Irene Parker and I take a look at timeshare relinquishment comparing Europe to America. As many Europeans own timeshares purchased in America, it’s useful to have the complete picture. This time she asks the question “Timeshare Transfer Agents: Friend or Foe?
For those not familiar with the term, Transfer Agents advertise offering timeshare owners a guaranteed “deed-back” even if the timeshare program is not deeded. (more on this further on).
In Europe we have a different take on this subject, as we do not have the same model of Transfer Agents like the US. We tend to have resale firms and exit companies, some purport to be legal firms, who for a sizeable fee will relinquish your contract. Many of these companies do both, so the lines can be a ltiile blurred. Although we do have some of the same problems, such as resorts /developers who do not recognise the sale and or transfer.
Here we bring in the ongoing story of two elderly sisters, known as Mrs B. Around two years ago they took up the services of a company who claimed they would get compensation for them if they joined their “Class Action” group. But in order to do this they had to pay around £5965 to relinquish their two timeshares, one was Oasis Lanz in Lanzarote, the other was Dona Lola Club on the Costa del Sol, run by MacDonald Resorts and Hotels.
Mrs B signed a power of attorney so the company could work on her behalf, all appeared to be above board. After around a year she eventually received notification that her timeshare had gone, both had been transferred / sold to a gentleman for £1 each. Inside Timeshare has all documents relating to this.
Sounds all well and good.
Well, as far as Oasis Lanz is concerned it is, Mrs B has not had any contact from them or received any maintenance bills. The problem is Dona Lola Club and MacDonald Resorts, they will not recognise the transfer. This has now caused a problem for Mrs B and her sister.
They have been subject to threats of legal action by a debt collecting agency, Network Credit Services, employed by MacDonald Resorts. According to them there is £1412.54 (as of April 2016) for maintenance, accrued after the supposed transfer, (this amount increases as time goes on).
So why do MacDonald Resorts not recognise this transfer?
On speaking to Network Credit Services and explaining that the debt was under dispute, Maureen stated that MacDonald Resorts will not recognise any transfer made by this company, because in Maureens words “ McDonalds just get paperwork back from saying no longer required”. In other words, there was no actual sale or legal relinquishment. You will see the same in the article by Irene, using a company to take on the transfers.
This case is still ongoing with official complaints about the chasing of this “debt” going through the Financial Ombudsman Service.
Another aspect that is very common in Europe is the “Bait and Switch” tactic employed by many companies claiming to be “resale” firms.
The basis of this method is very simple, the timeshare owner either contacts a company they have found on the internet, or, they have been cold called by. They promise they can sell your timeshare and even give a very high valuation over the phone. Next they arrange a meeting to discuss your options.
Unfortunately there is no resale market, with one company actually stating this, so what then happens?
Simple, in order to get rid of your timeshare you must now purchase another product, be it leisure credits or discount holiday club. At the meeting ( read sales presentation), you are told that the product will cost around £10k to £12k. But don’t worry, we will discount that price for the value of your timeshare, so it will only cost you a fraction of that amount.
This was used to dupe many owners into Club Class and DWVC, where the incentive was the cashback offer. With this you are given a certificate for the value of the timeshare plus the cost of joining the club. In 3 to 5 years, as long as you follow the rules (which were complicated) you could then claim back the value on the certificate. So far we have never known anyone who did get paid out.
But what happened to your timeshare?
For many it was simple, they did not get rid of it, then after a couple of years they found they owned years of back maintenance. The timeshares were not transferred or relinquished, they are still liable for the maintenance and still own it, causing many a stressful situation with debt collectors.
So, let us look at what the situation is in the USA.
Timeshare Transfer Agents: Friend or Foe?
By Irene Parker November 20, 2016
Lately, a company by the name of Resort Release has been running an ad on my Facebook feed. It is always frustrating to invest time and energy campaigning to improve the timeshare industry, only to have companies we don’t approve of take out ads promoting their service. At least Inside Timeshare can control who posts on their site.
Transfer agents advertise offering timeshare owners a guaranteed “deed-back” even if the timeshare program is not deeded. The upfront fee ranges from $3500 to $7000 or more. Contracts taken back are “bundled” 25 to 50 and sold back to the developers, similar to what happened during the worldwide subprime mortgage crisis. The developers resell for full value.
What else can happen to the points or weeks or “inventory” recovered?
