What Timeshare Owners Should Know About Resort Extension and Termination and How ARDA-ROC is Helping Owners
Many timeshare resorts across the country are facing a serious problem: timeshare plan expiration dates. Timeshare plans are the legal documents that create the timeshare resort and its structure. Some of these plans contain provisions calling for the termination at a certain date in the future. When a timeshare plan expires, the resorts cease to be timeshares without any guidance in the plans for what comes next.
What Does it Mean When A Timeshare Plan Expires?
When a timeshare plan expires, typically, a condominium plan would remain in place. This means that the 52 owners of each unit become “tenants in common,” meaning that they jointly own what is now a condo unit. However, there is no provision for how these owners can use or sell the unit, making the use or disposition of these ex-timeshare units nearly impossible.
What Should Owners Know?
ARDA-ROC believes when these expiration dates approach, timeshare owners should be able to choose whether (1) they want to continue owning their timeshare or (2) whether they want their resort to wind down. Owners need policies and procedures in place to facilitate the option they choose.
Even in resorts without expiring timeshare plans, there may be times when timeshare owners need the ability to terminate a timeshare property. This occurs when a resort has fallen into disrepair, the timeshare interests are no longer marketable, and the restoration costs don’t make financial sense for the owners to continue. In most cases, resorts are located on prime real estate. For these owners, termination would result in a hefty payout if the timeshare could be terminated and the property sold. There are numerous examples where owners of interests that were unmarketable pre-termination end up walking away with up to $15,000 apiece.
How ARDA-ROC is Helping Owners
Timeshare plan expiration dates are more common with older resorts. When they were first constructed, the plans included language terminating the timeshare plan 30-40 years in the future. For many of these resorts, it is now 30-40 years later. As these dates rapidly approach, the need for legislative intervention protecting owners’ interests grows greater. That’s why ARDA-ROC has been working hard to pass timeshare extension/termination legislation in state legislatures throughout the United States. Thanks to our owners’ advocacy efforts, Florida, South Carolina, and Rhode Island have already passed legislation in this area. Bills are also pending this year in Massachusetts and Virginia, with more planned.
To solve the expiration-related problems, these bills would:
- Establish new and more achievable voting requirements for owners who want to terminate or extend their timeshare plans.
- Apply retroactively to existing association documents.
- Allow the Homeowners’ Association (HOA) to represent the resort owners to handle post-termination activities and accomplish a sale.
- Protect the HOA and board members by limiting the period of liability for acts associated with terminating or extending a timeshare plan.
These changes empower timeshare owners to choose their resort’s future and put the necessary procedures in place to accomplish their objectives. ARDA-ROC looks forward to keeping you updated and engaged as our Virginia and Massachusetts bills move through those legislatures.