Friday, August 11, 2017

Not Convinced Your Timeshare is Worthless? Then Do This -

Even though the IRS values all timeshares as worthless, and hundreds of timeshares can be had on eBay for next-to-nothing, some people just can't believe that the timeshare for which they paid tens of thousands of dollars, isn't worth the paper their contract is printed on.

So I propose the following challenge. Call any timeshare company and tell the salesperson that you would like to buy their most expensive timeshare, with one key condition. Tell the sales rep that within thirty days of the purchase date, you would like the right to sell that same timeshare back to the timeshare company for the asking price of just one dollar.

Any company selling a legitimate product would jump at such a proposal because it would be foolish not to. Such a company would make a killing every time. Your car dealership would take you up on that offer. Your realtor would. So why not your timeshare company?

Hmmm, I wonder why...

Friday, July 21, 2017

Ever Wonder Why Timeshares are Allowed to Stay in Business?

Reprinted from The Orlando Sentinel, July 20, 2017: Marriott Vacation Club, the Orlando-based time-share company, is being accused of using its influence to get state law changed to help it jump off the hook of a pending lawsuit.
Two Central Florida legislators introduced changes to the state’s time-share law last year, after MVC was sued because of its time-share policies. The company has not commented on whether it sought the change. It stated in a court notice that the change in the law “is of crucial importance to this case” -- just weeks after Gov. Rick Scott signed the bills into law May 23.
New York attorney Jeff Norton sued MVC last year, alleging in court documents that the company’s entire sales structure is basically an illegal racketeering scheme because it uses a points-based system that was built on top of a system that previously sold deeds to real estate, among other things.
Norton took note of the timing of the change in the state law in a formal objection to the company’s notice regarding the change. “It seems obvious that because defendants [MVC] could not justify the legality of their conduct under existing law, they endeavored to change the rules,” Norton wrote to the court.
Because of the new law and definition, the company and its attorneys at Greenberg Traurig say much of the pending lawsuit is without merit, telling the judge in the case that the recent change in law “effectively eliminates several of plaintiffs’ claims in whole or in part.” MVC officials declined to comment for this story; regarding the lawsuit, the company previously said it follows every aspect of the state regulatory compliance for vacation ownership sales.
The company’s efforts to change the law while litigation is pending “may be legal,” Norton said in an interview that echoed his court filing, and he added, “I do think there’s something inherently wrong with using political influence to rewrite the rules, when you can’t defend your actions.”
A third-party observer, Ben Wilcox of the nonprofit government watchdog group Integrity Florida, said the time-share law changes are suspect.
“It has the appearance of unethical influence, the appearance anyway,” Wilcox said. “The question would be, does it represent misuse of office or conflict of interest? Is it meant only to benefit those corporations and change the rules of the game?”
The two state legislators who are credited with changing the law are Rep. Michael LaRosa, R-St. Cloud, and Sen. Travis Hutson, R-Elkton. Hutson’s office did not respond to a request for a statement or interview.
LaRosa worked with the time-share industry’s lobbyists at the American Resort Development Association to craft the bill, said spokeswoman Rebekah Hurd. The company is a member of ARDA. She said LaRosa intended that the legislation help define how a time-share owner can cancel a contract.
“The bill was not designed to benefit any specific operator or to interfere with any pending litigation. Throughout the bill being heard in its committees of reference not once did the definition change, get questioned nor did any one person or organization express any opposition,” Hurd, said in an email.
Scott’s spokeswoman Kerri Wyland said only that the bill was approved unanimously by both houses and made “needed changes” to the law.
The change in the law spells out who is an “interest holder” in a points-based time-share plan, in a 130-word paragraph. The changes in the law say that historic time-share owners, who still own deeded weeks of time, are not “interest holders” in the company’s current points-based system. The new definition of “interest holder” was proposed in Senate Bill 818 just weeks after Norton argued its definition in briefs filed on the docket of the pending lawsuit.
The company also highlights one sentence of the amendments to the law that read, “This paragraph is intended only as a clarification of existing law.” According to the company, that sentence means the changes in the law are basically retroactive and apply to Norton’s lawsuit, which was filed in May 2016, months before the bills were introduced.


