The death of the holiday timeshare
Gavin Stuart's comments can also be found in related articles titled - Do timeshare schemes still offer value for money? originally published by Christine Long for The Sydney Morning Herald on 9 February 2020 and Brisbane Times on 8 February 2020.
There was a time when sitting in a seminar or getting a sales call about the wonders of owning a timeshare was almost an Australian rite of passage.
The industry’s own statistics show that in 2012 there were 170,000 total owners across 91 timeshare resorts in Australia, with 2,683 timeshare units.
But what was once pitched as a great investment and an appealing holiday destination, may have lost its gloss.
Gone is the glamour of a few weeks holiday each year at a resort that you own in a lovely regional setting, along with other families enjoying the same opportunity. Instead, there is the reality of paying rising levies on your fixed retiree income to maintain an ageing facility in a regional area that your family and friends no longer wish to visit. And when you ask around to sell your interest in the resort, you quickly discover that it isn’t worth very much at all.
In 2018 consumer advocate Choice pointed out “Some timeshares can take 38 years to work out cheaper than booking your accommodation yourself each year.”
Summing up its findings Choice went on to say “Should you invest in a timeshare? The short answer is no".
So, when developers start showing some interest in the land the resort is located on, the option of selling out looks very attractive.
This was the case for Vacation Club Ltd which had operated a timeshare resort in Port Macquarie called ‘Vacation Village’ since 1980 for its approximately 494 members who owned and were entitled to stay at the resort.
At an Extraordinary General Meeting in November last year, the members voted in favour of a series of resolutions to wind up the Club which ultimately resulted in the appointment of trustees by the NSW Supreme Court for the sale of the resort property.
The resolutions were passed with overwhelming majorities ranging from 85% to 89%, in circumstances where:
many members were approaching, or were in, retirement and couldn’t afford the levies;
levy default amongst members was growing placing the Club and members alike under increasing financial pressure;
as members were ageing with virtually no ability to exit the timeshare there was a high probability that defaults would accelerate;
the Club couldn’t afford to pursue the levy defaulters; and
holiday rents were not covering the maintenance fees in many cases, leading to a strong move amongst members to favour the realisation of their interest through the sale of the resort land for future development.
Bartier Perry acted for the Club, in which Vacation Club successfully made an application to the Supreme Court of NSW for orders appointing trustees for the sale of the timeshare resort property under section 66G of the Conveyancing Act 1919 (NSW).
The 66G application was necessary because the title to the land on which the resort was located had been divided into 1248 sub-folios with 501 members, many of whom could not be located and communicated with. In these circumstances, the court needs to make orders for the title to be consolidated so it can be sold, because everyone with an interest in the land may not have notice of the orders sought, and may not have an opportunity to raise any objection or consent to the process.
As you might imagine, the logistics of dealing with 501 owners and 1248 land titles poses particular issues for litigation of this type and formulating a clear strategy for the process and implementing it efficiently is imperative to ensuring the orders sought are obtained with minimum delay and expense.
Once the appointed trustees have marketed and sold the land on which the resort was located, the members will be able to resolve to wind up the resort company and finalise the process of bringing the timeshare venture to an end.
If you and fellow members of your timeshare resort have determined that the time has come to wind up your timeshare arrangement and realise the value of your resort, we’ve provided a basic checklist of some issues to consider.
You can access that checklist and more information here - Has time run out on timeshare resorts?
Author: Gavin Stuart