Marriott Aruba Surf Club - Lawsuit by Association against owners

Has anyone else received a letter threatening them that they have violated bylaws and articles of incorporation of the Surf Club Owner's Association? Cannot find anyone to talk to or anyone who can provide these bylaws or who knows the nature of the action. The letter mentions use of timeshares for "commercial" use but it does not explain what that implies. I cannot imagine that is suggesting one cannot rent their units or places like Redweek would be out of business! Considering that Marriott used to (maybe they still do) rent units on your behalf - this all seems so bizarre. If anyone knows anything - I would be very interested in hearing some thoughts.

It is really an interesting letter/threat. In short, skipping the legal mumbo jumbo:

- It's coming from the Association's legal counsel, not Marriott's.

- The Association "has reason to believe that you are using residential units at the Resort for commercial purposes, which is a violation of the Articles of the Association and article 9.1 of the bylaws.

- The attorney wants you to respond by registered letter within 30 days

- Failure to respond and you have waived your rights to be heard, and the Board will initiate an expulsion procedure based on article 10.2 of the Articles of the Association and article 13.2 of the bylaws.

- Upon completion of expulsion, you are no longer an owner and no longer have rights of use and occupancy. Basically, they are taking your property, tough ta ta's.

Now back to the original post. Yes, bizarre.

- Why is the Association taking this action?

- What are the "commercial purposes" that are forbidden? Renting your unit is allowed at every other MVCI property. And even stated by Marriott as part of the sales process.

- Why would the Association open themselves up to numerous costly and onerous lawsuits open what can be deemed a potentially frivolous violation, if it is related to owners renting their units?

I would imagine if an owner replies by registered letter, it amounts to a confession and you'd be expelled more expeditiously.

There must be more to the story and looking forwarding to some official statement and clarification from the Board over the direction of this action.

Agreed, there has to be a bit more to this story.

The "commercial" activity clause in your Association agreement would be interesting to see. If it is just a vague 'weasel words' or standard boiler plate clause, it probably has no enforce-ability unless you have opened up a gift shop or massage parlor in your unit or something. I know an awful lot of Marriott owners that rent their weeks for years and years and this has never been a problem.

Do you own a lot of weeks? Have you found out if others have received this letter?

One possibility is that this entire thing is a fraud.

Thanks - does not appear to be fraud as Marriott is aware and has advised anyone to whom you might wish to speak - to say nothing other than you should respond to the letter. So far I have heard from two others who have received the letter but I have to believe there are many more. The whole action is unconscionable and for the first time in two decades, I am absolutely embarrassed that I am part of Marriott, a Platinum Rewards member and have Chairman's Club level in MVC. What a disgraceful and hurtful action and the fact that our Association might have actually been behind this and or complicit in this effort, without even a call, head's up or inclusive investigation is incomprehensible to me. For many years I have read blog after blog about folks complaining about Marriott and feeling they had been harmed in one way or another. Certainly, we have been lied to numerous times whether about fees or rental programs and other aspects of ownership but this is just an inexcusable low. As one who has owned a business for almost 25 years, that includes a call center - and one who is deeply involved in customer service, I cannot believe that no one from Marriott corporate has reached out (as they cannot be reached) to elaborate on any of this and provide some support for valued customers - not just of timeshares but customers of Marriott worldwide! Aside from using my units, multiple ones, every year since 2008 (the first year they were available), I have travel worldwide and have prioritized Marriott for my personal and business travel, and for my company executives, for many years.

Hi timg106,

I have since replied to the letter and spoken to other owners that received the same letter. If you would like to chat, you can reach me at 860-209-6286.

Thank you

We received the same letter from HBN law representing The surf club and ocean club association. We are so upset, because now I have to hire an attorney to see what is going on with Marriott!!! We own 11 units which my parents bought us, their 7 children and our familes so we can all be on vacation together, My mom has been ill for a few years and we allowed other family members use some of the villas, some we have rented to good friends, and now all of a sudden thats not allowed? If marriott rents it for us, they dont even cover your maintenance fees. I will be calling HBN tomorrow and informing them that we just received the letter on the 21st even tho its dated august 1st, and telling them our attorney will be responding shortly. Just wondering our villas are not in our names its owned by 7 of us(brothers & sisters). AFG associates. My parents did this 17 years ago when they bought them because they wanted their children to own them. Im thinking maybe thats why we received the letter? They are assuming we are running a commercial business.....

