Opinion: Outrageous (Diamond Resorts)

POSTED: 07/8/11 1:42 PM

Diamond Resorts is the next one in line to give the timeshare industry in St. Maarten a bad name. This afternoon the company is in court with a retired American who bought a so-called whole-ownership in the project for more than $300,000. The contract gives him the right to long lease for 900 years. The resort might as well have sold the place to him.

The contract between buyer and seller seems reasonably simple. It states the purchase price and it also states in words that cannot be misunderstood or interpreted in a different way that the buyer has to pay $500 a month in maintenance fees, plus an amount for so-called metered services – electricity and water. So when the owner, Arthur Macdonald had paid all his electricity bills and $6,000 in maintenance fees for 2010, he thought he was done until December.

Then Diamond Resorts, the owner of the project, slammed him with another invoice for maintenance fees. This time the amount was $46,678 and while the number crunchers in Las Vegas were at it they also added a bill for a replacement reserve – whatever that may be – for the relatively modest amount of $4,927.

When Macdonald wanted to talk about this, the company refused to talk. And when Macdonald refused to pay, the resort cut off his electricity.

One might be tempted to think that Macdonald is a querulous and difficult customer who is spinning a story to make Royal Palm and Diamond look bad, but that is not the case. Macdonald is a friendly fellow who just wants to enjoy his time in the Friendly Country. And he is not the only one going to war over the outrageous maintenance fees. Next week Tuesday a group of twenty Royal Palm owners will be in court over the same issue.

So what is happening here? And who is going to finally do something to stop the craziness? We don’t want to get ahead of ourselves over a court case that is still pending, but we saw Macdonald’s contract and there is no doubt that he signed on for a full ownership that came with a maintenance fee of $500 per month. How on earth is it possible that that fee jumps just one year later to an outrageous $4,300 per month?

It seems clear that Diamond needs money, but is this the right way to get it? The whole affair is giving St. Maarten’s Timeshare industry again a bad name and it wasn’t that good to start with after all hell broke loose at the Pelican Resort Club earlier this year.

Democratic Party MP Leroy de Weever is working on legislation designed to protect consumers who buy into timeshare projects, but that legislation is not ready by a long shot and it does not offer any relief to people who are not at the receiving end of brutal strategies by invisible corporate honchos in Las Vegas.

Even though this is a dispute that plays in civil court, the effects have already spilled over into the court of public opinion. The internet is a wonderful tool, but it is deadly for our tourism industry in this case. So there will be again a call for the government to step up to the plate and to bash some sense into the heads of companies that charge honorable clients with extortionate maintenance fees.

How damaging these incidents are for the industry as a whole appears from the Pelican-saga. Since trouble started in Pelican Key back in December, the resort has not sold a single timeshare unit and it now has a significant whole in its 2011 budget.

Of course the resorts must bring in enough money to keep their facilities in good shape. But the headaches of timeshare resort operators should not become the headache of their clients.

Who, indeed, in his right mind, would be crazy enough to fork over more than $300,000 for a condo knowing that it comes with an annual charge of around $50,000 for maintenance fees? Who, indeed, after reading this story, is crazy enough to recommend to friends and family that St. Maarten is the ideal place to buy a timeshare unit?

The answers to these questions are obvious, but there is a more urgent one to answer: who will stop the lunatics that let their greed get the better of them at the expense of an industry that is vital to St. Maarten’s survival?

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