Introduction by Irene Parker
We promote self-advocacy. When a timeshare member or owner is attempting to extricate from an unwanted timeshare, or resolve a timeshare dispute, contacting your resort should be the first step. However, when results fall flat, should you simply stop paying, sign up with an exit company, or retain a timeshare attorney? Today, an attorney with timeshare experience granted us permission to publish their thoughts, anonymously. We always appreciate information members of the legal community are willing to share. Our newest After Inside Timeshare contributor answers the question:
If Owners Stop Paying Maintenance Fees and Loan Payments, What Happens?
After Inside Timeshare has been hearing more reports about timeshare developers becoming increasingly aggressive, suing on promissory notes. We published an article about Westgate Resorts suing former clients for perjury because they had signed an affidavit stating they were not working with a third party when they were.
Timeshare loans are financed at high-interest rates – 12% to 19.99%. Given little resale value and no resale value, if there is an outstanding loan, timeshare members can find themselves stuck if life takes an adverse turn. Hardship releases are not always forthcoming. Members of the military, or those who work in a field requiring a security clearance, should do considerable due diligence before buying a timeshare.
I’ve gotten to know a few exit companies, sometimes in the process of writing an article, reaching out on behalf of a timeshare buyer who feels they were hoodwinked. Consumer Law Protection is a good example, a firm misnamed. The larger, more established companies have at least refunded money when we reached out, honoring their money-back guarantee. A caller recently informed one timeshare owner that Omni Ellis is filing for bankruptcy. She had paid them $6,000 to be released from a timeshare with no outstanding loan. Timeshare Elimination Team, not to be confused with Timeshare Termination Team, also in bankruptcy, artfully dodged a demand for a refund.
One exit company charged a staggering $27,000 to be released from two Wyndham contracts. There was no outstanding loan. The owner and I contacted Wyndham. She learned that she was eligible for Wyndham’s “Limited Edition” deed-back program in which she could use her points for three years (without paying maintenance fees) and then relinquish her points at no cost. The exit company eventually refunded the $9,000 deposit she had paid, adding, “If and when your volunteer can’t help, we will be there.”
As Charles Thomas has frequently reported from the European side of timeshare, things are just as bad over there. On this side of the pond, Canadians were outraged by the failed exit attempts of Cory Stegemann’s Cornerstone Vacation Ownership and the Cyria Group. Cory Stegemann worked in sales at Wyndham’s Carriage Resorts in Ontario, Canada, no longer timeshare. He also served on the board of CVOA, a trade group.
By an Attorney
The timeshare industry is attacking lots of law firms and exit companies all over the United States- as far as I know, the cases never go to trial. The resorts fold and settle before the trial. Here is my theory…the main claim the timeshare entities make against exit companies and law firms is tortious interference. Basically saying, “It’s your fault, exit companies and law firms, that people want out of their timeshares” … so how do you think law firms defend that? Probably obvious to you – with the truth…we deposed and do discovery on their training programs, their sales agents, unhappy consumers, etc.. and, the REAL reason people want out of timeshares is the bad behavior of the timeshare brands.
Do you think Timeshare Developers want that testimony and evidence in the public record? Absolutely not! They requested and received confidentiality orders from the court so all the testimony and evidence is confidential…however, guess what happens at a trial – all evidence and testimony become public record! So it’s no surprise they settle all these cases with law firms and exit companies right before trial.
Here is what is really going on… cases against exit companies and law firms are incredibly expensive to defend. Timeshare law firms sued by developers spend a fortune! So the timeshare industry has been successful in shutting down small law firms and exit companies, through attrition – basically the cost of defending the lawsuit puts them out of business. One law firm got a really great ruling in one of the cases filed against them, where the judge says as much, “Your claims are BS exit company, and I see what you are trying to do by making this lawsuit so expensive with heavy motion practice, etc…”
Lawyers are the agents of our clients. We step in their shoes and act on their behalf, so lawyers cannot tortiously interfere in a contract when representing a client in a contract dispute. Can you imagine if Developers were right about that??? Then no lawyer in the US could represent any client for a contract dispute ever!! That would be crazy.
