Welcome to the start of another week with Inside Timeshare and as you can see from the title it begins with some news that has amazed everyone. We all know the problems timeshare companies are facing in the Spanish Courts, yet, many continue to cause as much delay to the final outcome as possible. For some reason, for which we have yet to find an answer, they are really just delaying the inevitable, we have consistently published the decisions of the incessant appeals to the High Courts and the rush of Supreme Court Rulings, the outcome is always the same!
Most cases against Diamond are centered on the Island of Tenerife, which as we know from the past was a hotbed of timeshare sales activity, this case is one of those fairly rare cases to be heard in Fuengirola, Malaga. We do know there are many cases being heard involving Diamond in that region’s courts, we have published enough news items on the legal wranglings over “Jurisdiction”.
All of these, we can only say “frivolous” moves, have caused significant delays to the clients and their long wait for conclusion.
So the word “SHOCKED” in our title will come as no surprise with the latest news.
Usually, there is one hell of a fight to get the payment, again we have seen this with other timeshare companies as well, most notably Anfi, only one springs to mind who complies voluntarily, Marriott.
Then in a written judgement from the court on 8 September 2021, in which the relevant parties have been duly informed, the court formally ordered the payment of the awarded funds. The PDF below is the Spanish version with an English translation between paragraphs.
Usually, when the original judgements are issued, the client’s lawyers activate the “Provisional Execution of Sentence” order. This is a procedure that begins the legal seizure of the funds by the court. Sometimes this can be a rather lengthy process and has the potential to cost the timeshare company considerable financial penalties. We have seen one High Court penalise one transgressor over €100,000 more than the client originally paid for the timeshare.
Within hours of the order being issued and made public, the court announced that the funds had been credited to the court’s account before an embargo could be fully enforced. So it would appear that the “Provisional Execution” order had the desired effect, but, Inside Timeshare has to ask, could it also be a result of pressure from Hilton to Diamond to desist in their delaying tactics and play ball?
Hilton Grand Vacations paid $1.4 Billion in order to purchase Diamond Resorts, this news was officially announced in March 2021, and it did create quite a stir. Speculation was rife as to how it would affect Diamond members the world over, concerns were also raised by members of HGV.
No one knew how this would all pan out, especially the lawyers working on legal cases in Spain.
The completion of the acquisition of Diamond Resorts was announced on 2 August 2021, so it is quite feasible that the Hilton buyout has influenced at least Diamond Resorts in Europe. It is very much hoped that it will mean a faster road to a conclusion for the clients. After all, as Hilton’s Grand Vacation Club Inc is a public company listed on the New York Stock Exchange, this was following a spin-off from Hilton on 4 January 2017. This means just as we have seen with Marriott, they are responsible to their shareholders.
This case was presented on behalf of an English client by Canarian Legal Alliance, as we have come to expect from their team of lawyers, they have worked in the best interests of the client ensuring that all legal possibilities are covered.
Welcome to this week’s edition of Letter from America, this week Irene Parker answers a question asked by many consumers when it comes down to loans/mortgages for the purchase of timeshare. This is very much a problem for our US readers as in Europe and especially in the UK all loan agreements are considered personal loans to purchase a product, any default on the loan agreement is a civil matter and is dealt with by the County Courts. The courts can order the repayment or send in the bailiffs to seize personal property to the value of the loan. The timeshare will not be seized as the loan is not collateralised by the timeshare, after all, it is worthless.
There are not many figures available on County Court Judgements made for defaults on these loans, mainly because they are listed as personal debts not attached to anything but a debt to the lender. For instance, you may have taken out a loan for home improvements, this is treated exactly the same as a loan for timeshare. It should also be pointed out that a County Court Judgement commonly known as a CCJ destroys any credit rating and will prevent you from getting any further finance. Now, considering the average age of timeshare purchasers, they are of a generation that will pay off these defaults as a debt is a debt and to receive a CCJ is out of the question. It should also be pointed out that even if consumers receive a CCJ, they are unlikely to advertise the fact on these timeshare forums, after all, it could be very embarrassing.
Is a Timeshare Foreclosure an Installment Loan Foreclosure or a Mortgage Foreclosure?
Is a Timeshare Foreclosure Considered Mortgage Foreclosure?
On the credit report yes, but not with mortgage lenders: Per HUD mortgage lending guidelines, a timeshare is not treated as a regular foreclosure and is treated as consumer debt.
The U.S. Department of Housing and Urban Development (HUD), the parent of FHA) classifies timeshare mortgages as installment loans and not real estate loans.
