Introduction
Trust companies underpin the whole concept of timeshare, in that they preserve and protect the assets which all timeshare consumers buy into. Those companies (in respect to the consumers assets) formulated the underlying mechanics and contracts of the entrusted assets.
The main players in timeshare are FNTC UK Ltd,Continental Trustees Ltd, Barclays international trust and Hutchinson & Co Trust Company Ltd. There will of course be others, however I intend in this 5 part explanation to concentrate on FNTC, which are prolific in the timeshare industry. I do so, mealy as an example so as to give the consumers an oversight as to the minds and the actions which consumers are affected by.
By way of explanation Timeshare is a complex area, especially if and when a dispute arises.
First of all a developer arrives on the scene and has a desire to construct a resort in an area of his choice. That holiday resort can take many forms i.e: a hotel, An Apartments block, timeshare etc.
A developer performs the action of developing with a view of making a profit and being a company, the mind in charge will fancy the best possible return for the speculation it embarks on.
One such opportunity is that of Timeshare and no doubt when undertaking due diligence, every developer will court the advice of professionals who will explain the fundamental contracts which underpin timeshare and the rewards which will arrive the event the developer accepts the proposers offering.
The options:
A developer builds an apartment block then sells each apartment for a market price, which after subtracting the costs of the construction and associated costs (hopefully) that developer will be left with a profit.
The entire development will then bind the owners into an unincorporated association so as to maintain the developments communal areas and with a purpose of preserving the investment, which all the owners bought into. That club will we run by the owners and for the owners benefit.
This model offers a build and reward prospect and does not in really allow a pipeline of future royalties and profits to roll in from the development venture. In short, its build, sell and then move on plan.
If developer builds a hotel they have 2 choices in that they can run the development as their own hotel or sell the development to another either off plan or sell after working to hotel chains particular requirements.
The latter is a build and sell on model however, assuming the developer is acquiring to self develop then their chosen goal will provide an underlining asset and a business platform. This model (if exploited profitably) will give the developer an enhanced value, in that he has created an asset and a trading platform.
As each is interdependent on the other and if the business generates a profit into the future the combined value of the development is elevated. This said there is risk, as to the Directing minds ability to manage the hotel profitably.
The Timeshare option.
Timeshare only predominantly works in the holiday market as when a consumer wishes to acquire a property to reside in, that residence is required 52 weeks a year. Where as if a person wishes to go on holiday those holidays are at particular weeks of the years and subject to when the consumers are permitted to holiday. Another consideration is the number of holiday weeks consumers are granted in their employments contracts.
In respect to Hotels this is a form of timeshare as the consumers chooses a time and a location where to holiday, and if available, the consumers books the holidays. In this model the yearly occupancy is shared however the consumer does not have any ownership in the room/suit they occupy. It does however allow the consumers to visit many different locations through-out the world. That said the consumers are restricted to availability and hikes in price at peak times.
In respect to self catering holidays the original concept was that holidaying consumers share in the yearly occupancy however rent the apartment. The concept of timeshare permits part owning instead of renting the apartment they actually visit. This ought to reward the paying front loaded costs
At some point in the future, consumers could then dispose of the ownership and move on to other adventures. This concept would provide the consumers with an inherent advantage in that they experience 5 star holidays in glorious resorts and when they choose to move on, they can sell their title to another, resulting in their holidays being (in the long run) cheaper and in some expectations self financing.
Some will (no doubt) chuckle and indeed balk at this! However that is with the benefit of hindsight. That said that was the concept and that is a very workable concept and enriches consumers.
The underpinning of timeshare
To make Timeshare work there are 4 basic contracts excluding finance agreements and other facilitating arrangements?
The first contract is between the seller of the timeshare and the consumer who acquires it.
This contact (as history tells us) has been the most controversial and in many case the representations made buy the seller or his agent have proved to be untruthful. When you reflect on the situation the salesman always want to sell and that process is engineered to benefit the salesman with bonuses and rewards when a sale has been made. You can pithily appreciate that a plethora of debacles and disputes result when any person or company who is employed to persuade another into a contract is enriched by rewards (misrepresentations and selling false hope).
The second contract is the trust contract whereby the trust (which holds the assets on behalf of the Consumer) undertakes to protect the consumers asset.
These documents and cross obligations are very complex documents and only the savvy lawyers will know the implications, obligations, effects and liabilities which are contained in the documentations.
The third contract is that of the membership of the unincorporated clubs whereby the consumers contracts to a membership of a club for perpetuity. (a lifetime and beyond). Again these documents are long winded, legally worded; contain binding obligations which purportedly last forever as well as cross references which would require significant and quite perusal to understand.
The fourth contract involves the developer and the clubs which the consumers is bound to forever which affords the developer (founder members) a voice in the club, how its run, who it employs, the levels of fees/charges and how the consumers disposes of the Property they acquired.
In the backdrop of having to consider these four primary and complex contracts consumers might have been partially intoxicated, unawares, on holidays and subjected to verbal chastisement for hours on end, by a well versed, well educated and incentivised profiteer who is represented by a highly motivated and financially induced salesman selling a sea of dreams which in a lot of instances turns out to be a falsehood.
