New Orleans Resort: Developer takeover of resort and issues under Louisiana Napoleoni

[MaryH]

I have a question for some of the experts on this board. To what level of details is a timeshare required by law to disclose detailed financials to the owners? Or can they get away with a fairly sketchy expense budget done mostly on a cash basis? i.e. assets not capitalized and depreciated.

Also, I looked over my deed in detail. the % of unit is 1/52. The % of common area multiple by number of units x 52 weeks is not 100% but something like 44-45%. Can there be another basis on which the % is calculated?

If I want to get a hold of the oringial charter (in LA) how would I go about it?

[rikkis_playpen]

For this answer, you'll likely need to refer to a real estate attorney in the state where the timeshare is located.. Regulations will vary by state, and also could vary depending on when the timeshare regime began and when the next renewal of the condominium declaration is scheduled.

Chances are the answer will cost you unless the attorney who originally drew up the condo declaration and registration is retired now and wants to talk shop with you. That is a long shot...

If your resort is owner controlled, you may ask one of your board members to inquire with the resort's legal counsel for an answer...

If you find out, please share it here!

[MaryH]

The questions to the board are controlled and managed via the management company. Someone posted by mail some questions last year and they had not been answered so not sure if the board received it.

The TS begin around 80-82...

[MaryH]

Apparently a resort I owned took on a developer as a management company sometime last year (somewhere between June and November). There have been what I considered misconduct on their part and 1 director resigned in protest. Sounded of the 3 remaining director, 1 is not very active and 2 others more active ones are not very savvy.

Some of the actions are:
1. Tried to send mailings in fall 2011 to get his people on the board. That failed but after one of the directors resigned in protest, the develop got one of his subcontractors in as secretary.
2. Contacted owners that are behind to deed intervals to them the developer rather than the HOA.
3. Do not pay MF on the units they own and/or the units they control that are behind in MF. Rents those out and as far as we can tell non of the money from rentals goes to the HOA. Payment from owners for MF and rentals goes to the for profit company the management company controls with a similar name to the HOA.
4. They tried to raise the MF for 2012 but directors said he had agreement to keep MF steady for 2 years. In return they never did budget for 2012 and 2013 proposed budget was a copy of 2011 budget which is a minor adaptation of 2010.
5. Budgets and any actuals are very sketchy... no real breakdown of the number of owners that are current, and what other income since owner rentals of their weeks the Management company or HOA takes a 35-40% cut.
6. There was a single line in the 2011 actuals provided less than 1 hr before the board meeting before the annual meeting of over 600K for renovation (not approved by the budget and not covered by the reserves in 2011).
7. There was a owner in dispute with a highly demanded week regarding what he owes since he claimed to have prepaid a said year and the management company claimed it was still owning.. This owner was told to send information directly to the resort on behalf of the directors but no guarantee the directors received those mail.
8. They are now contacting owners that are behind to either pay up (with no consideration since the management company/developer may have rented the weeks in the past for profit) or deed the intervals to them for a fee to the management company with none of those fee apparently going to the HOA.

I am really concerned.. I have Hyatt and have seen the more professional P&L which I am used to. I think a lot are being hidden in the management company books (a for profit company) and little accurate information are being given to directors and owners. Some of the information demanded are claimed to be in the hands of one of the manager that is part of the developer (family member) and that person was conveniently sick for the annual meeting.

I can bet you that the information demanded will be similar to request for the annual budget of 2012 which was promised multiple times but never send since they did not even bother to cut and paste a previous years budget like they did for the budget of 2013 from 2011.

Basically it sounds as if the directors allowed the developer to take over the resorts since by some estimation the develop now control (not sure own directly or control via dilliquency) over 25% of the resort since if I calculate by the MF it is counting about 75% of ownership, down about 300+ from a few years ago.

[mbreudse]

We have gotten our best timeshare education from tours. I learned about points more recently and knew I wanted them. I also learned about TUG from a Fairfield presentation on Maui, where Fairfield has no timeshares. Anyway, the guy was very nice, knew we were not interested in what he was selling and just spent some time on small talk. I mentioned Timesharing Today, he mentioned TUG and talked about owning many timeshares over the years and the difficult adjustment of moving to Hawaii after loving his trades there.

Rick hates it when I ask a lot of questions, which I do not have to do anymore because I know more than they do. The more questions you ask, the more determined they are to sell you. The Sunterra presentation on Maui required me to pretend to not know much, but I wanted to know more about Sunterra. I asked questions directly XXXXXXXXXXXXXXXXXXCamiseta real madrid related to Sunterra and the guy got a little disturbed when I kept telling him that dividing the number of years by the sales price is not the way to determine the true cost of the purchase. I kept reminding him to add in the MAINTENANCE FEES.

