September 2009 Developments - 30

Leg Lega Legall Through a successful quiet title action, the Developer will be able to obtain a judicial determination that the termination process was valid and that the timeshare owners who have not transferred title to their interests (even those that the Developer was not able to ﬁnd or that voted against termination) no longer have any ownership in the project. In most instances, the Developer can obtain a default judgment making the quiet title action very streamlined. Re-thinking Business In summary, terminating a timeshare project can be long and complicated but may be proﬁtable for an enterprising Developer willing to wade through a difﬁcult process. This may also be a helpful option for owners who otherwise can not get the funds needed to refurbish their project. When structuring a termination plan, the Developer’s primary goal must be to obtain insurable title to all of the timeshare interests, while complying with state law and the project documents and attempting to be as fair as reasonably possible to the existing timeshare owners. For projects that cannot be terminated, the Developer may want to look into judicial reformation as a possible alternative. Steven J. Newman, Esq., works with Ballard Spahr Andrews & Ingersoll, LLP, in Salt Lake City. The author acknowledges the contribution of Harry E. McCoy II, Esq., RRP, Senior Counsel at Ballard Spahr Andrews and Ingersoll, who suggested this topic and provided important historical case studies. Steven’s e-mail is newmans@ballardspahr.com. Endnote 1 Step 8: Judicial Reformation—An Alternative Approach. In the event the Developer is taking over a project that is in disrepair and determines that it is not feasible under the project documents to terminate the project or achieve the necessary ownership interests to control the votes in the owners association, the Developer may need to have the project facilities updated, so it can successfully market and sell timeshare interests in the project. Renovating projects to meet today’s competitive market standards is costly, and many owners balk at paying the increased assessments necessary to cover such expenses. As a result, owners associations and/or Developers are often times unable to obtain the votes necessary to renovate projects. The only option the Developer may have is to ﬁle a complaint and petition in state court for judicial reformation of the project documents to reduce the percentage vote required for owner approval of the proposed capital repair and replacement budget. Upon the voting requirements being lowered, the Developer may then control enough votes to cause the owners association to levy a special assessment to cover the costs of renovating the project. Some state statutes explicitly provide for judicial reformation when the voting requirements in project documents are too restrictive. Some Developers have even been successful with judicial reformation in states where judicial reformation is not provided by statute. Some timeshare projects are in condominium projects and are subject to state condominium and/or common interest ownership laws. Other timeshare projects are not in condominium projects and buyers are sold undivided interests (“UDI”) in the entire project. In most states, UDI timeshare projects are not subject to common interest ownership acts. Isn’t it time you had a professionally produced video to help you reach your sales and lead-generation goals faster and more effectively than ever? We can help. CustomCorporateVideos.com is the ARDA member’s responsive source for high-quality yet economical: • Sales & lead-generating web infomercials • Full-length broadcast quality videos for marketing, training, branding • TV channels on your site • Website “walk-ons” • More than technology – a focus on sales Gerry Hanlon - Producer • Video source for two of the world’s top ten gerry@customcorporatevideos.com 443-980-7626 hotel management companies WEBTVHQ 30 Developments • September 2009

September 2009 Developments

Table of Contents for the Digital Edition of September 2009 Developments