Unburdening Company Myth # 3 We are helping the consumer – nobody is being swindled

Why every fraudulent transfer damages thousands of consumers

While it is true that the unburdening companies’ claim that consumers who avail themselves of an unburdening program for a fee may receive relief from assessment obligations, every time a timeshare interval is transferred to an Asset-Less Entity or individual and the assessments become delinquent the rest of the members of a timeshare resort must bear the burden of the delinquency, collection costs and eventual foreclosure costs. Certain practices of the unburdening companies have practically killed the resale market. What TTR has discovered is that, regardless of the ethical profile of the model or the company involved, eventually some (we suspect the bulk) of intervals taken in by unburdening companies end up being conveyed to Asset-Less Entities or individuals and the assessments then become delinquent.

TTR has reviewed well over 100 unburdening operations.  We discovered a wide range of business models and practices. The models range from more responsible models to unscrupulous models that are simply designed to create a default in payment of assessments or take the consumer’s fee but never convey the interest.

The more responsible operations actually deliver what they promise to their customers; that for a fee, they will arrange to convey the customer’s timeshare interest to another entity or person thereby relieving them from the obligation to pay the associated assessments. Whether such conveyances are done by a defective deed or under a defective Power of Attorney is a separate issue. Another model is one associated with companies that facilitate trade-in programs for active timeshare developers. Typically these operations monetize the timeshare interests by making reservations for the current use week and then renting, exchanging or using that reservation as an incentive for marketing purposes. Often, the reservation for the use week is made under a Power of Attorney before the title to the interest is recorded. Some unburdening operations and trade-in programs have an associated resale operation that advertises and lists the more desirable intervals. Often, these desirable intervals are listed on EBay and other web sites for very low selling prices ranging from $1.00 to a few hundred dollars. This practice constitutes “dumping” and pretty much killed the resale market for the individual timeshare owner. These listings are often shown during an unburdening or sales presentation as proof of the value of the consumer’s current ownership. At the time that the interval is listed, the assessments are current. If the listing doesn’t sell by the time assessments become due again, it is then transferred to an Asset-Less Entity or individual. In the case of intervals that have a Right of First Refusal (ROFR) provision, the intervals are sold back to the developer for a negotiated fee.

The less responsible operations often still attempt to monetize the associated usage rights but fairly quickly convey the timeshare interests to Asset-Less Entities or individuals.

The fraudulent operations simply take the consumer’s fee and never transfer the interval. In this case, the original consumer is damaged as well as the Association.