San Marco, California-based Welk Resorts, which operates destinations in five cities including Branson, on July 25 filed suit against three companies over allegedly interfering with and misleading its timeshare owners.
The suit, filed in U.S. District Court for the Southern District of California, alleges Lynwood, Washington-based Reed Hein & Associates LLC, dba Timeshare Exit Team, persuaded timeshare owners to use its service to cancel payments to Welk – while claiming there would be no legal or financial consequences.
Under the terms of a typical Branson timeshare purchase agreement, according to Welk President and CEO Jonathan Fredricks, individuals purchase perpetual interest in a property at an average price of $17,000, financed over 10 years, and then pay $920 annually for a vacation owners association fee, which includes maintenance, property taxes, activities and access to other resorts.
Welk alleges Timeshare Exit Team charged each client up to $5,000 to cancel an agreement, by hiring one of two law offices to send a generic, one-page cancelation letter to the resort.
One letter – sent on behalf of a client from Privett Law Firm of Pawnee, Oklahoma – was only two sentences, simply stating: “Please be advised that we want to terminate the above referenced owners’ obligation with your timeshare company, including the mortgage and promissory note, if applicable. We would entertain a small transfer fee.”
Seattle-based Schroeter Goldmark & Bender sent longer but similarly worded letters, which were attached to the lawsuit documents.
In a video on Timeshare Exit Team’s website, founder and CEO Brandon Reed says, “We force the timeshare to take the contract back, with a 100 percent money-back guaranty. We will get you out or you pay nothing.”
The site also states the company negotiates with the resorts on behalf of its clients and uses an attorney if needed.
The problem is, Fredricks said, owners may not breach their contract, by letter or otherwise. Any owner who then stopped making payments, he said, was reported to credit bureaus and was required to make a large settlement payment.
Additionally, since the attorneys’ letters stated timeshare owners should not be contacted directly, Fredricks said Welk had no way to resolve the problems that arose.
“We didn’t have the ability to contact the owners legally to talk about the debt or to negotiate a settlement,” he said.
Fredricks said although there is no formal way to cancel a perpetual timeshare purchase and maintenance agreement, there are third-party companies that buy and resell unwanted contracts and Welk works with owners who are experiencing financial hardships – such as delaying required payments or offering payment settlements.
But for individuals bent on relinquishing their ownership, Kelly Robinson of Quality Timeshare Closings in Branson works with listing brokers to transfer those timeshares. Websites such as RedWeek.com charge sellers $125 to list and $400 for a successful sale. The buyer then pays a closing company like hers about $425, plus potential transfer fees.
For difficult cases, where owners owe more than the timeshare is worth, she recommends calling an attorney specialized in timeshare litigation.
About 55,000 households worldwide are Welk members, Fredricks said, including 3,500 who reside in the Midwest. The situation described in the suit has affected less than 1 percent of Welk timeshare owners, he said, but it undermines the entire timeshare industry.
“Unless this racketeering scheme is stopped, Timeshare Exit Team and the others listed in the suit will continue to disrupt vacation ownership contracts, further damaging vacation owners and vacation ownership companies throughout the U.S.,” Fredricks said in a statement. “We are saddened to see former owners who were induced to breach their contracts have their credit scores plunge, while Timeshare Exit Team and the lawyers pocketed profits and moved on to their next prey.”
Reed of Timeshare Exit Team responded to Springfield Business Journal by email through a public relations firm.
“Timeshare Exit Team learned of this matter through a media release distributed by Welk Resorts (on) July 26, 2017. Following the news being publicly distributed, we were formally served on July 27, 2017, and intend to present a vigorous defense to these claims. We would also like to inform consumers that the meritless lawsuit and inaccurate accusations therein will not dissuade our team from continuing to advocate for consumers,” he said. “I’m proud of the service we offer and of the company we have built.”
Welk Resorts’ Branson vacation properties are located on State Highway 165, on the east side of Table Rock Lake near several other resorts including Wyndham Mountain Vista, Pointe Royale Condo Vacation and Golf Resort, and Chateau on the Lake Resort Spa and Convention Center. The Welk Resort Branson Hotel and The Lodges at Timber Ridge share property at 1984 State Highway 165.
Welk’s other resorts are in California – Truckee, San Diego and Cathedral City – and Cabo San Lucas, Mexico.
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