Once again it’s with regret that another state has enacted tougher laws in relation to timeshare and once again the legislation falls woefully short of offering solid consumer protection. It seems that all the legislation that is making its way onto the statute books in the States is solely aimed at the resale and exit market with no mention of the protection for consumers at the point of sale.
It comes as no surprise to us that such legislation is being driven by the American Resort Development Association (ARDA). This organisations name pretty well explains their business modus operandi, RESORT DEVELOPMENT. The ARDA membership is a real who’s who of all the major developers such as Hilton, Wyndham, Blue Green, Westgate and virtually all other big and small developers. Naturally with such an illustrious membership it’s fair to say where the exact loyalties of this organisation lie. ARDA has over 600 corporate members and 5,000+ engaged associates.
North Carolina – Latest legislation
The great state of North Carolina has become the first state in the nation to pass legislation regulating timeshare exit companies. The groundbreaking timeshare statute stems from the North Carolina Real Estate Commission (NCREC) recognising the need for regulation of companies claiming to “exit” consumers from their timeshare contracts. In short, a few of the key points are shown below:
- Timeshare exit companies may not advise or suggest timeshare owners cease making payments on their timeshare obligations;
- Timeshare exit company contracts must provide timeshare owners with a right of rescission;
- Timeshare exit companies cannot charge timeshare owners for a transfer or exit service that amounts to foreclosure or repossession;
- Timeshare exit companies are not entitled to a fee for a transfer or exit service if the timeshare owner procures their own transfer or exit;
- Written evidence of the transfer or exit must be provided and include the method of transfer or termination, along with legal documents; and
- Timeshare exit companies must escrow the fee charged to timeshare owners.
Once again we see an industry driven campaign to make it tougher for third party companies to assist timeshare owners who wish to exit when their developer either makes it difficult or nigh on impossible.
Admittedly, North Carolina did update their existing timeshare legislation with the addition of some point of sale protection but this falls far short of the sort of protection afforded to purchasers whose timeshare come under the remit of the European Union. The main points are below:
- Require timeshare developers to provide a complete public offering statement to a buyer before the execution of the sales contract.
- Provide that all buyers’ funds received by the developer prior to closing are to be deposited into an escrow account maintained by an independent escrow agent to protect those funds.
- Specify conduct that violates the law and empower the Commission to take disciplinary action against any regulated party for violating the law.
- Modernise the law to appropriately regulate the current products and services that the timeshare industry offers and provides to consumers.
As anyone in possession of a timeshare in the States will know, the Public Offering Statement (POS) is not only full of indecipherable legalise but often runs to 40 pages or more, all this to be read and understood before the contract is finalised and at latest before the cooling off (rescission) period ends, which incidentally in North Carolina is 5 days.
Once again, no mention of the actions of sales people, who for the main part appear to be the root cause of most dissatisfaction, together with maintenance fees, together cause the major problems in the American timeshare industry.
Yet again ARDA show their true colours. Not a mention of unfair sales practises being curtailed legally. Not a mention of pegging maintenance fee increases by legislation. Not a mention of fair exit strategies, just an attack on the exit industry:
“This new law includes language that addresses how the timeshare industry has evolved over the years,” said Robert Clements, vice president of regulatory affairs and general counsel for the American Resort Development Association (ARDA). “We commend the Commission for putting together a law that can serve as a model for other states looking to update what they have in statute, and we thank the General Assembly and the Governor for their support. We take pride in having been able to help the Commission, and we’re happy to continue to be a resource to them as they implement the law, as well as for any other states looking to modernise their timeshare laws.”
“This is a win for consumers, as this law regulates timeshare exit issues that harm timeshare owners and the industry as a whole,” said Elizabeth Baker, vice president, state legislative/regulatory official outreach for the American Resort Development Association-Resort Owners’ Coalition (ARDA-ROC), an organization that purportedly “ represents” over 1.6 million timeshare owners. “As we’ve seen time and again, unscrupulous exit companies take advantage of owners looking for exit options, and this is a first-of-its-kind legislation that works to combat that.”
“Timeshare exit issues that harm timeshare owners” says Elizabeth Baker; failure to install guaranteed cost effective exit strategies is what harms timeshare owners more than anything else.
Physician heal thyself
So it can be assumed that considerable time, effort and legal expense has been expended, not to mention the time consumed by the legislature of North Carolina State to solve a potential problem that plainly wouldn’t exist if timeshare resorts and developers would simply get to grips with the fact there are owners who just want out.
At TCA we are not unrealistic and accept the fact that owners who exit contracts cost resorts and developers money. With that in mind why don’t they charge a sensible multiple of annual maintenance as a fee to exit, at least this way owners can rest in the knowledge that if life swings a curve ball and they need to get out, there is an escape route. But obviously, for reasons known to the industry this idea has never got off the starting blocks.
A bit more about ARDA
As we stated earlier ARDA membership across all types is heading towards the 6,000 mark, little wonder that they have a significant voice within the timeshare industry. Being fee based it’s easy to see the type of funding they achieve and how this translates into the money they can allocate to time and effort in cases as highlighted above. So how much do the industry contribute. In actual Dollars we cannot be certain but given the number of members and the current annual membership fees it’s not difficult to make a guess:
Whilst investigating for this article we came across the tax filing for ARDA for the year ending 2019. First of all, this return is filed under Section 501(c) which is for the return of an organisation exempt from tax. The submission is carried out on form 990. Naturally all the company facts and figures are contained within. An interesting point we discovered was the salaries of the chief execs:
Since these accounts were published, Howard Nusbaum has retired and his place has been taken by Jason Gamel. As may be observed above, his final years’ salary was a mere $1,049,948! In fact the ARDA executive total pay bill was over $3.3 million.
Enough said.
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