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National and State Timeshare Owner Groups Petition Florida Governor to Veto Developer Bill

On March 20th, 2015

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Timeshare News

ORLANDO, FL — In a last-ditch effort to derail a fast-moving bill backed by timeshare developers, two owner-advocacy groups have petitioned Gov. Rick Scott to veto legislation that, they claim, would erode owners’ legal rights and allow developers to exceed the 125 percent annual cap on maintenance fee increases, among other provisions. 

With a May 1 deadline looming for passage of new bills, it was unclear at press time whether the 11th hour petition from the National Timeshare Owners Association and Florida Timeshare Owners Group would gain much traction. But their initiative is striking, nonetheless, representing a first-ever alliance between two groups that should be natural allies on owner consumer protection issues. A third owner-focused group, RedWeek.com, an online marketplace for resales and rentals, endorsed the petition this week.
The legislation, if signed by Gov. Scott, would go into effect July 1. It would apply to Florida timeshare companies, Florida residents who own timeshares, and to non-residents who own timeshares in Florida. Opponents fear it would also become a blueprint for timeshare bills in other states, which is why they are trying to rally opposition from owners across the country.

Senate Bill 932, authored by Sen. Kelli Stargel (R-Lakeland), a lawmaker with ties and fundraising links to the industry, was initially introduced as a low-key measure to clean up timeshare laws that were passed in the1980s and amended in the 1990s. A companion bill in the House, HR453 by Rep. Eric Eisnaugle (R-Orlando), passed the House in mid-April and is awaiting action in the Senate. Both bills are sponsored by the American Resort Development Association (ARDA) and its owner-related affiliate ARDA-ROC (Resort Owners Coalition).

Neither group is accustomed to receiving criticism over legislation from owner groups, especially when that criticism draws media attention from local newspapers. As a result of the critical press, including two scathing opinion columns in the Orlando Sentinel, ARDA leaders spent the better part of April assuring people that the bill is good for both owners and developers.

“No consumer protection is changing in any way,” said Howard Nusbaum, ARDA’s CEO and president. “The Florida legislation is multi-faceted. The one piece that has created the most aggravation for timeshare owners, or misconceptions, is this part about nonmaterial – differences (in a contract).”

The bill’s most controversial clause would exempt developers from legal liability for “nonmaterial” mistakes in disclosures and contracts as long as the developers had otherwise substantially complied with the legal requirement to disclose all relevant information to buyers. In effect, the exemption would make it harder for longtime owners to get out of contracts and, as Nusbaum noted, deter what he described as “frivolous lawsuits” against developers and HOAs. Another contentious part of the bill would allow developers to bypass Florida’s current cap on annual increases in maintenance fees to pay for emergencies, such as a hurricane, or unexpected value-added taxes that jurisdictions frequently impose on timeshare properties.

NTOA and FTOG are receptive to other aspects of the bill, including a provision that allows legacy resorts, 25 years old or older, to extend or terminate their timeshare plans on a 60 percent vote. Some HOAs currently operate under much higher voting rules, or have no provisions whatsoever to end or extend plans.

But the materiality and maintenance fee proposals backed by ARDA are fighting words for groups that pay attention to owner pocketbook issues. Greg Crist, CEO of the 20,000-member NTOA, and Frank Debar, founder and chairman of FTOG, said they were blindsided and outraged by supposedly minor changes in law that could have major implications for owners and future buyers.
“This is an unintended consequence of not communicating what ARDA and ARDA-ROC have been doing,” Crist said. “Eisnaugle has been working on this for a year yet nobody told us about it. Now everybody is hiding and ducking because they knew they got caught with their hand in the cookie jar.”

Debar, in a recent letter to Gov. Scott, said: “These bills have been rushed through the Legislature so quickly that most timeshare owner groups, such as ours, have just recently learned of its existence. It’s clear the bill is unpopular with timeshare owners, and its passage, as presently drafted, will likely bring unfavorable publicity nationally, when consumer groups outside Florida become aware of its full implications.”

One major complication for everyone in the debate: the GOP-controlled Legislature is fractured over a $4 billion budget impasse over health care. The intra-party split has become so rancorous that the Senate has refused to consider any House bills (including Eisnaugle’s HR453). Higher-profile bills over guns, abortions and adoptions stalled in the gridlock as the legislative clock ticks towards a Friday night adjournment.

At a recent Senate Fiscal Committee hearing, Sen. Stargel portrayed SB932 as a non-controversial “much needed update” of timeshare law to reflect market changes, especially the growth of trusts and multisite plans — programs that did not exist when the original legislation was adopted. She touted the 60 percent legacy resort voting rule as one of several benefits for owners. Stargel described the maintenance fee provision as something that “provides flexibility in fees” and termed the liability piece a “hold harmless provision for nonmaterial filing errors.” (These phrases are mirror images of talking points on SB932 that ARDA distributed to members at the ARDA World convention in Orlando (April 12-16).

Stargel also told the committee she was adopting an amendment — to allay unidentified “concerns” — that would put the burden of proof upon a developer to prove that a contractual filing error was minor, rather than material.
The amendment, designed to defuse opposition, did just the opposite.
“I appreciate their making that change, but think it will just further confuse things, because this was a muddy statute to begin with,” said Michael D. Finn, a Largo lawyer who testified against the bill, with Crist, in the House. Finn, in business 40 years with the Finn Law Group, specializes in representing timeshare owners who have legal problems with HOAs and developers. He said most of his cases settle, under a seal requested by developers, rather than go to trial. Most of his cases, he added, involve owners who are just trying to get out of their contracts.

According to Finn, the hidden agenda of the legislation is that timeshare developers “are just trying to impede the right to sue. They argue that they need to protect individuals from frivolous lawsuits, but that’s absurd. If a lawyer files a frivolous lawsuit in Florida, he will get nailed for court costs and attorney fees. Developers vigorously litigate these things. No lawyer would even think of filing one.”

Ironically, the one clause in Stargel’s bill that would directly benefit owner pocketbooks — a section eliminating a duplicative $2 per owner fee in existing law — was removed from the bill for fiscal reasons. With the state facing a billion-dollar budget shortfall, lawmakers refused to give up nearly $400,000 in annual revenues that timeshare owners are paying, unnecessarily, to the state to fund future regulations of the industry.
Stargel and Eisnaugle declined numerous interview requests for this story.

Nusbaum, ARDA’s perennially optimistic chief spokesman, expressed frustration with the way the bills have been treated in the media and “misrepresented” by critics.

“I think it is purposeful,” he said in an interview. “Look at where the noise is, it’s Finn Law. This is being driven by law firms who are trying to scare timeshare owners for their own personal gain. There is nothing in this bill that hurts the right of any owner who has a legitimate reason to have their contract interrupted. But these law firms have ginned up owners, and especially legacy owners, to be concerned that this (bill) means a cap off maintenance fees and there’s no rescission to protect them — so I have a level of frustration and passion about this. I know the facts and I know the law, and I’m comfortable with this bill. I’m not mad at NTOA or anyone else. But people believe what they want to believe.”

If the Stargel bill manages to work its way through the end-of-session logjam, it will end up on Gov. Scott’s desk — alongside the veto petition backed by NTOA, FTOG, RedWeek and an undetermined amount of timeshare owners.

Here is the petition: it speaks for itself.

On behalf of all Florida timeshare owners, and future buyers, we respectfully urge you to veto SB932, a developer-sponsored bill that was drafted without input from owners and consumer protection groups.

While perhaps well intentioned, the bill contains many flaws that erode owner legal rights and, worst of all, includes and expands vague language that will simply have to be litigated down the line. The bill, in short, needs to be amended to provide clarity and equity for both owners and developers on several key issues: public disclosure, contract litigation, timeshare trusts, legacy resorts and maintenance fees. As it stands, the bill before you is a one-sided effort by the development community to rewrite state law to match their current marketing efforts.

Example: The bill allows developers to unilaterally decide what constitutes “compliance” and “materiality” with regard to mistakes and omissions in contracts. The bill also restricts owners’ ability to challenge the legality of their contract after the 10-day rescission period required by current law. As you know, developers already hold all of the cards in timeshare transactions. Potential buyers are subjected to verbal high-pressure sales tactics that, under current law, are not actionable. Developers provide buyers with long and complicated contracts that are very difficult to read much less understand, and which are written to protect the developer. Beyond that, most timeshare developers don’t even offer, to this day, programs that will allow longtime Florida owners with medical or financial hardship to get OUT of their timeshare contracts while their mandatory maintenance fees continue to increase.

SB 932, if enacted, would give developers even more leverage over the owner community — and the fact is, they don’t need it. There is no emergency that requires passage of this bill.

Action: Please send it back to the Legislature with a veto message that says, “Give me a fair and straightforward bill that balances the needs of owners and developers.”

Read more about the bill and the petition opposing it at these links 
ARDA:
http://www.arda.org/arda/government-affairs/issues.aspx?id=5096 
ARDA-ROC:
http://www.ardaroc.org/roc/legislative-issues/issues.aspx?id=5096 
National Timeshare Owners Association:
http://www.ntoassoc.com/

Your opinion counts 
The article above has national relevance because owners of Florida timeshares can be affected, regardless of the state in which they live. Further, a provision of the bill provides for a majority vote of 60% of owners to extend or terminate the timeshare plan. A significant number of Florida timeshare governing documents already have clauses dealing with timeshare plan termination.

Some may call for a simple majority vote; others may call for votes that exceed 60% and other governing documents may be silent about this issue. It may be unlikely that resorts having these “sunset” clauses will modify their governing documents. So, the beneficiaries will be those resort governing documents that have no provisions.

Our first question is: If you are a board member of a Florida timeshare owners association, did you have knowledge about this bill and were you contacted to provide your input about it?

Our second question is for timeshare owners: The signing of this bill into law by Florida’s Governor is imminent. There is obvious disagreement between the supporters and the owners groups that oppose it. Should there have been more public debate about the bill prior to the bill being put to a vote and is the call for a petition against it justified?

Send your reply to: staff@tstoday.com Subject: Florida legislation.

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