We are having a conference call on Friday with other owners who received the letter if you would like to participate. Feel free to call me at 860.209.6286 and I can also share with you what we have learned so far. Interesting to hear that Ocean Club is part of this as well considering that in addition to having Marriott rent for owners, the Ocean Club website offers a platform (I think Surf can participate as well) to rent, buy and sell units!

Let us know what the outcome of your meeting is. This is sure a strange situation. And, I'd think it would be completely illegal in the US. Aruba falls under The Netherland's legal system, so I'm curious if this type of implied confiscation is illegal there.

Not opining on who is correct or not in this. Just giving some thoughts ... Owners can always rent out their units but the problem has become people have been purchasing multiple units and have been operating commercial enterprise of renting the weeks. The commercial renting of units is a violation of the plain language of the owners documents signed at purchase as well as the bylaws. A simple search online will reveal certain people who are blatantly renting units as an ongoing commercial enterprise. They appear on their own rental sites, RW, FB and other places routinely reserving weeks and renting out multiple units. The result of this action is these commercial renters have been monopolizing desired weeks in order to maximize rental profits, taking away the desired weeks by Marriott owners as well as losing the revenue for Marriott. Because of this, Marriott owners have been extremely disappointed about their inability to secure weeks due to the abundance of "rentals" by these commercial-owners. Appears Marriott (who have been aware of the problem for a couple years) are taking action to enforce the provisions of the documents and bylaws. In my opinion, they are focusing on the following language which seems quite clear:

According to the Share Purchase Agreement, it states, "PERSONAL USE: Purchaser represents and warrants to MVCIA that ... (ii) Acquisition of the Share is made for the purpose of utilizing the Improvements for personal use of the Purchaser and others deriving use rights through Purchaser; and (iii) Purchaser shall make no commercial use of the Improvements prohibited by the Disclosure Statement and Governing Documents." If that is not clear, the USE RESTRICTIONS under Article IX paragraph 9.1 states, "Personal Use Restriction: ... Use of residential Units ... for commercial purposes or any other purposes other than personal use described herein is expressly prohibited. 'Commercial Purpose' shall be broadly interpreted and shall include, but not be limited to a pattern of rental activity or other occupancy by A Member that the Association, in its reasonable discretion, could constitute a commercial enterprise or practice."

This language clearly states that the purchase of the unit is for personal use and a commercial use (e.g. Renting out as a commercial purpose") is prohibited - it states that "Commercial Purpose" is broadly interpreted and can include a pattern of rental activity. Seems that Marriott is seeking to enforce the terms of this to benefit the owners who purchased the units for Personal Use.

I did not get the letter, but this reads to me like they want to get units off the market for the destination points program. When I go to the sales presentations, I tell them I rent some of my weeks to cover my costs, nd they try to sell me more units for renting. In cone case they spent 30 mins showing me how I could maximize my rentals.

Things are getting out of hand with marriott. They have screwed owners numerous times.

I can certainly appreciate your insight and explanation and don't know whether you are an owner like many of us or represent the interests of Marriott in this mess.

I think that there are a number of flaws in some of the logic as pertains to how Marriott has applied their interpretation of bylaws:

First, nothing that you have outlined would serve to explain how an owner of multiple Platinum Plus weeks is harming anyone or preventing Marriott from making money! As a Platinum Plus week owner, the fees are outrageous and at least as far as Surf Club goes, any owner of a Platinum Plus week should be guaranteed their use week regardless of how many units i own or someone else might own. I do understand and respect the fact that this might not be the case at Ocean Club or other properties where weeks are all floating. But again, for a Platinum Plus weeks owner (fixed week 7, 51 or 52) - we are not preventing anyone from anything as regular Platinum owners (high season) are specifically NOT entitled to use their ownership interest to reserve a Platinum Plus week.

Second, there is also a distinction between a multiple weeks owner who may have systematically purchased multiple weeks on the various resale markets as opposed to someone who purchased their weeks through Marriott. In the case of the resale purchaser - I might acknowledge that is potentially a different situation - unless again the person was purchasing Platinum Plus/Fixed Weeks - for reasons outlined above. If the person is purchasing other high season units - the only problem i have heard that might complicate things for other owners has to do with the fact that the Marriott booking system is flawed and enables folks to essentially book more than 13 months in advance in some cases. This explains why people call MVC the moment after reservations open and still might not be able to get the week they want at Ocean Club or a property that operates on first come first serve basis according to season of use. As such, this would be something that Marriott could easily remedy rather than attacking what is largely a loyal base that has invested large sums of money in timeshare ownership.