The Florida Legislature has traditionally shied away from legislation that would alter the outcome of existing lawsuits, Wilcox said, but there is no hard-and-fast rule about that.
Robert Clements, an Orlando-based lobbyist for ARDA, said in an email that the recent legislation was developed by ARDA “working groups” covering many topics and geographic areas.
He said ARDA works “on behalf of the greater industry and does not concentrate on specific developer issues.” He declined to comment on the impact of the legislation on the company’s lawsuit.
The company has filed a motion to dismiss the entire case filed by Norton, which is currently pending. The named plaintiffs in the case, which seeks class-action status, are time-share buyers Anthony and Beth Lennen.
Since 2010, customers have bought points that can be used at a variety of locations. The points program is intended to offer more flexibility, but critics of the program complain that the basis for determining value of points at various properties can be arbitrary or disputed.
Before 2010, MVC's week-based program allowed customers to purchase a week of ownership at a specific location or resort. They could trade, but only with other specific locations.
Among other allegations, the lawsuit charges that MVC and First American Title Insurance Co. are engaged in a racketeering scheme to make money illegally from the fees charged on time-share transactions, under the federal Racketeer Influenced and Corrupt Organizations Act.
"The company and First American created a RICO criminal enterprise for … the purpose of allowing the company to make withdrawals from [an] escrow account … in connection with sales of invalid time-share estates, providing First American with a robust revenue stream of escrow fees and title insurance premiums despite the absence of title," the lawsuit states.
Orlando-based Marriott Vacations Worldwide Corp. (NYSE: VAC) says it has about 60 properties with 12,800 vacation ownership villas and about 410,000 owners in the United States and eight other countries. The company pools its time-share resorts into the real estate trust handled by First American.

By Paul Brinkman
pbrinkmann@orlandosentinel.com 

Monday, July 10, 2017

Here's What a Timeshare Release Looks Like

Editor's Note: The actual names of my clients have been redacted for confidentiality purposes:

Spinnaker Resorts
35 DeAllyon Ave.
P O Box 6899
Hilton Head Island, SC 29938
May 3rd 2017
Settlement and Release Agreement
This Settlement and Release Agreement is entered into by and between Spinnaker Resorts, Inc., Bluewater Resort, and XXXXXXXXXXXXXX
Recitals
WHEREAS, Purchaser executed a certain Purchase Agreement (533540) on or about the 8th day of August, 2015, purchasing a timeshare unit(s)/week(s) from the Developer in the Bluewater Resort by Spinnaker LLC.
WHEREAS, Purchaser now desires to rescind the purchase transaction beyond the prescribed rescission period provided under South Carolina law; and
WHEREAS, Developer and Purchaser have agreed to an amicable settlement in which Purchaser shall be relieved of the contractual obligations under the Contract.
Agreement
FOR GOOD AND VALUABLE CONSIDERATION, the receipt of which is hereby acknowledged, Developer and Purchaser agree as follows:
1. In conjunction with execution of this Agreement, Developer shall accept all monies paid and equity accrued till this day, May 3rd, 2017, as full and final settlement of the loan account XXXXXXXX33540.
2. Developer shall cancel the Contract and release Purchaser from all contractual obligations under the terms of the Contract and release and forever discharge Purchaser from any and all claims demands, losses, or damages associated with said Contract.
3. Purchaser shall release Developer from all contractual obligations under the terms of the Contract, and Purchaser shall relinquish and forever quit-claim all right, title and interest in and to the property purchased from the Developer. Purchaser shall release and forever discharge Developer, its principals, officers, agents, employees, heirs, administrators, executors, successors and assigns from any and all claims, demands, losses, or damages, associated with the Contract.
4. This Agreement may be executed in counterparts, and each counterpart shall be deemed an original as against the party signing same. Facsimile and email copies may serve as originals.
2
5. Developer shall remove all delinquent credit reporting from the Purchaser’s credit bureau file for Equiant Financial Services account number XXXXXX33540.
6. This Agreement contains the entire agreement between the parties hereto and is intended as a full and final expression of their settlement and release of claims.
7. Should it become necessary for any party to file legal action to enforce or interpret any of the terms of this agreement, the prevailing party shall be entitled to reasonable attorney’s fees and costs.
8. This agreement offer is valid until May 10th 2017.
Spinnaker Resorts, Inc.
May 3rd 2017
By: _____________________________ Date:_________________________
XXXXXXX, Loan Collection Officer
Purchaser:
________________________________ Date: _________________________
XXXXXXXXX
________________________________ Date: _________________________
XXXXXXXXX

Sunday, July 9, 2017

How Much Should it Cost to Cancel a Timeshare?

There are only a dozen or so companies and law firms that legitimately cancel timeshare contracts. Of these, prices can vary by several thousand dollars, so it pays to shop around. If your timeshare is not paid off, then expect to be quoted a price within the $3,000 to $10,000 range. Why such a huge range? Because all too often the salesperson will base the fee on the amount of money he/she thinks you can afford. If you are asked to provide the salesperson with the purchase price of your timeshare before you are provided a quote, then that is a red flag in my mind. The work that a firm must do to get you out of your contract is not a function of the price you paid for your timeshare. So whether you paid $7,000 or $70,000 for your timeshare, the fee you are charged to get out should be the same.

