Massachusetts Mandatory Take-Back Bill Likely Defeated

2013-06-26

Issue Brief

Representative Cleon Turner introduced HB 1665, which, if passed, would enable a timeshare owner to voluntarily surrender his/her timeshare as long as they have no outstanding payments due to the HOA and no other liens on the timeshare. The transfer of ownership takes place by a timeshare owner delivering a notarized deed of surrender to the managing entity or, if no managing entity exists, then to the developer. The bill states that the managing entity or developer must accept all deeds without regard to whether it has the capacity to take on the financial obligations of ownership of the surrendered timeshare.

Impact

ARDA and ARDA-ROC believe that the bill, as drafted, would present significant hardships for timeshare developers, managing entities, and owners’ associations. First, there are constitutional issues by legislatively allowing an individual to alter the contractual terms and conditions of the purchase. Additionally, for entities selling timeshare interests, proceeds from sales would not be able to be recognized under the full accrual method of accounting and clean title would be nearly impossible to obtain. Lastly, one of the most significant concerns is that it will be the responsibility of the remaining owners in the association to bear the costs of ownership when an interest is returned to a developer or managing entity and goes unsold. This could create a spiraling effect if more and more owners are priced out of their timeshare, eventually leading an association into bankruptcy.

Position/Call to Action

In May, ARDA and ARDA-ROC representatives met with Rep. Turner and key players on the House Judiciary Committee in Boston to educate them about all of the concerns with the bill, including the possible constitutional, accounting, and title implications. On June 19, ARDA and ARDA-ROC representatives offered opposition testimony before the House Judiciary Committee. Based on these efforts and feedback received from committee members, we believe the bill is dead, but given the potential consequences of the bill ARDA and ARDA-ROC will continue to lobby the committee.

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