By Irene Parker
July 23, 2021
Over the past year, there have been six disturbing reports that indicate timeshare developers are becoming more aggressive in pursuing members who default on loans. If the reports listed below obtained from credible sources are accurate, timeshare buyers should NEVER finance a timeshare, and timeshare attorneys will be provided substantial job security. If you get sued, you need an attorney. There is nothing to prevent a timeshare company from suing a member, but it is more difficult to collect on a timeshare judgment as the loan is not collateralized with anything but the timeshare.
Last week on TIMESHARE TALKSJessica Burke of Virginia Beach Timeshare Rentals discussed the benefits of renting timeshares. Renting avoids the initial outlay, and more importantly, gives the consumer time to evaluate different timeshares so as to make an informed decision as to which timeshare might be right for their family. Host John Raymond is a licensed timeshare broker and founder of Resort Reseller. Timeshares can be purchased on the secondary market for a fraction of the cost.
At a 2019 Florida legislative workshop I attended, Mr. McKelvey testified:
“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 (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 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….”
Timeshare members donate $5 to $10 per contract to ARDA-ROC in mostly “opt-out” donations. These donations are not as voluntary as they sound. When I asked that the $7 not be charged to my credit card along with my maintenance fees, it was charged anyway. When I called to ask that the $7 be removed, I was told they had to fill out an internal form to do so. That was back in January. Another member recently reported they had to call three times to have the $7 removed. Collectively, ARDA-ROC raises approximately $5 million a year from members.
Following are five additional disturbing reports:
One developer’s contract used to specifically state that they do not pursue summary judgments. That language has been removed.
Eric Olsen, an attorney of 42 years, was quoted in Kiplinger, to the ire of timeshare developers, when asked what happens when someone stops paying: “I ran this often-asked question by Salem, Ore.-based attorney Eric Olsen, founder of HELPS, a national nonprofit law firm that helps lower-income seniors with debt they can’t afford to pay. Olsen concluded our interview by urging readers to, “Consider walking away from the timeshare, as they generally have no value. Stop paying and ignore their communications. It will eventually get foreclosed and owing any deficiency is highly unlikely.” Kiplinger, April 26, 2021
Westgate’s VP of Mortgage Services stated in recent court documents that Westgate “probably” has a 30% default rate. Westgate’s lenders can’t be happy with that high default rate. Other developers have default rates that exceed 20%.
Hilton Grand Vacations and Orange Lake/Holiday Inn have sued members defaulting on loans, according to one exit provider.
Another source reported an upsurge in attorney hiring.
What does this mean to timeshare members and owners?
According to HomeGuidesSF:
The company may sue you in civil court to obtain a judgment. If the judge issues a judgment against you, the management company may garnish your wages or levy your bank account to get the money you owe.
Deeded timeshare owners face a different dilemma. If you stop paying on your timeshare loan, you face foreclosure. Foreclosure is the process whereby the lender files to take possession of the property and sell it at auction to recover the money you owe. There are two main types of foreclosure: judicial and non-judicial foreclosure. In a judicial foreclosure, the lender files a foreclosure lawsuit and takes you to court. The judge may issue a deficiency judgment for the remaining balance due after the auction. A non-judicial foreclosure is basically a paperwork shuffle. Your contract authorizes the trustee to sell the timeshare in the event you stop paying on it. You receive the official Notice of Default and the Notice of Sale. In California, the majority of foreclosures are non-judicial foreclosures where the lender cannot receive a deficiency judgment after the sale of the property.
Yahoo Financereporter Abigail Fisher recommends timeshare stocks because consumers are tricked into signing contracts they can’t get out of:
Best Stocks to Buy According to Hedge Funds
We find evil companies to be a very rewarding hunting ground to uncover long-term stock winners. In our opinion companies like Philip Morris (PM), Facebook (FB), Apple Inc. (AAPL), Alphabet (GOOGLE) are evil companies that delivered 1000% or more gains to their investors.
In this article we are going to look at another set of evil companies that use high pressure sales tactics to trick consumers into signing complex long-term contracts that they don’t understand: timeshare marketing companies. Check out this Reddit post where the user is asking several questions about Wyndham timeshare cancellation. This person was able to cancel and receive a full refund, but many consumers don’t cancel within the 7-day or 10-day window specified in their contracts.