If you have a timeshare that you've paid off, and all you have left are the annual maintenance fees, then expect to pay less because such timeshares require less work to cancel. These range anywhere from $2000 to $6000. Why the huge range? Same reason as before. If the salesperson wants to know what you pay in annual maintenance fees before you are provided a quote, then again, that's a red flag. Whether your annual maintenance fee is $250 or $2,500, the amount of work it takes to cancel your contract is the same. 

Monday, May 29, 2017

Of the Four Types of Timeshare Relief Companies, Only One is Truly Legitimate.

When searching for a way out of a timeshare, the timeshare owner will invariably happen upon any of four kinds of timeshare relief companies: those that claim to sell your timeshare, those that claim to transfer your timeshare, those that claim to donate your timeshare, and those that use a licensed timeshare attorney to negotiate directly with your timeshare. Of these four types, only the attorney negotiating with the timeshare is a legitimate strategy.

In this series of posts I will talk about all four types, and explain why the illegitimate types are allowed to stay in business.We begin with those companies that claim to sell your timeshare.

They're called timeshare resale companies, and most of them must change their name every couple of years due to all the bad press they get from unhappy customers. The pitch is simple: Send us a few hundred bucks and we'll sell your timeshare for you. There's just one problem; the timeshare almost never sells. In fact, the odds that it will are well under 2%. But these companies will take your money anyway. They stay in business because their contracts are carefully worded so as not to guarantee anything. They will never go away for one simple reason: a sizeable number of timeshare owners refuse to believe that their timeshare has no value.

And so, every year, thousands find out the hard way.

Come back next week for my thoughts on timeshare transfer companies...

Sunday, May 21, 2017

The Top Ten Tricks That Timeshares Pull (By Tom Heehler)

Trick #2: Get customers to pay off their timeshare mortgage before they figure out they've been taken


Timeshares know that a certain percentage of customers will eventually figure out that they can negotiate out of their contract by using a law firm or an attorney-staffed agency such as PMG. That's why timeshares use a couple of sneaky tricks to get as much money as possible from their customers as quickly as possible. One such trick involves the interest rate charged. Usually it's pretty damn high. I'm talking anywhere from between 13% to 22%. This interest-rate strategy encourages customers to transfer their high-interest timeshare debt over to a lower-interest bank loan, which pays off the timeshare instantly. Once the timeshare has been paid off, it doesn't really matter if the customer figures out how to cancel their timeshare contract, because the timeshare already has its money. What's more, those customers who are unable to refinance, and who never realize the extent to which they've been deceived, will pay dramatically more money to the timeshare over a ten-year period, often more than twice the original purchase price.

A second strategy involves having the customer open a new credit card with a third-party provider such as Barclays, and putting the down payment (or even the entire amount) on that credit card. Often the customer is made to believe that the new credit card is issued by the timeshare itself, when it is actually a third party credit card. Once the timeshare debt has been transferred to the card, the timeshare is paid off entirely, and will feel little to no pain when the customer eventually figures out how to escape the contractual obligation.


Wednesday, May 17, 2017

The Top Ten Tricks That Timeshares Pull (By Tom Heehler)

When you help people out of their timeshare contracts for a living, you spend a lot of time listening to stories about sales presentations. The following list of timeshare tricks is based on hundreds of conversations with as many clients. I consider these to be the most effective techniques used to separate people from their money. Most of these tricks are used by all timeshare salespeople, regardless of the timeshare company they work for. We’ll kick off today with trick #1:


Trick #1: Starting out with a ridiculously high dollar amount.
The salesperson does this for two reasons, both of which are critical to getting the sale. By starting off  extremely high, the salesperson establishes a dollar reference point by which all other offers can be compared. The technique usually results in the following exchange between husband and wife after their purchase:

“If we hadn’t held out as long as we did, Honey, we would have paid $50,000 instead of the final price of $15,000!”

(Little does the customer know, the salesperson would have accepted $7,000 as the final price.) This trick is pure psychology: $15,000 sounds like a small number and an awesome deal when compared to $50,000 – no two ways about it.

Second, by starting out high, the salesperson now has the ability to make up an excuse for lowering the price, to make the customer believe they are getting a steal. This excuse usually takes the form of a supposed foreclosed property or a trade-in.  Rarely is this actually the case, but the salesperson will lie and say it is. This sneaky trick also plants a seed in the customer’s mind that their timeshare can be given back to the timeshare company in the future, which is simply not the case.

