A bill that's currently in the works in the Florida legislature could make it more difficult to sell a timeshare you own in that state.
The bill, known as HB 7025 was originally about timeshare details like board elections, foreclosure procedures, and reserve calculations. Then at the last minute, lobbyists for timeshare developers inserted an amendment that could hamper your ability to sell your timeshare.The Florida Capitol, where this timeshare bill will be decided
What the bill says
No person shall participate, for consideration or with the expectation of consideration, in any plan or scheme, a purpose of which is to transfer a consumer resale timeshare interest to a transferee that the person knows (or should reasonably know) does not have the ability, means or intent to pay all assessments and taxes for the consumer resale timeshare interest that are due or that come due during the transferee's ownership...
Notwithstanding any other penalties provided for in this subsection, any violation of this subsection is subject to a civil penalty of not more than $10,000 per violation ...
A managing entity may bring an action to enforce the provisions of paragraph (e). In any such action, the managing entity may recover its actual damages, plus attorney's fees and court costs.
What's the reason behind this?
Many people have been stuck owning timeshares where they can't afford to make their payments. Many timeshares have little or no resale value, so owners have trouble selling them.
In some cases, companies have been created that take ownership of multiple timeshares. The owner transfers the timeshare to the company, which has no intention of ever paying the fees. The company can go into bankruptcy, and take all the timeshares it owns down with it. Florida has the most timeshares in the US, so this is an issue there.
The industry would like to end this practice, so this amendment to the bill creates steep penalties for anyone who participates in such a deal.
Why is this a problem for timeshare owners?
As a timeshare owner, how do you know whether the person you are selling to has the "ability, means and intent to pay"? Unless you're giving it to a friend, chances are you know nothing about whoever is buying it. And what does that vague "or should reasonably know" mean?
Companies involved in timeshare resales are leery of this, because their potential for liability here is high. Each violation could cost a fine of up to $10,000 + legal fees + court costs + damages (presumably this would include unpaid maintenance fees, and I'm not sure what else).
The Orlando Sentinel reported that a lobbyist for a timeshare resale closing company
accused developers of trying to trap buyers into keeping their properties so they must continue paying annual dues "because that’s the income stream". He said his client would never buy another time-share unit under the proposal.
If fewer companies participate in timeshare resales, that limits your options as an owner. If you face the possibility of significant liability if you sell to someone who doesn't pay the on-going fees, then that's another problem. Making it more difficult and/or expensive to sell your timeshare is not a good thing for owners.
What's the latest?
According to the Orlando Sentinel,
A hand-written amendment to remove the "reasonably know" standard and then a unanimous vote [to approve the bill]. Sausage-making in action.
It will be interesting to see what happens next. The bill passed the committee, but has more votes yet to come. If the industry gets this passed in Florida, I wouldn't be surprised to see similar bills arising in other states.
I'm no lawyer, but it seems that this benefits only the developers, and could be detrimental to the interests of Florida timeshare owners.
Do you have any comments, questions, or insights on this issue? Please share your thoughts in the comments below. I'd love to hear from you!