I was nice the entire time, though, and was feeling a little guilty because I talked one couple into rescinding their purchase while waiting in the lobby for my husband and mother-in-law to find a parking place. There was a fire in the parking garage and the fire trucks were not allowing anyone into the resort while the fire was being put out. I was bored. This couple was waiting for their friends to come out of the tour XXXXXXXXXXXXXXXXXXXXXXXXXXXXX. I told them about resales and they walked over to the desk to rescind while I was sitting there (they promised not to tell them it was because of the information I gave them). Then their friends came out and asked where they went, I told that couple about TUG and gave them my email address. They are still looking for the perfect timeshare for purchase. The other couple bought a Marriott resale.

[Carolinian]

I have never seen any laws about what they have to tell members in a newsletter or in materials presented to an annual meeting.

Where you have the right to full disclosure under the law is your right to inspect and copy a very broad range of HOA documents, including most financial documents, board minutes, and membership lists. That is generally found in the non-profit corporation laws of the state in question, as virtually all HOA's are non-profit corporations. You generally cannot make them send you this stuff, but are required to go to their office where you have a right to inspect AND COPY it.

Good practice requires a meaningful financial disclosure to members, and if the HOA is not providing it, I would demand that they do so,

[Carolinian]

This seems eggregious. I would look up the provisions of the non-profit corporation law (since HOA's are organized as non-profit corporations) in the state involved for your right to inspect and copy corporate documents, including financial document, and then make the demand and get a copy of everything you are entitled to. You will have to physically go to the HOA office to obtain that. You cannot make them send it to you.

If this developer is having weeks deeded to itself rather than the HOA and renting weeks belonging to the HOA or to individual owners and putting the money in its own pocket, it may be engaged in embezzlement and you might need to get law enforcement involved. Developers should be paying maintenance fees on weeks they own, so that would appear to be another impropriety.

You might also see if the state Real Estate Commission in the state where the timeshare is located is proactive for timeshare members or not. Under the long tenure of Blackwell Brogden at the NC Real Estate Commission, for example, they were extremely proactive for members. In one instance on the OBX, they got involved in a dispute with a developer, investigated thoroughly, and then twisted the developers arm to settle by giving up resort management, having its lackeys removed from the HOA board, paying the HOA for maintenance fees due on developer owned weeks, and surrendering its real estate license.

[MaryH]

Carolina,

It is Lousianna which has a slightly different flavour of TS laws and regulations since some are based on old Nepoleanic rules for real estate ownership.

I looked up briefly online and owners can inspect the documents but it needs to be on the premises. But the BOD were denied some of the documents by the excuse the person taking charge of the books (family member of developer or part of the development company) was sick. They have been very good at stalling.

An owner that was in dispute with his week was in contact with the real estate commission and had his inquiry on his disputed TS dismissed after resort / management company replied since I think his information may not be complete and he may have had some adverse communications with the resort / management company so management company did a fluffy reply and real estate commission said they replied and case dismissed. But I think I don't know all the details since I get some additional information whenever I ask very specific questions after finding out some facts about regulations or resort particulars.

I don't know how the existing directors let it get that bad..

[Carolinian]

The more complaints the Real Estate Commission gets, especially ones that are well substantiated, the more likely they will be to take a real look at what is going on.

And, yes, everywhere the right to inspect and copy documents requiring doing it onsite.

It sounds like someone needs to put together a concerned owners group with a web presence.

Carolina,

It is Lousianna which has a slightly different flavour of TS laws and regulations since some are based on old Nepoleanic rules for real estate ownership.

I looked up briefly online and owners can inspect the documents but it needs to be on the premises. But the BOD were denied some of the documents by the excuse the person taking charge of the books (family member of developer or part of the development company) was sick. They have been very good at stalling.

An owner that was in dispute with his week was in contact with the real estate commission and had his inquiry on his disputed TS dismissed after resort / management company replied since I think his information may not be complete and he may have had some adverse communications with the resort / management company so management company did a fluffy reply and real estate commission said they replied and case dismissed. But I think I don't know all the details since I get some additional information whenever I ask very specific questions after finding out some facts about regulations or resort particulars.

I don't know how the existing directors let it get that bad..

[MaryH]

I have never seen any laws about what they have to tell members in a newsletter or in materials presented to an annual meeting.

Where you have the right to full disclosure under the law is your right to inspect and copy a very broad range of HOA documents, including most financial documents, board minutes, and membership lists. That is generally found in the non-profit corporation laws of the state in question, as virtually all HOA's are non-profit corporations. You generally cannot make them send you this stuff, but are required to go to their office where you have a right to inspect AND COPY it.

Good practice requires a meaningful financial disclosure to members, and if the HOA is not providing it, I would demand that they do so,

Unfortuantely the HOA directors are not that involved so bascially it has now become developer controlled since they got the management contract and have been asking people who want to get out of their ownership to quit claim to them (developer/management company) rather than the HOA.

It seems that even the directors did not get a detailed budget and members list while they were there for the annual meeting so the management company is flaunting the law with execuses that someone (family of developer) is "sick".