In the case of the multiple week owner who purchased from Marriott, before this happened and since this situation started, i have spoken to many owners who were given the idea to rent by Marriott - seduced by promises of great rental income from Marriott; very low maintenance fee increases as well as the ability to rent on the open market! Marriott even providing financing and knowingly sold multiple fixed week units to people who had no intention of using all of them for personal use and had no thought of renting until the idea was brought up in the sales pitch!

In the end, it sounds to me like Marriott is creating a huge mess for themselves while also positioning the Association as the "bad guy" when in practice - it is Marriott that controls the Board and the Association! If there are issues with the reservation process that provides an unfair advantage to multiple weeks owners at locations that do not have fixed week ownership then they should fix that problem and close the loophole ASAP. I would be supportive of that and after speaking to people who received this letter, i learned about their hardships in this regard, specifically at Ocean Club. The irony is that folks who received the letter have actually been harmed by the very glitch in the reservation system to which i am referring!

If Marriott has found that they have oversold the ownership interests and/or want to change the rules then they offer owners like me their money back and take back their Platinum Plus units. That would seem fair considering that they are implying that they should never have been sold in the first place. Alternatively, the focus of this witch hunt should be narrowed to apply to those who might actually be gaming the system even though it is Marriott that controls that system in every way and can change the reservation process if they so desired.

Your post makes absolute sense. There definetly has been a problem recently with owners having difficulty getting prime weeks when in the past it was not an issue. I fully support this lawsuit if in fact it will eliminate this problem.

How does *owners* securing a prime week and then in turn renting it cause a problem for other *owners* not being able to get a prime week? The net result would be the same if the owner secured it for their own personal use. The number of owners at a specific resort has not changed, has it? Are there now more owners at a specific resort than there is inventory?

What has changed is that Marriott has turned over all of their Marriott-owned units to the Destinations Club land trust. So, those units are no longer available unless you are a DC points holder. And, some owners convert their weeks to DC points, so those units are no longer available. Am I missing something?

The "commercial enterprise" clause in Marriott's contracts has always amused me. I don't know any timeshare owner that consider their rentals to be a commercial enterprise. And, certainly not a vastly profitable one. There are better ways to make money than to buy a timeshare and then try to rent it.

I predict that in the unlikely event such a lawsuit did go forward in Aruba and some owners that were clearly violating their agreement with the Association or Marriott were actually "evicted", every one of those weeks would end up in the Destinations program. They would not end up in a pool where resort owners could use.

Seems totally inappropriate that the Board of the Association would be spending owners money to sue owners for doing what 50% or more of the owners are forced to do because of Marriott's rules. The Board should instead work with Marriott to get the rules to work for the owners. If owners were unable to get good weeks and purchased multiple weeks in order to que up and get good weeks what is wrong with that? The owners spent good money for extra weeks and they are only doing what Marriott rules forced them to do. What I find most incredible is the Marriott sales people actually try to convince owners to buy multiple weeks. They tell us how we can get better weeks by owning more and we can make money by renting. Marriott is also eager to try to rent the weeks for owners (they take a huge % for doing such). So the bottom line of all of this is our maintenance fees will go up by the amount of litigation costs. The secondary market for resale of our weeks has been awful and continues to get worse. This lawsuit will make matters worse. The secondary market could actually totally evaporate (who in their right mind would want to purchase a week if they now must fear it being taken away from them if they rent it out). Another incredibly irritating point is Marriott does not use its ROFR rights to purchase units on the secondary market. This has allowed the value of our units to plummet. Marriott is currently selling the equivalent inventory to new owners for in excess of $15,000 to $25,000 yet they pass on secondary market purchase ROFR's as low as $6000? If Marriott was to use the ROFR and buy back the secondary market resales that would be the easiest most efficient way to accomplish a few things. One it would keep the market values of our units steady and closer to the value that Marriott is selling new units for and secondly it would keep owners that want to rent from being able to purchase weeks at such low prices. As owners we should actually thank the people that are holding up the secondary market right now. Yes they may own multiple weeks and yes they may rent them out but they are the only reason our resale values are not at zero..I think the Board needs to do its homework and truly understand what the problem is. The problem is not that owners are renting out weeks. That is totally normal and should be allowed without restriction. The problem is the system is broken and Marriott has rigged it to stay broken. Lets revise our rules if we need to have a fairer way for owners to participate equally in getting good weeks (regardless of how many they own). But under no circumstance should the Board continue to go after owners that rent. Lets fix the system. This witch hunt of certain owners is not a fix.

