The Point at Poipu is a Diamond Resorts International (DRI) timeshare property located on Kaua i, Hawaii which has been in the news and the center of heated debate due to the water intrusion special assessment of over $5,800.

The following letter (reprinted in its entirety) was posted on the Point at Poipu Angry Owners Facebook page.  The letter speaks for itself:

Thursday, December 22, 2011

Mr. Howard C. Nusbaum, RRP
President and Chief Executive Officer, ARDA
1201 15th Street NW
Washington, DC 20005-2842

Dear President Nusbaum:

My wife and I have been timeshare deeded owners at the Point at Poipu Resort on Kauai since 1995 and are writing to you for assistance. We are ARDA Members who have been affected by the illegal and unethical actions of Diamond Resorts International (DRI) related to our timeshare. I would ask that your organization provide assistance in this matter.

Our specific complaint is that DRI has refused to release an owners list with names and addresses to candidates running for board of director positions at the Point at Poipu. Both Hawaii State Law and our resort by-laws require that the management company release the owners list to candidates who have made a legitimate request for it.

Normally, when a timeshare resort is sold out, control of the resort’s board is turned over to the owners who have no conflicts of interest. This has not been the case since DRI took over management of the resort in April 2007. The board of directors has consisted of a majority of DRI employees or relatives of DRI employees who, in our opinion, have a direct conflict of interest and are more likely to make decisions that are biased in favor of DRI.

There are many financial and management situations upon which a board must decide. It would seem prudent for board members, who are DRI employees or relatives of DRI employees, to recuse themselves from decisions that involve contracts with DRI and fees charged by DRI. Even though the resort by-laws state that a director shall not vote on any issue in which he or she has a conflict of interest, we are not aware of any instances where a board member has declared that he or she is in conflict of interest.

We have seen huge increases in management and maintenance fees all of which have been approved by a board of directors controlled by DRI. At the same time, we have observed resort maintenance go into decline. Because of the poor economy, coupled with large increases in maintenance fees, some owners have gone into foreclosure. Most of those foreclosures have been purchased by DRI to convert into their vacation club point system to sell for a large profit.

During October of this year, deeded owners and Diamond Vacation Club members received bills that have burdened them with huge assessments to repair a water intrusion problem that Diamond Resorts has known about for years. Each deeded owner is being billed $5,893.32 for each timeshare week owned. This is in addition to the normal annual maintenance fee of $1,259.28. In our opinion, these assessments are designed to force many owners into foreclosure in spite of threats from the board to collect outstanding assessments by legal action or a collection agency.

In our opinion, without access to the owners list, deeded owners, who are not DRI employees or relatives of DRI employees, will have little or no chance of being elected to a board position. Furthermore, as long as DRI refuses to release the owners list, they will continue to control the board and to vote in and fill board positions with DRI employees or individuals with a potential for biased decisions in favor of DRI.

We urge that immediate actions be taken against DRI to rectify the situation including:

1. Force DRI to release the owners list to individuals with a legitimate reason for obtaining it per current Hawai`i State law and resort by-laws.

2. Use any influence your organization might have to temporarily halt this assessment, in order to assess the situation more thoroughly, unbiased, and look at more options to reduce the financial impact on our owners that vacation in the State of Hawaii.

In our opinion, failure to act immediately will only continue to exacerbate the present resort management situation and enable DRI to continue to exploit owners.

DRI already controls 37% of the deeded weeks at the Point at Poipu and corresponding board election votes. In our opinion, if the present board and management practices are allowed to continue, DRI could eventually control more than 50% of the deeded weeks. They have achieved this control by buying up foreclosures and by encouraging owners during sales presentations to give up their deeds and put them into a point based vacation club. It appears that many of the sales practices to get owners to join the club were deceptive. Even today, DRI maintains a sales staff at the resort to sell points in their vacation club. No deeded weeks are being sold by DRI. We have heard from some recent buyers of vacation club points that no disclosure was made during the sales presentation regarding the water intrusion problem or the assessments that club members would incur.

Notification of these assessment fees were recently received by all owners, forwarded in a highly deceptive fashion. The notice arrived at our home on 21 October 2011 with a presorted first class postmark of 17 October 2011. Contained within the notice was an invitation to attend one of two informational meetings scheduled for 19 and 20 October 2011 – the meetings had already taken place before the letter had even arrived. In order to attend one of the meetings, an RSVP was required prior to 14 October 2011 – three days prior to the letter even being sent. It would have been impossible to even attend the meetings and, based on the date of notification, this appears to be the intended purpose of DRI.

I honestly feel that DRI has been negligent in maintaining the property (using the maintenance fees that we have paid, on time, over the past 16 years) and are attempting to completely rebuild the resort at the expense of the owners. Our original disclosure agreement clearly states that DRI is required to carry insurance to cover these types of situations. DRI alleges in the assessment letter that their insurance claim was denied and that the board “decided litigation (against the insurance carrier) would be costly, lengthy, and the outcome highly uncertain.” No details regarding a failed attempt to make an insurance claim was provided. At a minimum, DRI needs to provide details regarding the insurance policy that they claim to carry and why their claim was denied.

I have already filed formal complaints against DRI with the Federal Trade Commission, the Securities and Exchange Commission, the Better Business Bureau, the Consumer Financial Protection Bureau, the Ombudsman of Hawaii, the Hawaii Regulated Industries Complaint Office, the Attorney General of Hawaii as well as numerous members of Congress and State Representatives. I am currently working with a group of concerned owners who have found themselves in this unfortunate situation. You may have already heard from some of them as well. We are hoping to join together in a class action against DRI to prevent the company from unfairly (and illegally) take advantage of their customers.

The Office of the Auditor for the State of Hawai`i addressed all these issues in the “Sunset Evaluation Report: Time Sharing” (Report No. 92-19) and I quote:

“In particular, time share owners increasingly have run into difficulties with the management of time share plans. Because owners are geographically dispersed and spend only a short time each year in their units, they need strong protection from management abuses such as exorbitant increases in maintenance fees and unexpected special assessments. The current time share law is designed to protect buyers from abuses in sales practices but offers insufficient protection from management abuses.”

Thank you for your immediate attention to this matter. Please let me know if you need any further details. I am looking forward to your response!

 

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