The V.I. Timeshare Act has spent three years in the drafting stage, but after being presented during Thursday’s Finance Committee as a bill that would regulate the timeshare industry and shore up a large clerical issue – the committee advanced the bill.
Timeshare units are held under a condominium statute that is over 50 years old, according to bill sponsor Sen. Kurt Vialet. Should the legislation be signed into law, timesharing would gain statutory recognition and allow the government to regulate U.S. Virgin Islands timeshare plans, how timeshare plans are offered and sold, and put in place codified protections for both buyers and sellers.
However, Vialet said perhaps the most pivotal abilities the legislation provides is the ability for timeshare associations to perform a non-judicial foreclosure and the ability for timeshare associations to be billed once by a tax collector.
“Timeshare units, in most situations, are purchased for one week, which means for one particular unit 52 bills are sent out [in a year]. If you have four units, it’s 208 bills that would be sent out from the property tax office at the lieutenant governor’s,” Vialet said. “So, when you have a couple hundred timeshare units, we are talking about thousands of bills.”
These bills are usually for small amounts Vialet said, and ultimately the “the process has become quite cumbersome” for the officer responsible for issuing.
Dolace McLean, general counsel for the Office of Lieutenant Governor, said the tax collector would send a single bill to each timeshare entity in the territory, whereas currently, the tax assessor must value each of the over 20,000 timeshare units and then generate each bill separately.
“The tax collector then prints each bill, inserts each bill into its own envelope, seals the envelope, and then hand delivers the bills to the post office. A single bill sent to a managing entity, via electronic means greatly eases the burden on an overworked Real Property Tax Division staff because it replaces the hectic, time-consuming, and laborious billing process that takes place annually,” McLean said.
The legislation offers a solution to not just one problem but also another, according to Vialet. “The next big issue is really those timeshare units have literally been abandoned,” Vialet said.
The legislation was crafted to provide a process for timeshare associations to foreclose on a person’s property without having to go through a judicial process. While it was designed to be used for the purpose of abandoned properties of which the owner is unreachable, should an owner appear, the legislation also allows for the owner to ask that the foreclosure be done through the judicial system.
“They abandoned the unit. You can’t locate them, can’t send a bill, but they still have that one-week ownership. So the unit stays empty for that one week and we have units that have multiple individuals that we cannot find for multiple weeks we are losing revenue,” Vialet said. “In those instances where we can’t find the individual, we don’t know where they are, the association will have the ability to have a non-judicial foreclosure so that we can claw back those properties. And bring them back into circulation which would then enable us to collect more taxes and bring more money to the island because we have more guests coming.”
Though the purpose of a non-judicial foreclosure ability being bestowed upon timeshare entities was clear, not all committee members thought it was fair to have the ability to sell someone else’s property without any court action. Sen. Dwayne DeGraff said the ability could even undermine legislation he will be presenting offering people “a chance, a six-month period for notification.”
George Dudley, a partner in the law firm of Dudley Newman Feuerzeig LLP who appeared during the hearing on behalf of timeshare advocacy group American Resort Development Association, responded to DeGraff by comparing the situation to an unwanted hotel guest.
“A timeshare unit is a prepaid vacation,” Dudley said. “If you show up to a hotel and you are overstaying your welcome and you are not paying for your hotel room, the hotel company doesn’t have to take you to court to get you out of their hotel room. They can call the police and have you removed for trespassing. What we are trying to do here is make a timeshare unit similar to the rights a hotel owner has with respect to an overstaying guest.”
Ultimately, the 76-page bill was advanced to the Rules and Judiciary Committee for further review.
Separately, the committee advanced an additional two bills and held three. Of the forwarded legislation was a bill to restore an 8 percent reduction in government employee salaries; the other bill would allow the lieutenant governor to collect unpaid property taxes and public sewer fees from the property sale of a delinquent taxpayer.
Sens. Marvin Blyden, Samuel Carrion, Dwayne DeGraff, Donna Frett-Gregory, Javan James Sr., Janelle Sarauw, and Kurt Vialet were present for the hearing. Additional non-committee members were also present for the hearing.