Friday, May 12, 2017

Ask Tom Heehler: Why Should I Have to Pay an Upfront Fee or Retainer?

When hiring an attorney or an attorney staffed agency, a potential client is often asked to pay an upfront fee or a 'retainer.' Many clients wonder why they should have to pay such a fee, particularly when they have not yet received any benefit from hiring the attorney. What happens if the case settles shortly after paying the retainer fee and before the attorney has done much work?

Pro-Upfront Fees

There are a number of very reasonable reasons an attorney might want to request the upfront payment of a retainer fee. It compensates an attorney for the use of his or her name, reputation, and expertise, even if only because the attorney's name gains leverage for the client and allows the case to settle more quickly. In fact, having the right attorney can sometimes achieve a settlement after only a phone call or a letter. There is obviously value to this benefit, and from a fairness standpoint, it only seems appropriate that the attorney should be compensated for use of his or her reputation.

Similarly, the fee compensates the attorney for agreeing to be on standby for the case. By doing so, regardless of the course of events in the case, the attorney is potentially foregoing other gainful employment and business opportunities in order to remain available when needed for the lawsuit. 

Of course, retainer fees also protect an attorney after the work has begun. For example, if the case proceeds and work is required of the attorney, the attorney can use the retainer fee to defray costs as s/he performs necessary work on the file. Similarly, should a disagreement arise or some other unforeseen circumstance that would make it impossible for the client to pay the attorney as originally agreed, the retainer fee ensures that the attorney receives at least some compensation for the time devoted to the matter. 

Anti-Upfront Fees

Of course, there are a number of arguments against collecting an upfront retainer fee, as well. For example, some clients might be put off by the idea of prepaying for someone's services, and look elsewhere for another attorney who does not charge a retainer fee. Naturally, that means the best instance in which to charge a retainer fee is when the attorney is specialized in a hard-to-find discipline, the number of attorneys in that field/location is very low, or the attorney is exceptional in some other way (board certification, particularly well-known in the community, etc.). Just as in economics, scarcity often creates value, and this gives exceptional attorneys an advantage when negotiating retainer fees.

Another argument against retainer fees is that some clients fear that if little or no work is done by the attorney before the case settles, the client will have effectively paid for nothing. Of course, as noted above, the counter-argument is that the party is buying the opportunity to work with the attorney and utilize his or her reputation. Failing to pay the retainer fee for fear of paying for “nothing” is a one-sided view that does not take into account the attorney's sacrifices in agreeing to forgo other work in order to take on the case and, of course, the attorney's reputation value. Indeed, the opportunity cost of not paying the retainer fee to retain an attorney may be much higher than the fee itself! Nevertheless, many attorneys are willing to forgo a retainer fee or refund it if little or no work is done on the case prior to settlement.

The final argument against retainer fees is that some clients, when presented with two similarly qualified attorneys, may tend to choose the one who does not charge a retainer fee. Not collecting a retainer fee may actually serve as a way for newer attorneys to get into the marketplace and compete against more seasoned attorney lawyers with well-developed reputations. 

Common Practices for retainer Fee

If an attorney does decide to charge a retainer fee, there are some common practices that may be wise to observe. For example, the retainer fee is often based on a multiple of the attorney's hourly rates and the number of hours the attorney reasonably believes could be expended in a set period of time. Alternatively, the fee could simply be an arbitrarily selected number, but must usually have some relation to the matter at issue and will often be regulated by the bar association of that state.

Remember, actual time spent on the case is usually tacked on in addition to the retainer fee, and the retainer is merely a deposit. Nevertheless, many attorneys will use the retainer fees to pay off the initial charges on a matter until the fee is depleted. At that point, the attorney will usually switch to a standard hourly billing arrangement, or may request the payment of another deposit before work can continue (a replenishable retainer).

Conclusion

The choice to charge a retainer fee or not is ultimately the attorney's preference in most cases. While the bar association or other governing bodies may occasionally mandate certain deposits and fees, this is the exception, not the rule. An attorney's choice of whether to charge a retainer fee, and how much that fee should be, may have certain pro's and con's, so it is important for the attorney and anyone evaluating an attorney, to determine whether that individual is sufficiently qualified, experienced, and well-known to warrant charging such a fee and how much a reasonable amount is. Naturally, most attorneys are willing to work with a client to figure out the best approach that will be fair to both the lawyer and the client, but understanding the attorney's relative value and scarcity in the marketplace can give each side additional leverage in any resulting negotiation.

Reprinted from HG Legal Resources.org