“There are basically four buckets that transfer companies often attempt to put inventory into…
Bucket 1 – Works with an inventory broker who may or may not have a direct inventory recovery agreement. *Branded properties only
Bucket 2 – Lists timeshare properties on eBay and Craig’s List for $1.00
Bucket 3 – Transfers to “Mules” *Foreign Nationals who may be judgement proof
Bucket 4 – Transfers to Companies who later dissolve the corporation administratively. *Leaves resort pursuing a clouded title, doubling recovery costs and impacting association’s bad debt line, which all remaining owners on the roster end up absorbing.”
Timeshare sales presentations can border or cross over into predatory sales pretty quickly. Not all sales agents are like that, but the internet complaints sites are flooded with complaints that start out, “The sales agent said.” There’s something inherently disturbing about paying a transfer agent a large sum of money only to have the agent sell back to the developer and start the process over again.
I asked Greg Crist of the National Timeshare Owners Association what advice NTOA gives to owners concerning transfer agents. Greg’s answer is complex.
“We continue to receive a number of calls and emails from timeshare owners regarding potentially fraudulent transfer companies. Some of these groups have even gone so far as to pay for celebrity endorsements that give unqualified credibility to their programs. The questions we get are…
“Can these companies really do what they say they can?
“What happens to us and our timeshare, if they are not successful?”
Timeshare cancellation is not like cancelling your cable or phone service provider. An owner has typically entered into a contract of perpetuity or long term right to use program. Those contracts were not designed to be simply cancelled. These transfer companies know this, so they basically search for ways to circumvent the resort completely. The owner’s property is often transferred to a third party individual or another company that works closely with the transfer group to accomplish the goal of getting the property out of the original owner’s name. What happens next, determines if the original owner may have a problem down the road.
Resorts are increasingly turning away suspect transfers and within a year, the original owner is getting a new maintenance fee. That spells trouble for the owner, who in turn goes back to the transfer company only to find that the phone number is disconnected and the company is closed. They are ultimately out thousands of dollars for using a service who could not fulfill its guarantee and they still own their timeshare.”
My last question for Greg:
Are there any legitimate transfer agents and if an owner does need to be released from a contract a resort has refused to take back, what other alternatives are there besides not paying the maintenance fees until the contract is foreclosed?
Greg Crist responds:
“There are legitimate sales and transfers of timeshare, but the number of fraudulent transfers has grown over the last few years to a point where it has caused the snowball of “Bad Debt” affect”.
“To see what I mean by that, just look at your new maintenance bill this year. Included for your reading pleasure, is a budget of how that fee is calculated equally across the roster of owners. Scroll down to the line item that says bad debt. This is going to typically be one of the highest figures listed on your budget. Sometimes the resort will even itemize each line to exactly what it cost the owner in each area”.
“In the case of a recent budget that I reviewed from a Florida resort, the maintenance fee was $926 and from that, the bad debt cost to each owner cost $138 for 2016”.
“Fraudulent transfers are the main culprit of the resort’s growing bad debt”.
“More and more timeshare companies recognize the need for timeshare owners to cancel their contract due to any number of life changes. Timeshare owners should contact their resort to ask about the resort’s surrender policy, contact the Licensed Timeshare Resale Broker Association, if the resort is located in the US, to ask about selling the timeshare, or talk to a timeshare attorney before entering into an agreement with a transfer agent. And of course! Contact Inside Timeshare if a European resident or the National Timeshare Owners Association if US”.
As you can see, names and titles might be different, but the results are the same, owners left with their timeshares, resulting in maintenance arrears. Resorts / developers with timeshares transferred to companies who then fold leaving a shortfall in maintenance collections. The sad thing is, the industry really only has itself to blame, lack of “Secondary Market”, “Resale Market”, tied into contracts with no viable exit solution. Leaving owners with nowhere to go but into the hands of the unscrupulous and the fraudulent, costing them (the owners) thousands of Dollars Pounds or Euros in the process.
There needs to be some control, it cannot be left to the industry to police itself, as before in Europe the call is for independent oversight into all aspects of the industry. From first purchase to resale and relinquishment. Somehow I do not see this happening as the industry itself is against this, they believe they can do it, well, so far it would appear they can´t.
Inside Timeshare would like to thank Irene Parker for her help on this article and insight into this part of the industry in the USA, we would also like to thank Greg Crist at the NTOA for his contribution and answers to Irene´s questions.
If you have any questions or comments on this or any other article published, Inside Timeshare will be pleased to help. If we do not know the answer we will find it for you.