously? Really? The resort contacted National Timeshare Owners Association (NTOA, http://www.NationalTimeshareOwnersAssoc.com/) asking for advice. (Now in the interest of full disclosure I want to mention I am on the advisory board of NTOA. Before I became a member of the board, however, I was singing the praises about this organization for a long time. Becoming a member [talking about you, dear reader] is not a bad thing. You know I would never steer you wrong). I was asked my opinion about this. I advised that the resort tell Whoopie Doo to go pound sand. Whoopie will probably threaten legal action but the resort should stand firm. The last thing con artists like Whoopie Doo want to do (hey! That rhymes!) is walk into a court of law.

 

So now here is an interesting situation. You’ve paid a company $3500 to take your time share. You have signed the deed over to this LLC. You actually no longer own the timeshare, this is technically true. But the resort is refusing to acknowledge the transfer which means you are still on their books as the owner and you’re going to get a maintenance fee bill each year! Congratulations! Now, you won’t find this out until you get your bill next year. By that time, good luck on finding those nice folks who took your $3500. You now no longer own a timeshare and you’re on the hook for the yearly maintenance fees.

 

“Wait”, you say, “How can the resort refuse to acknowledge a lawfully recorded transfer of a deed”. (we heard you thinking this). Well, there’s this little thing called fraud. It was a fraudulent transfer designed to make money by bringing harm to the resort. (As a side note: Some resort who have been burned by this are now suing not only the folks behind the LLC but also the original owner [that would be……you] claiming fraud).

 

So how do you protect yourself? First, if you find yourself in a situation where you want to sell your timeshare, call us. It’s what we’ve done for folks for the past 30 years and we offer different programs depending on what you have and your particular situation. There’s not many folks we can’t help. And for the few we can’t help, we can refer you to the right person who can or offer free advice on what to do. Secondly, if you’re bound and determined that you trust that famous celebrity or the nice person across the table from you who wants you to pay them a lot of money, ask them for a copy of their real estate license. They should offer no excuses, no “this doesn’t apply to us” stories; they either have one or they don’t. If they don’t, well……..I’d hate to be writing a story about your situation in an up-coming newsletter.

 

At least in the US there is a company which tries to ensure this does not happen, The Timeshare Transfer Registry, but even with this in place the scam still goes on, not only losing thousands for the owners but also for the resorts.

 

So what can you do about not getting caught, unfortunately there is no straight answer. All you can really do is check the company and check again, ask your resort do they recognise the company you are dealing with. If you are undertaking a private sale, again check with your resort on how the transfer is done legally. Once the transfer is complete, again check with your timeshare company or resort that you are no longer registered as the owner and liable for maintenance.

 

The biggest problem is actually finding someone who wants to buy it in the first place, just look on ebay! There are alternatives to trying to sell, some resorts will take them back, for those that do not, then there is a legal process of relinquishment. Yes this will cost, the amount again depends on the company, but beware, as Mrs B found out she paid for a relinquishment but ended up with a transfer of ownership to another person and this is not recognised by the resort.

 

If you have any questions about this article or any other timeshare matter, Inside Timeshare is here to help. Contact through the comments section and will find the answer or point you in the right direction.