Diamond Resorts International loses court case against whole-owners

POSTED: 04/2/13 12:45 PM

St. Maarten – The Court in First Instance struck down a drive by Diamond Resorts International to hit so-called whole owners at their Royal Palm Resort in Simpson Bay with maintenance fee increases of between 800 and 900 percent. Instead, the court allowed Diamond Resorts to increase the fees for 2011 compared to the year before with 30 percent and for the following years until 2015 with the average increase of the consumer price index, which the court set at 4 percent.

The court ruling is a relief for several timeshare owners at the resort, like Arthur Macdonald who was facing annual maintenance fees of close to $50,000 for an apartment he bought for a bit more than $300,000. The contract came with monthly maintenance fee of $500, but eight months after Macdonald bought the place, Diamond Resorts decided to change its policies and treat whole-owners who own 52 weeks of an apartment on a long lease contract) the same as it treats its interval owners who bought only one or several weeks at the resort.

The court furthermore ruled that the whole-owners did not buy the right of apartment, but that they have a long lease contract that expires after 999 years.

For Macdonald and other plaintiffs the annual maintenance fee for 2011 now goes from $6,000 to $7,800. Since 2011 Diamond invoiced Macdonald for more than $158,000 in maintenance fees, but Macdonald, who volunteers every year at the Heineken Regatta, stuck to paying his contractual $6,000 fee.

It is unclear at this moment whether Diamond Resorts will appeal the ruling. The company’s attorney mr. Lucas Berman has said on several occasions during court hearings that Diamond Resorts is battling with a $10 million deficit and that the resort will go bankrupt if the court does not allow it to impose the higher maintenance fees on the whole-owners.

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