Anyway..hopefully, these lawsuits are a thing of the past. They have not been successful in the timeshare industry. I think their solution and next strategy is clear – many resorts will now work with individuals for a release of their contract but are very clear – if you hire an exit company you no longer qualify for that program.
If you want out of a legally binding obligation, you should consider speaking to an attorney about options, and potential consequences if you stop paying timeshare maintenance fees or a timeshare mortgage – NOT an exit company. Exit company employees are just more salespeople without a law degree.
Unfortunately, we are seeing more and more owners associations sue owners in Small Claims Court for outstanding maintenance fees – especially the smaller resorts – and we see lenders suing on the promissory notes. I am not talking judicial foreclosure – I am talking suits for money judgments (Westgate Resorts in Florida).
Nonpayment of fees may work for some resorts, but it does not work for all
In most instances, nonpayment of maintenance fees do not show up on credit reports because maintenance fees are not credit, BUT, the exception is, if a debt collector gets involved – a debt collector CAN report nonpayment of fees to collections. Monterey Financial, a debt collector, is notorious for doing this for both Mexican and US resorts.
Despite ridiculous commercials on the radio by exit companies that act like getting out of a timeshare is “one size fits all” …it is not. Each resort contract is different, each state has different laws – for example, some states do NOT allow nonjudicial foreclosure. In those states, the lender or association must sue to foreclose – which then often includes a request for a deficiency judgment and requests for attorney fees.
Also, the “guarantees” made by exit companies are equally ridiculous- the only entity that can “guarantee” an exit is the other party to the contract – read the fine print on those “guarantees” and you will often find a loophole for the exit company to keep your money…for example, they “guarantee” an “exit option” – not that you will actually like the option they give you, just that they give you one…so here is an option you may hear after you sign up… “Pay off your mortgage and then stop paying the maintenance fees and hope the association seizes your timeshare” – it’s likely you don’t like that “option” but hey…the exit company gave you an option, so now their contractual obligation to you is satisfied according to that exit company … their guarantee was an option… no refund for you… or, the exit company just doesn’t answer your phone calls anymore. Look at the Timeshare Exit Team..sued by the State of Washington Attorney General and now out of business…
Many exit companies are more expensive than lawyers…so guess what some exit companies do…they take your $6000+ and then hire an attorney “on your behalf” for $1500-$2000 (paid to the attorney). The exit company keeps the rest of your money, doing very little to no work to earn that money- just a middleman.
Yep, an exit company just does what you can do yourself – call the entity you have an obligation with (lender or owners association) and ask to be released, or stop paying and breach your obligation in hopes your timeshare is seized…you don’t need an exit company – do it yourself. If that doesn’t work, hire a lawyer to negotiate on your behalf, or sue if you have a cause of action,
Timeshare Users Group (TUG) has tracked the outcome of those who chose to default on their maintenance fees and loan payments.
Thank you for contributing your views on the subject of exits, AIT respects the fact you wish to remain anonymous, it is understandable given the attacks developers are launching on genuine attorneys, a point we have covered on our pages. This article follows very nicely yesterday’s article “Paid for Articles and Advertising“, where we highlighted the “scare tactics” which are used, but this time not from “cold calls” but through advertising and paid-for articles.
This industry is nothing short of disgusting, its greed knows no bounds, from the very first purchase through all the “upgrades” and then holding their members hostage with no viable exit plan. It is this that has given rise to the scams from the periphery, often the very same people who sold it and have left with your data. Yes, they may be attacking the “scam” operators, not with the intention of “protecting” their members, but for their own protection, these lawsuits only pay “lip service” to you the member, it’s called MARKETING.
That is all for this week and the end of another month, our thoughts are with our friends across the Great Lake, stay safe. Baby Dog has already made his intentions clear, I see no peace this weekend.