How would this reporter feel if the buyer tricked, was her grandmother? Tiffany’s parents were kept for 11 hours, their IDs withheld. They lost their two deeds they had since 1998, and $34,000. They were told that if they didn’t convert their deed to points, maintenance fees would increase from their current fees of $2,000 to $6,000. The transaction resulted in maintenance fees of $6,000 which they could not afford. Tiffany’s interview:
Many timeshare members and owners, who report unfair or deceptive sales and marketing practices, are senior citizens in their 60s, 70s, some in their 80s and 90s. They have maintained lifelong high credit scores, but are faced with little choice but to default on a timeshare loan if the resort dismisses their complaint because they signed a contract. There is little to no secondary market. Coupled with interest rates ranging from 12% to 20% (higher if credit card financing), a timeshare can become a financial nightmare. About a third of those reaching out are younger. The youngest was 19 and pregnant when she signed a perpetual timeshare contract at midnight – after a six-hour presentation.
Timeshare members can negotiate directly with their resort to resolve a dispute, but expect to be challenged with:
You signed a contract,
Your allegations are unsubstantiated,
We are not responsible for what our sales agents say,
You didn’t question this on the recorded closing (because you believed the sales agent or were coached on what to say or not say).
How can this posturing and ongoing war between developers and those providing exit services be healthy for the timeshare industry?
People, members of the media, and even the Federal Trade Commission have started addressing why thousands of members reach seeking release from an unwanted timeshare. The FTC lists Timeshare Sales at #7 on their current Top Ten Scam list and Timeshare Resales (fake buyers) #10.
Related Articles: FTC: Timeshares: Yes? No? Maybe?
Thank you Irene, a very interesting article and I hope it helps to answer some of the questions we receive.
It should also be pointed out that in the UK, one bank, Shawbrook Bank, did acknowledge a few years ago that they did not carry out their due diligence when authorising timeshare loans, meaning many agreements were signed without the affordability checks. The bank set aside around £9 million to cover any defaults on these loans as they would have had great difficulty in enforcing these loan agreements in the County Courts. The CEO at the time was forced to resign as he was the one that arranged the agreements with the timeshare companies.
Another point is all timeshare sales companies must be authorised in order to broker these loans, before April 1st, 2014 these would have been authorised by The Office of Fair Trading and from that date by the Financial Conduct Authority. A case that Inside Timeshare has been following was the validation of these agreements by Barclays Partner Finance for loans brokered by Azure Service Ltd who were not authorised. This validation order would legalise the loan agreement and make it enforceable in law.
Inside Timeshare has already uncovered many timeshare companies who brokered loan agreements with various lenders and have found that the vast majority have never been authorised. This investigation is ongoing and is being used to end loan agreements.
That is all for this week, have a great weekend, and join us again next week for more news and information on the murky world of timeshare.
The Radio 4 program You and Yours will not be broadcasting the MacDonald Resorts segment today as planned, this is due to MacDonald Resorts contacting our reader and making an offer of settlement. Hopefully we will be able to publish a successful conclusion in the future.
Back now to our Letter from America.
Welcome to the end of another week with Inside Timeshare, today’s Letter from America is from an old friend, Irene Parker. It needs no introduction apart from it is a subject that has sparked many conversations, the acquisition of Diamond Resorts by Hilton Grand Vacations. Here Irene explores what this means to Diamond Members.
What does Hilton Grand Vacations Acquisition of Diamond Resorts Means to Diamond Members?
How Private Equity has Influenced Timeshare
By Irene Parker
March 26, 2021
Several Diamond Resorts members have expressed bewilderment by the announcement this month that Hilton is acquiring Diamond Resorts. Former deeded owners of resorts purchased by Diamond – Monarch, Gold Key, Sunterra, ILX, Amber and others, were told that they had to give up their deed and convert to points. It is likely they will once again be told they must upgrade to have access to Hilton properties. Overall, Diamond members seem to feel Hilton’s acquisition is a welcome development. The transaction is expected to close by summer.
But when you think about the power of putting the Hilton brand on …. it will, number one, create a tremendous amount of credibility. It’ll allow us to attract customers, higher-quality customers than Diamond was able to attract.
We’re going to be– we’re launching a new brand called Hilton Vacation Club. And Hilton Vacation Club will be positioned just below Hilton Grand Vacation Club, which is an upper upscale brand. And Hilton Vacation Club will be an upscale brand. And the entry price points are significantly lower, about $20,000 lower to– to enter the system.
Accelerates launch of HGV-branded trust product offering: rebrand Diamond’s properties over time to drive revenue growth in a new customer segment
My Comment: Trust-based means properties are owned by a Trust, but that is of no benefit to timeshare members who don’t “own” anything. Buyers of non-deeded points purchase a right-to-use product. They have no beneficial interest in a Developer’s Trust any more than a member of a Country Club or gym club has a beneficial interest in their club’s brick and mortar buildings.
