Arizona Timeshare HOAs Benefit from Finder Fee Change in SB 1219

2010-07-29

Issue Brief

Developers in many states, including Arizona, are permitted to pay finder fees (referral fees) to a timeshare owner at their resort when that owner refers a friend or relative who might be interested in buying at the resort. The idea has proved mutually beneficial marketing for developers and owners.  However, timeshare associations and their managers were not permitted to use finder fees to obtain potential buyers for their inventory, including foreclosed inventory.

Impact

SB 1219 now permits not only developers, but also timeshare associations or their managing entity to pay a non-monetary (maintenance fee credit or spa discount, for example) of the equivalent of up to $1,000 per owner per year when the owner refers a potential buyer for developer or association inventory. In 2010’s tough economy, the revision will help associations find new maintenance fee paying buyers.

Position/Call to Action

Both ARDA-Arizona and ARDA-ROC supported the finder fee revision to the state timeshare act and worked with the Arizona Realtors and the Department of Real Estate to be certain that both groups accepted the change.  In fact, the Realtors allowed ARDA to add the provision to SB 1219 (which was essentially their bill).  The Realtors needed to be involved in the negotiations since, in many states, only licensed real estate brokers can receive finder fees, although exemptions for small amounts such as in Arizona may be allowed.

Resolution

With all interested parties in agreement, the Arizona Legislative enacted SB 1219 and Governor Jan Brewer signed it.  The law became effective on July 29, 2010 and both timeshare developers and managing entities/owners associations may use finder fees as provided in the bill’s Section 10 on that date. The full bill as enacted may be found here. 

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