The selling is unregulated, unchecked and a sea of litigation has kept the courts busy since the outset of timeshare.
This is an established fact and for those reasons consumer have tuck tails and existed the timeshare experience, with a view of never returning.
The action of the leavers has not changed timeshare. In the many years timeshare has been in existence, many in the industry have said that vast changes have been made, however the same complaints remain and make toxic what could be a great way to travel.
To get to the nub and the root causes of timeshare problems it ought to be wise to explore the minds behind the development of the 4 contracts and how those instruments affect the consumers.
Using FNTC I have visited there web site and below are a representations as to the service which they provide to the developers.
……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………….
FNTC stands for First National Trust Company and they are based in the Isle of Man UK. The Chief Executive is Declan Kenny
His background is heis an Accountant by profession and has been with FNTC in various roles since 1989.He took over the position from Mr Paul Gardner Bougaard who has since felt the organisation and is the CEO of the Resort Development Organisation RDO.
Before Mr Kenny worked for FNTC HE held a variety of positions within Permanent TSB, a Financial Institution based in Dublin. Under his leadership
FNTC boasts it manages over £2.5bn worth of property assets. These assets are mainly consisting of over 300 resorts and leisure land developments. Those resorts FNTC say provides services to over 650,000 consumers therefore they are a huge player and accordingly have huge responsibility.
Philip Broomhead is also a Director and is a UK Solicitor and Director of FNTC, he is based in central London and has been in the fractional and shared ownership business for over 20 years.
Fractional ownerships is where there are a multiplicity of owners of a particular parcel of property.
Mr. Broomhead claims he has gained wide experience in creating the right legal structure for resort developments and works with many of the leading European resort developers. He has been a member of the Legislative Council of the Resort Development Organisation (RDO) for many years.
FNTC is the market leader in the travel and leisure industry, managing 70% of the European trustee market.
FNTC‘s administrative support says they will help your business grow, they claim by enabling you to focus on core business activities.
FNTC suggest that it has a wealth of experience in all the main jurisdictions across the world
Again they claim to have a hands on approach when working closely with developers lawyers and accountants ensures that FNTC fully understands your business and can recommend services that meet your exact needs.
The business solutions offered by FNTC are the complete solutions. By using FNTC as a single source for advice and support, administration costs as well as improving customer service levels and retention.
As well as the role with the industry FNTC offer services such as
Trustee services: developing the necessary infrastructure that is legally and financially compliant, providing full protection for the end consumer.
Financial services: providing consumer finance and collecting sales and maintenance fee revenue in all major currencies.
Shared Ownership – what you need to know
Choosing the right legal structure for your shared ownership development is essential. Whether a simple fixed week timeshare resort, an eighth share fractional, a non-equity private residence club or a deeded fractional property we can create a program, tailor-made for your long term success.
Comprehensive Choice
We are experts in designing commercial and legal structures for:
Many of the leading hotel brands are now including it as part of their product offering to provide more choice, to balance their portfolio and improve their overall business performance by
- Maximising profitability
- Increasing customer loyalty
- Increasing year-round occupancy levels
- Attracting new customers
Consumer satisfaction in timeshare is significant with over 6.2 million families enjoying holidays at 5,300 resorts worldwide.
How it works
There are a variety of ways that timeshare can be purchased throughout the world. In essence, when a consumer buys a timeshare they are purchasing their future holidays and leisure time. This involves a purchase fee which will vary depending on the standard of accommodation, its location, the length of the scheme and the services available. In addition to this an annual maintenance fee is payable to cover the upkeep and ongoing management of the resort in which they have purchased their timeshare.
In its infancy, timeshare was sold simply as a fixed week (7 days) in an apartment at a particular resort. However, through consumer demand for more flexibility, the product has become increasingly sophisticated and now provides consumers with a variety of product offerings including fixed weeks, points, floating time, split weeks and usage on alternate years.
FNTC provide ideal structures facilitate timeshare products and provide both developers and consumers with a wide range of services.
tructure
The above statements can all be views by visiting with FNTC at their website.
In support of their clients these now state they are a founder member of the RDO.
As TNTC manages over £2.5bn worth of property assets over 300 resorts which they say services to over 650,000 consumers it would be only just to the consumer to see what their role is in timeshare. How they operate? For who’s benefit and why the complexities are a needy requirement? I say this as I came across the latest concept authored by FNTC which is sold as Fractional ownership of a Fractional Points System.
………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………..
In Lancastrian the model is that holidaying consumers are being sold “a bitty ownership in a bitty point system which is all ready subdivided into bits (in the form of points).
I have taken advice from quite learned soles and they have not got the foggiest idea what is being sold.
I say this conceding that, my advisors only read the document once, however if they are having trouble understanding it, how on earth can holidaying consumers understand it? Consumers are not savvy with contractual obligations of this product, more to the point, how on earth are consumers signing up to this product whilst being in the dark as to the implications of what they are signing?
In truth what is being said to the consumers (at the point of sale) to inducing them into parting with many thousands of pounds every day to acquire an obligation they cannot possible understand.
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