Timeshare Legal Advice
Consumers have now received, or begun to receive responses from Macdonald Resorts Limited (“MRL”) concerning the resolutions that are being motioned and passed by committees across a number of timeshare resorts in Europe.
The position being taken by MRL is that the Committees are entitled to motion these resolutions to change the nature of each time share club from a fixed week timeshare to a floating week system. MRL and its committees are defending themselves by referring to the clauses contained within individual constitutions which allow the Club to change and/or alter the constitution upon 75% of the members voting in favour of such an alteration or change.
There is a substantial argument therefore as to whether or not the clauses within the constitution entitle the Club to change the very object of the Club. This is a matter of contractual interpretation. The point, however, may be a moot one for the reasons set out below, by reference to the situation at Club Villacana by way of example.
We have now obtained a copy of the Trust Deed relevant to the Villacana Club and the position appears to us to be as follows:-
- The holiday properties (comprising apartments) that make up Villacana Club are not owned by the Club.
- When the Villacana resort was set up, and before any time share weeks were sold, a Deed of Trust was executed. The parties to the Deed of Trust were Barratt Multi-Ownership and Hotels Limited (now MRL) on the one part and a trustee, Barclays Trust International Limited on the other part (“the Trustee”).
Pursuant to the Trust Deed there is express reference to the Club which was created by MRL to “secure for its members joint rights of ownership of specific apartments at Villacana in Spain and also exclusive rights of occupation for such apartments for specified periods each year”. The Trust Deed further provides that each apartment at the Resort would be owned by a separate company. The shares in that company (yet to be disclosed) are to be held by an independent custodian trustee who would hold the shares in trust for members of the Club.
The position therefore is that all the holiday properties, which together make up the Villacana Resort, are owned by a company. That company is not the Club, nor is it MRL. The beneficial owners of the company are the members of the Club. In other words, you, as members of Villacana Club, each own shares in the Company which in turn owns the properties.
The Trust Deed expressly provides that the Trustee shall hold the properties in trust for members of the Club.
It is accepted that, upon reading the Trust Deed, that the Trustee will act in accordance with the written directions from the Club’s committee save that the Trust Deed expressly provides that the Trustee will not be bound to act in respect of such directions where those directions shall be inconsistent with the provisions of the Trust Deed.
Pursuant to clause 19 of the Trust Deed the Trustee and the Founder Member (MRL) are entitled by supplemental deed to alter the provisions of the Deed of Trust provided “such alteration does not prejudice the interests of the Members …”
It is therefore reasonably clear from an analysis of the Trust Deed that the Resort is held on trust for the members of the Club. The Club is not a separate legal entity and therefore does not own the properties. The properties are held on Trust by the Trustee company that must act in accordance with the interests of the members and to further the object of the Trust, which is to secure for the benefit of the members joint rights of ownership of specific apartments at the Villacana Resort and also exclusive rights of occupation of such apartments for specified periods in each year.
The Club, which in itself is not a party to the Trust Deed, is therefore proposing to pass a resolution which interferes with the provisions of the Trust Deed which has been described above.
In our opinion it has not been satisfactorily explained to the Members of the Club how the proposed changes are to lawfully take place without unanimous consent for beneficiaries to the Trust, without the involvement of the Trustee and without any supplemental Deed of Trust being executed.
To simply say that a change to floating week occupation is allowed because of one paragraph within the Club’s constitution is to over-simplify what is an extremely complex property and trust arrangement.
For more information regarding this article or assistance in any other timeshare related issues please contact the TCA on 01908 881058 or email: info@TimeshareConsumerAssociation.org.uk