My question: Diamond’s properties are already in Diamond’s Trusts. Does Hilton plan to buy legacy (older) resorts, modeling Diamond’s business model?
Combining HGV’s points-based deeded product with Diamond’s points-based trust structure will allow the Company to cater to a wider audience, attract more new buyers and drive incremental growth in a capital-efficient manner.
HGV’s deeded product provides premium pricing, inventory sourcing flexibility, and the ability to pre-sell projects to support strong project-level cash flow, while giving buyers and owners the value of guaranteed availability.
My question: How is availability guaranteed? According to Hilton members I spoke with, availability is guaranteed by means of an advanced booking window. It’s not the same as owning a fixed week that is a true guarantee.
The introduction of a trust product allows for lower barriers to ownership, reduced inventory delivery volatility and inventory recycling, enabling smoother sales and upgrades while providing buyers and owners network and pricing flexibility.
The biggest question on the minds of many Diamond members is – will there finally be a resale value. Rules change, but at last check if you buy Diamond points on the secondary market, you must buy 50% of the number of points you bought on the secondary market, directly from Diamond to be eligible for The Club, to be able to exchange. Will Hilton be so restrictive?
Inventory delivery volatility reduction must be because points are of almost unlimited supply and eternal.
Inventory recycling means foreclosing or taking back points.
“Smoother sales and upgrades” is something Diamond members are very used to and many are wary of.
One Diamond member expressed Diamond’s pricing flexibility:
Kona 11/6/18 – Our agent tried to convince us to purchase Hawaii collection points for $11.40 per point, as opposed to $4.79 presented on Oahu the week before. Manager Brett asked us where the $4.79 came from. We shared the paperwork we had been given. He became rude and threatening saying, “it is illegal for you to have these papers.” The papers had been given to us.
Integrates Diamond’s innovative Events of a Lifetime® experiential sales and marketing platform that drives strong engagement and Volume Per Guest (VPG) premiums with HGV’s owner base
My Comment: It is hoped Hilton will do a better job of informing the person presented with an EOL that it is a solicitation.
Volume per Guest is a metric that is often used to show efficiency in sales. Total sales volume divided by the number of tours “guests” that each site has.
Ex. Site sells 200,000 on a day with 25 guests = 8,000 VPG – This is the expectation for existing owners. (Figures provided by an industry insider)
Many on our Diamond member-sponsored Facebook have questioned how this remarkably high VPG has been achieved.
In 2018 – Private-equity firm Apollo Global Management LLC is preparing to take Diamond Resorts public …. Apollo could seek a valuation for Diamond Resorts of around $4 billion and aim to raise in excess of $500 million in the offering, though price expectations are moving around, according to people familiar with the process.
HGV, spun out of Hilton Worldwide in 2017, will buy the Las Vegas-based Diamond Resorts (for $1.4 billion) from funds managed by affiliates of Apollo Global Management Inc., Reverence Capital Partners and others in an all-stock deal.
Private equity funds more closely resemble venture capital firms in that they invest directly in companies, primarily by purchasing private companies, although they sometimes seek to acquire controlling interest in publicly traded companies through stock purchases. They frequently use leveraged buyouts to acquire financially distressed companies. Once they acquire or control interest in a company, private equity funds look to improve the company through management changes, streamlining operations or expansion, with the eventual goal of selling the company for a profit, either privately or through an initial public offering in a stock market.
History Repeats Itself
The first Diamond member to submit an article about their timeshare experience to Inside Timeshare was in 2016. A family of five, with their firstborn off to college, they alleged that they were told if they became Platinum they could offset maintenance fees. The most recent Inside Timeshare article is about a Diamond member who received a $95,678 judgement contesting a $3,995 Sampler trial product. He alleged that he was told he could offset maintenance fees at $.20 per point by charging purchases to a Diamond Barclaycard.
Many Diamond members have reported that they were told that if they did not give up their deed their heirs would be liable for the timeshare. There have been 157 Platinum members who have reported allegations that they were promised the ability to be relieved of maintenance fees, unlock equity, or be able to sell points if they became Platinum loyalty level or bought additional points.
Do your timeshare math when purchasing a timeshare or upgrading. Seniors especially need to amortize the buy-in price over their expected lifetime to determine if the outlay is worth the price.
Thank you, Irene, as usual, you have given us much to think about, let us hope the industry itself wakes up and take notes from what their own members are saying.
Join us again next week as we explore and report on the murky world of timeshare, have a great weekend.
More Breaking News
On Monday Inside Timeshare will be publishing the latest on the Cazorla Group, the majority shareholders of Anfi, it has been announced that the courts have declared the Cazorla Group bankrupt.