Do you want to be a member of a Timeshare Association that is thriving?

There are important things you can do to help your Association.  This blog will discuss only the possible legal solutions, and not the practical solutions of having good management of your Timeshare Association.

First, I will share with you the most immediate remedies which are to (a) implement a sound rental program and (b) follow up promptly and effectively collecting assessments, all in compliance with the project governing documents and applicable laws.

The most effective long term solution, if the timeshare interests are deeded, is to convert the project from deeded to non-deeded interests.  The virtues of non-deeded over the burdens of deeded interests have been publicized since 1995 in industry articles and workshops.  (See www.timeshare-attorney.com .)  It is therefore appropriate to request developer contribution to the added costs of operation and remedies due to setting up a much costlier legal structure than necessary.

So, what are the advantages of non-deeded interests to the Association and its members?

• Lower foreclosure costs against defaulted members (A recent informal study revealed the annual Association Budget is 3% – 13% higher to foreclose against deeded timeshares.)
• No ancillary probate necessary at the death of out-of-state owners (The added cost of $1,000 – $4,000 is further discouragement to heirs who may not really want the timeshare anyway, which leaves the Association no alternative but to foreclose.)
• No quiet title issues if a unit is to be sold to help pay Association expenses, assuming there are sufficient units remaining to service owners in good standing

Although there are many forms a non-deeded structure can take, I am most familiar with the Association holding an appropriate amount of undivided interest in the real property to support the timeshare interests held by the owners/voting members.  The conversion process must be in compliance with the project governing documents.  In the first “conversion” I did the project declaration did not specify the form of conveyance for the timeshare interests, so the Association held the undivided interests it foreclosed upon and issued voting memberships.  If the declaration specifies deeds for conveyance, it must be amended.  If title to units must be cleared, that can sometimes be done by the Association if the declaration includes a power of attorney from each member to the Association to clear title if necessary.

In either case the conversion can be accelerated by inviting the members to sign a deed to the Association in exchange for a Certificate of Ownership, based on the three advantages listed above plus:

• No personal liability of the individual owners for what happens on the property, if they are not directly on title.

I have found these recommendations to be very helpful to Timeshare Associations I have worked with.  I hope they will cause you to look at your Association in a new way.  Best wishes for a thriving Timeshare Association!