Hi boys and girls! OK, so here’s a test for you and, I’m sorry, but most of you are going to get this wrong. But! You’ll be smarter in the end! This is something that comes up pretty frequently in time shares. Is your time share deeded? In almost all instances the answer will be yes, even when it’s not! Puzzled already?
So here’s what got me thinking about this story. First, I’m going to show you a real quick article in the Orlando Sentinel from October 20, 2016. This is about Marriott’s Points program and a pending law suit over it. The article itself is interesting if you own Marriott Points but it also brings up the question: When is a deed actually a deed? First, here’s the story:
Marriott timeshare company responds to racketeering lawsuit
Marriott Vacation Club and First American Title Co. are battling a proposed class action lawsuit that alleges MVC’s timeshare sales are a racketeering scheme.
Marriott’s attorneys with Greenberg Traurig in Orlando have filed over 50 pages in its first round of replies to the lawsuit, which started as a proposed class action in May.
“It is evident from these allegations that plaintiffs have misread the statutes that they assert have been violated,” Marriott says in a motion to dismiss the case… “The allegations are without merit and the MVC Plan fully complies with applicable law.”
Marriott (NYSE: MVC) also seeks to have the dispute moved to a state regulator for review.
The lawsuit takes aim at Marriott’s points program, which replaced traditional sales of timeshare weeks at specific resorts in 2010. According to the suit, Marriott timeshare customers pay fees associated with owning real estate — such as closing costs and recording fees — but don’t actually own any real estate. Despite not actually being real estate owners, the lawsuit says, buyers are still paying closing costs, recording fees, title policy premiums and real estate taxes.
The suit also targets First American Title Company — the trustee for Marriott’s land trust — and Orange County and Orange County Comptroller Martha Haynie. The plaintiffs are two timeshare buyers, Anthony and Beth Lennen, who bought a unit at Crystal Shores in Marco Island – but their deed was recorded in Orange County.
Greg Crist, president of the National Timeshare Association, said he would welcome review of the allegations by a state regulator.
First American has filed its own 27-page motion to dismiss the case, where the title company alleges that the Lennens made a choice to purchase title insurance, and that they signed agreements that they couldn’t sue over the timeshare program itself.
Haynie’s office also filed a motion to dismiss her office from the case, arguing that recording a deed doesn’t bestow any legal blessing on it.
According to the lawsuit, deeds that are recorded in Orange County for Marriott timeshares have completely meaningless codes that only refer to contracts with Marriott, and not to actual real property, which makes them illegal.
The lawsuit seeks to abolish Marriott’s points program, which attorneys said is unique among timeshare companies. It also seeks the return of fees and costs paid by buyers.
First American is represented by Orlando-based Rumberger Kirk & Caldwell, and the Chicago office of Kirkland & Ellis.
OK, so there’s obviously two stories here but we’re going to look at the “deed” part of this story. So when you purchase a Marriott Points-based time share (as opposed to their “Weeks”-based time shares) what do you really own? Well, actually just a membership. Well if it’s just a membership then why the deed? And why are you paying real estate taxes, title insurance, etc.? Those are good questions and I’m anxious to see how the court rules on these. In my humble opinion many time share buyers are probably under the impression that they actually own real estate if they are paying taxes, etc. But back to the real question: If it’s just a membership, why the deed?
This comes up a lot in our office. Folks call us saying they have a deeded time share in Aruba, as an example, that they want to sell. Well, they do and they don’t. What they actually have is a contract to use a time share at a specific resort for a certain number of years. The folks selling the time shares use the word “deed” very fast and loose. This happens in many areas, not just Aruba. The questions, again, is: What is a deed?
First, there is the common interpretation. If I tell you I own something that’s deeded you naturally think of a home or piece of land. There’s a paper deed describing the property. But look at the actual definition of “deed” from Wikipedia:
“A deed (anciently “an evidence“) is any legal instrument in writing which passes, affirms or confirms an interest, right, or property and that is signed, attested, delivered, and in some jurisdictions, sealed. It is commonly associated with transferring title to property. The deed has a greater presumption of validity and is less rebuttable than an instrument signed by the party to the deed. A deed can be unilateral or bilateral.
So! A deed is not just limited to real estate! So in essence every time share is deeded, even when it’s not! But then, wait a minute……maybe not! We continue with Wikipedia:
“At common law, to be valid and enforceable, a deed must fulfill several requirements:
- It must state on its face that it is a deed, using wording like “This Deed…” or “executed as a deed”.
- It must indicate that the instrument itself conveys some privilege or thing to someone.
- The grantor must have the legal ability to grant the thing or privilege, and the grantee must have the legal capacity to receive it.
- It must be executed by the grantor in presence of the prescribed number of witnesses, known as instrumentary witnesses (this is known as being in solemn form).
- In some jurisdictions, a seal must be affixed to it. Originally, affixing seals made persons parties to the deed and signatures optional, but seals are now outdated in most jurisdictions, so the signatures of the grantor and witnesses are primary.
- It must be delivered to (delivery) and accepted by the grantee (acceptance)”
So! To be “deeded” the word “deed” must be used somewhere on the instrument! Leave off the word “deed”, and you no longer have a deeded time share. Now wasn’t that easy?