HOA Bankrupt: Condo Up For Auction

We all know that timeshare has changed over the years, the ownership/membership base is getting older, the new generations regard it as old fashioned and the industry as a whole is struggling to keep up the numbers. Probably the reason for all the complaints about presentations and upgrades accompanied by exaggerated claims.

These complaints tend to be centred around the main players, there are other smaller timeshare concerns, such as the North Pier Ocean Villas in Carolina Beach. This, like many others, was among the first generation of timeshare resorts or condominiums, not just in the US but also in Europe. Small developments, quite often as was the case in Spain and Portugal, by families on land they no longer needed and took advantage of the developments in those emerging European countries.

Tourism was booming and more accommodation was required, there was also a lot of money to be made. The idea of timeshare was ideal for these small developments, great apartments, large pool with a bar, a snack bar and a small restaurant with a bar for the evenings. So began the small timeshare resort, all apartments divided into 52 weeks and then sold in weekly increments. The purchasers were happy, the resort owners were happy, in fact, everyone was happy.

In Spain the first timeshares sold on this model tended to be all very legal and above board, many owners were given an “Escritura” which is basically a title deed, they owned that portion of the apartment. There was a value to it, not a great deal, but value.

Some of these resorts eventually met a very sorry end, usually due to the take-over of the management of the resort, the unscrupulous and greedy had wormed their way in. One resort on the Costa del Sol, Spain, is still being investigated over 30 years since the owners lost everything. Unfortunately, the Gentleman who was the staunchest of campaigners passed away leaving the fight with his family.

Now we hear the news of a Timeshare Condominium at Carolina Beach which is now up for auction.

Looking at the pictures of the place, it really is in a sorry state, all due to a catalogue of misfortune and errors. The President and Chairman of the board of directors of the Home Owners Association, Jay Hutchings, submitted the bankruptcy filings.

Dated and run down

His involvement began in 1990 and he is also maintenance manager through his company VMH & Associates Inc., which is contracted by the HOA. Another company where he is a registered agent is Timeshare Ventures Inc, which is apparently an in-active company in Florida, this accepted ownership of at least 16 timeshare deeds in the last year, 7 in 2020 and another 16 in 2019.

It would appear that Mr Hutchins is blaming those handing back, yet he stated to the court that people started handing back in the late 90s. This was for no reimbursement, it was just to be rid of it and the rising maintenance fees, he explained to the court.

In a quote from Hutchins to the court as published by Wilmington Biz, it really sounds like he is trying to put on a “sob story”.

“People started giving them back,” he said. “I’ve taken so far this year 83 deed-backs, which is $60,000 worth of revenue.” 

Well if that was the case, surely there was a reason for this?

It would seem there had been friction for some time between the management company and the owners, all stemming from the lack of maintenance and repairs with conditions slumping over the years. There was also concern raised at the lack of information as to how their maintenance fees were spent, especially in the light of the general condition of the property.

Then to cap it all, it received a lot of damage during Hurricane Dorian in 2019 which tore off the roof and caused significant damage. The HOA attempted to get owners to pay a “special assessment” to rebuild phase one; it appears this was roundly rejected by the individual owners.

The insurance paid the HOA $895,000 to repair the roofs on both buildings along with some interior repairs, this was within 5 months of the hurricane. Unfortunately while waiting for the payment, rain caused further damage.

This was just the first in a litany of disasters and what many would call mismanagement.

Once work began it was found that there was more damage than first believed, then there was a problem with permits and a stop-work order was issued. There was then the problem of the insurance payment, how much damage was caused by the works crews.

The auction will take place on 7 April 2022 at the US Bankruptcy Court in Raleigh, with the initial minimum starting price set at $3.95 million. If that price is met then the owners may be in for around $1,800 each, which is based on the minimum amount and also the debts that are currently known. It is not inconceivable they may receive nothing, let’s hope that is not the case.

North Pier Ocean Villas is not the first to go down this route and it will not be the last. In Europe, these types of resorts or condominiums have ended up in the hands of the big management companies. They are changing the resorts and in many cases introducing the points systems, ridding themselves of the fixed week owners. So it will be interesting to see who will be bidding on this piece of oceanfront real estate?

For the full article please follow the link to Wilmington Biz



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