Trolling for Votes and Control
Several developers have adopted deed back programs whereby owners at selected resorts are able to turn back their deeds, sometimes at a cost to the owner. Those developers are also aggressively acquiring defaulted timeshares that are being sold at auction or that can be found online at distress sale prices. The economic motives for this are clear. It is more cost-effective to convert existing timeshare properties to a developer’s points/vacation club than it is to build new projects.
Another developer strategy is to acquire enough voting rights to displace the bona fide owner-board members with developer-controlled board members. Board control empowers the developer to manage maintenance fees, special assessments and management costs. They then end up with revenues gained through management fees and inventory to feed their vacation clubs.
The prime targets for these activities are legacy resorts and legacy owners. Other targets are the board members who have served to protect the interests of those legacy owners. We have seen developers in court battles with boards of directors and recently, TimeSharing Today has learned that two board presidents at different developer-controlled resorts have been ousted by the new “puppet” boards of the developers. Those board members do not have access to the owners lists to inform them about what is taking place.
Developers argue that the legacy resorts they target need higher maintenance fees to ensure adequate reserves for needed upgrade the resorts to bring them up to the standards of their vacation clubs; new owners get the quality amenities and services that are consistent throughout their properties. This argument, in certain situations, can be valid.
The questions for legacy owners are they:
- Informed about what is going?
- Getting hit with surprise special assessments and maintenance fees?
- Being coerced to convert to a Points/Vacation Club during sales presentations?
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