Resorts Play Vital Role in Resales Closing Process

For many of the nearly 20 percent of new timeshare owners who buy a resale interval, the introduction to their new resort won’t go smoothly. According to representatives of the industry’s top title companies, resort homeowners associations are often unresponsive or slow to supply needed documentation. “Sometimes, it’s even hard to find out who to contact and what the process is,” says Amy Bellman, vice president – division counsel for Fidelity National Timeshare and Chicago Title. “Other times they’re only checking the post office box once a month.”

Slow response times and onerous requirements can mean that closing a $5,000 timeshare sale can take eight weeks or more, something a buyer who closed on a $300,000 house in two weeks will find mystifying. “Many buyers are new to the industry,” says Jennifer Munoz RRP, AVP business development at First American Title Insurance Co. “A smooth transaction where the resort provides necessary documents and communicates during the closing process is the first step to having a happy, dues-paying owner.”

“All resorts strive for a good owner experience so we want to start out that relationship on the right foot,” agrees Jeanine Wells, senior operations manager for Stewart Vacation Ownership.

In discussing their ideas for how the process could be improved, these three experts have helped Resort Trades assemble a few guidelines – maybe even a wish list – for HOAs.

Easy Access
The place to start is clear communication on your resort’s transfer process for titles, so why not post that information on your website? Include the name, physical address, email address, fax number and other contact information, along with fees and forms that need to be submitted. “Some resorts have requirements that if the buyer is an LLC, a form must be submitted authorizing the LLC to purchase that specific interval,” Bellman says.

This information should also be provided to owners, including if resorts require a signed authorization from the owner before the resort will communicate with third parties, such as title companies. “Making this simpler would be a big help,” Wells says. “There are resorts that still require the owner to be on the line during any phone calls. Since owners can be from all over the world and include many time zones, this can be hard to accomplish. Additionally, most owners are at work during normal business hours, which is when calls to the management company or HOA would take place.”

Another idea is for resorts to keep a list of title companies they have worked with and send out an update when fees or requirements change. Be sure to send the amount of the transfer fee with the estoppel documents and not if there is a fee increase scheduled. “Fees commonly go up at the first of the year,” Bellman says. “That can slow things down in January because we have to make sure we have the current information.”

Letter Perfect
Resorts are generally first contacted by title companies for estoppel letters and right of first refusal (ROFR) documentation. The estoppel letter outlines information regarding the current owner’s financial standing in regards to the HOA, what is due and what has not been paid. It also indicates any assessments that are in progress or projected. The ROFR is exactly what it sounds like; resorts may have the option of buying the unit instead of letting the sale continue.

Title companies must wait until resorts respond to these requests before they can finalize a sale. ”We need to know what the fees and, for example, if maintenance fees are due,” Bellman says. “Some resorts take eight weeks or more to provide this information. It really slows down the process.”

If resorts send the information to the owner instead of the title company, that’s another hiccup. These delays can create new problems as new maintenance and other fees can become due after the sale’s terms were originally agreed to by both parties. The simplest solution is to provide needed documents directly to the title company via email.

Title Transfer
Once the title company has all needed information in hand and buyer and seller complete the transaction, there’s still another possible roadblock: the resort has to transfer the title to the new owner. Resorts charge varying fees for this service, with some charging upwards of a $100. While the revenue can be welcome, high fees may be short-sighted.

“If the transfer fees are perceived as too high, sticker shock may be a deterrent to obtaining a new owner,” Munoz says. “It may hinder the transaction. As a result, the seller may let the property go through the foreclosure process, and the resort would lose a dues-paying owner.”

This final step can take up to six months for resorts to complete. “During that time period additional maintenance fees can become due or the new owner will miss an opportunity to vacation at the resort,” Wells says. “If there’s a problem that needs to be fixed, we don’t hear from the resort until it is too late to collect fees from the previous owner.”

“For our purposes, this is critically important,” Bellman says. “As a practical matter new owner can’t use their timeshare until the HOA updates their records.”

Due to problems with “relief” companies, some HOAs are leery of title transfers. There are red flags, such as a buyer with a name like Dump My Timeshare and no money changing hands. Title companies can help put procedures in place to create a disincentive for such companies to accept inventory from your resort.

In most cases, a phone call to the title company can alleviate concerns. “If they have suspicions or questions about who the buyer is, they can call us,” Bellman says. “Even better, they can call the new party on the deed to welcome them to the resort.”

Looking for more information on how your HOA can put a resale program in place? Check out the American Resort Development Association’s Best Practices for Resort Resales in the HOA Toolbox on their website: