State senator blocks industry bill that would have restricted owner access to HOA rosters

On October 19th, 2016

Posted In:
Timeshare News

A powerful California lawmaker, who also happens to be a timeshare owner, singlehandedly blocked an industry-backed timeshare bill that would have restricted owners’ ability to access HOA rosters in order to communicate with each other about board business and elections.

Sponsored by the American Resort Development Association (ARDA) as a means of protecting owner confidentiality, the bill passed through the California Assembly on a 79-0 vote. But it stalled in the State Senate, languishing for months in the Senate Judiciary Committee, which is chaired by Sen. Hannah-Beth Jackson, a Santa Barbara Democrat and former prosecutor who was elected in 2012.

Jackson’s committee has considerable sway over all bills that have significant legal impacts. In fact, it’s a graveyard for any bills that don’t pass her muster. According to legislative staffers, Jackson’s legal and timeshare experience gave her a unique perspective on the potential ramifications of Assembly Bill 634, which juxtaposed owner privacy rights against owners’ ability to use owner rosters for legitimate member-to-member communications about board policies or HOA issues.

The original bill, authored by Assembly Majority Leader Ian Calderon, D-Whittier, set forth procedures for HOA boards to enable owner-to-owner communications. Those procedures, moreover, were designed to prevent membership rosters from falling into the hands of third-party scammer companies who might use the lists to harass owners with timeshare sales-or-transfer solicitations.

According to a Senate committee analysis of the bill, AB 634 also would have repealed key portions of a 2010 California appellate court ruling that upheld owners’ rights to access membership rosters for legitimate board business. In that case, Worldmark by Wyndham repeatedly refused to grant an owner’s request to access the list to share a petition challenging the board’s domination by current or former Wyndham executives. At one point, 

Worldmark offered to mail a copy of Robin Miller’s petition to Worldmark’s 260,000 members if Miller agreed to pay $260,000 in mailing costs. Miller asked the board to provide email lists, to reduce the costs, but Worldmark declined, citing privacy issues.The case went to trial in 2009. Miller’s access rights were upheld. Worldmark appealed.

In its ruling upholding Miller’s right to access the list, without having to bear a prohibitive financial burden, the appellate court said: “A danger exists in allowing too free an access to membership lists; however, the potential for abuse must be balanced against a member’s legitimate needs and rights to utilize lists in election contests and for purposes reasonably related to a member’s interest.”

The Calderon bill, drafted by ARDA, attempted to balance the two competing owner rights cited by the appellate court — preserving privacy while enabling communication. But Jackson’s team did not like the details.

The Senate Judiciary Committee analysis of AB 634 said: “While this bill would help protect the privacy of timeshare plan members and could potentially shield them from unwanted marketing, it would also remove the ability for members to identify and communicate with each other except in very narrow circumstances.”

“As drafted, the analysis continued, “this bill arguably favors the interests of the management of a timeshare plan and of a timeshare association too heavily. With this bill, management or an association may be able to effectively prevent the delivery of messages it does not agree with by denying owners — who likely will never meet each other — the resources they need to contact each other.”

Fast forward to late June, when the bill is finally subjected to a public hearing in Jackson’s committee. Calderon testifies that the bill will protect owners from being preyed upon by predatory transfer companies, but does not offer one concrete example where an HOA roster was either sold or given to a third party company for commercial purposes. (ARDA did not provide a single example of this purported abuse, either.)

Jackson, without discussion, declares that the bill will be amended, with the author’s consent, and recommends a “do-pass-as-amended” vote by her committee. The amendments are not discussed or distributed. The bill is approved unanimously and sent to the Senate floor for further consideration. One month later, the amendments surface. They strengthen the ban on distributing HOA rosters to third parties, but strip out all prohibitions on sharing lists with owners.

What happens next? Calderon, the author, doesn’t like the amended bill because it still authorizes sharing ownership roster-information with other owners. ARDA, the sponsor, abandons the bill.

“The amendments were prepared by the committee at the direction of the chair (Jackson),” said Peter Roth, ARDA’s vice president of marketing and communications and industry relations. “We did not agree to the changes as the goal for us remains the protection of the owner’s personal information.”

Under current California law (and the amended AB 634), Roth added “this provides the opportunity for anyone who acquires one interest to then sell the list or use it to attempt to scam or simply solicit owners.”

Facing the Legislature’s imminent adjournment on Aug. 31, Calderon gutted AB 634 of all timeshare language on Aug. 18 and, overnight, turned it into a measure dealing with digital assets in probate.

Both sides, meanwhile, said they would consider reviewing the timeshare issue as new language emerges to solve the dual claims of owner privacy and disclosure. For sure, the issue is not going away, because California is a national bellwether for consumer protection AND privacy issues.

One silver lining for ARDA as AB 634 succumbed to Jackson’s amendments. Three similar prior bills, starting in 2012, died in various committees. AB 634 lasted longer than any of its predecessors.

One last word: Sen. Jackson’s office declined to answer any questions about her timeshare experiences.

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