Received the letters today. Looking for some advice and maybe a lawyer. Can anyone provide the name and contact information of a lawyer they have already used? I tried calling you Darcy but got your answering machine. Thanks in advance for your help and previous posts. Not sure how I could possibly respond within 30 (thirty) days with a registered letter to Aruba when I receive the letter on day 29?!?

Steve,

Send an email to Al Ross <alross888@hotmail.com>. I have been talking with him since he reached out to me. how many weeks do you own? We have been trying to get a handle on how wide this is.

He received the letter and him and others were talking to an Aruban lawyer.

Hope this helps.

I don't trust marriott at all.

Mark

Hi Steve -

I did get your message early this morning. I can speak to you today. I am connected with the group that Al Ross is part of and we can loop you in.

Talk soon!

1. Found out the letter was only sent to NINE(9) owners out of 33,000 !!!!

2. This has come about to both BOD, due to many complaints from long time owners that they can not get anything during platinum plus season !

3. This has no affect on owners who own only a few weeks at either property. They can still do whatever they were doing no problem.

4. Commercial rentals of any type are not allowed and are finally being addresseed by both BOD- owners that own 10 units or more that don't use them but book at the 13 month mark.

5. If you received the letter it's in your best interest to answer accordingly before action is taken as described in the purchase agreement by both parties.

The above information was provided by an owner who is in Aruba now and heard about this and wanted to help get some answers. He met with GM of both properties and forwarded this information on Facebook page for both properties.

As most of you know, I am Rose and we received the letter. We sent ours out Monday by fedex international overnight with signature required. I also sent an email to the attorney who sent the letter, because I received my letter late on 8/22/17 and a automated response email came right back to me saying she is on vacation until 9/5 but if an emergency to email 2 other attorneys. So I re sent it and a few days later , I received a response from one of the attorneys staying they are in receipt of my email. Maybe Steve can send an email today explain you just received the email and you will be responding to the letter in 5 business days. If I hear anything else I will keep in touch Rose Tudisco Rtrt03@aol.com

If there were not a handful of Aruba owners that were freaking out right now, this would strike me as laughable. 9 owners out of 33,000???? How many units are there at the Aruba Surf Club? And, what percentage of the property is owned by Marriott?

It strikes me as very improbably that 9 owners could negatively affect platinum season availability in a resort that big. Has their Board ever defined what "commercial" activity really is?

I'm not an owner in Aruba. Obviously, I don't know most of the facts and I don't know anyone on the Board, but this sounds like the Board is trying to make an example out of some people. They may be opening themselves up to some ugly reprisals. The approach seems ill-advised and I'm betting that Marriott Vacation Club advised against this course of action.

Since the first time I heard about this, it just does not add up.

As much as I'd like to believe that Marriott would advise the Board against doing this, I think they might actually be OK with it.

Through various bits, this is what I have pieced together. Much of it is opinion, not necessarily fact. All of it comes down to having to react to a lawsuit by an owner and who is going to take the fall.

There is a person who owns 50-ish Platinum Plus weeks and has been redeeming them all for President’s Day week, and then renting out the weeks. This has rubbed other owners who also are trying to stay that week, but nothing is ever available. They complain to Marriott. Marriott tries to curtail the owner. The owner sues Marriott for not fulfilling his ownership. I'm on the owner's side, he bought the weeks, he should use them. And I agree with earlier posts, whether he uses them or rents them, it doesn't affect the inventory availability for other owners.

Marriott really doesn’t want to get involved, since even part of their sales pitch is that you can rent your weeks out. But they have to do something to deal with the complaints.

So Marriott turns to the Association and says this owner is violating the CCR’s (as vague as "commercial activity" can be undefined). Since it is Association rules, the Association is responsible for enforcing them, and the legal costs to do so. The Association opens itself up to counter suits and legal costs. Marriott stands on the sideline, pretending to look the other way.

The issue is with the volume (size and sound). With 33,000 owners just at that property, plus countless others worldwide at other properties, plus owners of just points, there will always be a problem of supply and demand for a holiday week at ANY property. And it doesn't take many owners to get pissed off and complain for Marriott to have to do a little something, and it appears their response is "take it up with the Association".

In all reality, rentals to non-members are great for Marriott. Every person is a sales opportunity. Marriott is not mad and losing money over these rentals, they never had them to start with. They make their money selling ownership and managing properties. Take for example their ownership of 200+ units at Grand Residence in Lake Tahoe. That is roughly worth 7 million points (low estimate). They sell those points at $12+ dollars and that's an easy $84 million, plus annual maintenance fees!

The legal fight is not worth Marriott's time, money and bad press (risk of future sales). Thus they are playing to Association to deal with it.