May 3, 2013 — Since the late 1960’s it is my best guestimate that upwards of 50 + Million ‘sales guests’ attended a timeshare presentation somewhere in the world & heard the immortal words (e.g.): “ …and when you are done vacationing you can sell it and get all your money back…”. An equal number of those prospects were also told that when they do “sell it” they’ll likely make a handsome profit or instead of selling they could “rent it” out each year and earn an income forever and ever!
So here’s the scoop. Back in the early days of our industry when those assertions first started the claims were not exactly misleading because quite frankly the original notion was, IMO, well founded and that was a time when there was only an assumed secondary market for timeshare owners somewhere in the uncertain future whereby they might someday need or want to “sell-it” or “rent-it”.
And indeed during the 1970’s some timeshare owners did resell at a fair market price and often broke even, while others sold and made a tidy profit. Back then other timeshare owners simply rented out their ‘weeks’ to friends, business associates, neighbors and so forth and put a few bucks into their pockets as well.
But when you fast forward some 20 years later to the mid 1990’s everything had changed dramatically in our industry. By then, with a couple million timeshare owners on the books, many of their traveling needs and lives had forever changed.
Many owners, for example, no longer traveled, encountered financial difficulties of some sort in their lives or simply retired, resulting in lower disposable income available for vacationing.
Others went through divorces or the death of a spouse. Still others developed serious health issues that prevented them from traveling and others had exhausted their vacation desires, etc.
As such, confronted with those ‘life’ realities many TS owners/members began actively looking to do what they had been
sold told years previously they could easily do in the first place and that was to “sell-it” or “rent-it”.
By the end of the 90’s a plethora of ‘time’ was coming onto the secondary market. And pretty much everyone in the ‘biz’ (developers, sales reps, etc.) knew only too well there was a serious problem for owners/members needing or wanting to sell or rent their ‘time’ because there was no organized, centralized, specialized & viable timeshare system available to them in which to accomplish those objectives.
By the early 2000’s things were getting downright ugly and desperate for many of these timeshare owners/members. And of course the Internet became the super-information highway & ‘meeting-place’ in which individual timeshare owners rapidly discovered they were not alone in their plight.
Soon hundreds of thousands of ‘time’ intervals were on the secondary market as those owners were trying their hardest to unload their vacation slots any way they could, including giving their intervals away for free if they could just find someone, anyone to take the slices of paradise off their hands.
All this activity gave birth to legitimate resale/rental companies that helped out some owners. And, as is well documented, other resale/rental scam companies surfaced and went into what became dubbed as the ‘up-front business’. Once they collected the advance (‘upfront’) fee to “sell-it” or “rent-it” that was the end of the relationship and the owners with their inventory sat idle for years to come.
Then came the ‘post-card’ companies that contacted (and still do) TS owners telling them if they paid them a fee of the thousands of dollars the owners could transfer their ownership over to the ‘company’.
By doing so they were assured they would get out from under their ownership rights, uses and obligations, including in many instances skyrocketing annual maintenance fees, dues, special assessments, etc. that run in perpetuity for millions of owners.
In 2013 this resale/rental aspect of the ‘biz’ is quite the mess. Many owners are so distraught that they are just walking away from their timeshares in record numbers even though they risk a major hit to their credit report/score for not paying their contractually required annual maintenance fees, assessments and so forth.
Now, I bring this all up because believe it or not there are still developers around the world authorizing — if not outright encouraging — their sales reps to continue the practice of telling and/or strongly implying to every would-be buyer that as a timeshare (vacation) owner/member they, too, can “sell it” or “rent it”.
And by doing so, to my non-lawyer way of thinking, that could — depending on the jurisdiction — constitute what may be deemed one or more acts of silent fraud, misrepresentation or outright fraud by the developer/rep primarily due to the omission and/or purposeful concealment of one or more “material facts”.
In other words, absent a credible, dependable and viable resell/rental program that produces real “sell-it” or “rent-it” results it is nearly impossible for many owners to do so and to claim otherwise during a sales presentation may not be wise let alone legal. Especially considering many would-be buyers have been and are making, in part, their purchase decision based of those assertions.
Which leads me to a potential problem for any sales rep telling prospective buyers that they can indeed “sell-it” or “rent-it” because absent a viable (aka: no smoke or mirrors) system in place to accomplish those goals the reps, when a complaint is filed, could be hauled into a civil or criminal court of law (again, depending on the jurisdiction).
And when that happens the outcome could ultimately turn the reps’ lives upside down, such as the possibility of losing their license to sell (anything), having a ‘public record’ that will haunt them for all eternity thus eroding their ability, in the real world, to continue making a decent living and providing for their families.
You see, rightfully, many timeshare developers around the world have a contractual relationship with their ‘reps’ that is filled with all sorts of legal mumble jumbo that essentially lets the developer off the hook. They do so in the event a rep, shall we say, is less than truthful with the developer’s clients (aka: prospects/ buyers/owners/members) and ‘pitches-heat’ (aka: lying) about the ability to (e.g.) “sell-it” or “rent-it” etc.
In one particular court case that I’m familiar with that rep’s defense attorney submitted evidence in the form of confidential developer training materials that include the old ‘T’ pitch (use it, loan it, rent it, and sell it or will it). And that the rep(s) working there are instructed in writing and during most sales meetings to follow the entire sales process to, well, the ‘T’.
I won’t go further into that or other cases at this time, and who will ultimately prevail in those cases is anyone’s guess. But every rep should understand that once the process against them starts just the expense of a decent legal defense can run a minimum of $30-$60-K USD (or more).
And for those reps who believe they may have some form of Professional Liability Insurance (PLI; aka ‘errors and omissions’) covering civil suits I highly urge you all to read the fine print ‘today’ and make sure you know exactly what is covered, under what circumstances and of course what is not covered.
It should also be noted that to the best of my understanding PLI usually does not cover criminal cases and those instances can and often do lead to the accused taking that highly undesirable perp walk that even the not-so-guilty may be forced to endure.
So have a lot of fun, sell a ton of ‘time’ and earn a lot of money; but to paraphrase Elmer Fudd always remember to ‘Be vewy vewy careful hunting those wabbits’.
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