Ask RedWeek / December, 2015

Timeshare boards deny access to rosters for communication on owner issues

I want to contact owners to start a campaign at my resort, which is a Wyndham, but they are telling me that I cannot have access to the owner rosters, that they are confidential and private and that it's against association policy to release them. Is this true? How can owners ever get organized, on any subject, if they cannot communicate directly with other owners?

These questions usually surface when HOA boards and management companies begin to have problems with members over issues such as elections, recalls, rising maintenance fees, reservation problems, or repairs that aren't happening. And in most cases, when owners try to get hold of owner rosters so they can launch their own communications, the boards and managers close ranks and unanimously say "absolutely not."

It's an open question, however, whether this is a good policy or business practice, since owners are entitled to communicate with other owners — and most of them consider it a basic free speech right (particularly around the hot tub). On the other hand, boards typically deny access to owner lists relying on their own policies, association bylaws, and sometimes state laws that compel them to protect the privacy rights of members.

What Do the Courts Say?

The issue has gotten higher visibility in recent years as a result of a landmark court case in California, where an appellate court ruled in 2010 that an owner had the right to inspect, copy, and use membership rosters to communicate with other owners about a petition to change the bylaws at a WorldMark Resort. The resort's management company was Wyndham Resort Development Corp.

While not delving into many details of the case, which generated a 20-page appellate court ruling, it is fair to observe that the court did not like the fact that WorldMark took extensive steps to block disclosure of the membership list, even though it was authorized by the association's own bylaws. The court also rejected WorldMark's contention that Miller should pay $260,000 to subsidize the snail-mailing of his petition to WorldMark's 260,000 members. Finally, the court dismissed WorldMark's claim that it could not share owner e-mail addresses because it did not "own" the e-mails, even though it uses e-mail addresses to handle owner reservations and online proxy voting for elections. WorldMark claimed that Wyndham, the management company, "owned" the e-mail lists.

The ruling in Miller vs. WorldMark sent tremors throughout the developer industry — because it opened the door for timeshare owners to start communicating and organizing, on their own, to investigate issues at their resorts. Prior to this, and even to this day, many HOA boards tend to be closely held clubs dominated by developers or their management company allies and, as a result, they can control all communications that are distributed to owners.

New Legislation - Helping or Hurting Owners?

This year, in an attempt to overturn and/or reinterpret the WorldMark ruling, Wyndham and the American Resort Development Association (ARDA - the lobbying entity for all major timeshare developers) drafted legislation for a California bill that would, under the mantel of protecting owner privacy, create new rules and procedures for disclosure of timeshare owner rosters. Under Assembly Bill 634, a timeshare owner would have to submit a request-to-communicate to the board and/or management company, then pay for the "reasonable" cost of sending that communication to members of the HOA. The board and/or management company would also have to determine that the communication involved legitimate association business (such as a board recall petition or a proposed amendment to HOA bylaws, as in the WorldMark case). The bill also provides an appeals procedure for members to go to court to compel disclosure of owner records.

The purpose of the bill and its restrictions on disclosure, according to ARDA officials, is to prevent owner rosters from falling into the hands of third party companies that could use them to solicit owners for "get-out-of-your-timeshare" scams. "This bill creates a process for timeshare owners to communicate with association members without the disclosure of the lists," ARDA said in support of the bill, which is modeled after a statute in Florida (home to 25 percent of US timeshare resorts and headquarters for most, if not all, timeshare developers).

Owner advocates have a different view of the legislation. Owner communication, they say, is a key to a healthier timeshare industry.

"When people need answers to questions about what's happening at their resort, they deserve to get them," said Greg Crist, CEO of the National Timeshare Owners Association, based in Florida. "I am sensitive to the fact that there are bad operators out there seeking to take advantage of consumers by obtaining board data records, but there are legitimate reasons why members should be able to circumvent their boards and communicate independently."

According to the bill's author, Assemblyman Ian Calderon (D-Whittier), "As a result of the (WorldMark) ruling, any timeshare owner can easily get their association's lists and sell those lists to any third party. Such a list on the open market would easily be of substantial value, particularly to unscrupulous parties who prey upon timeshare owners."

ARDA's and Calderon's positioning is ironic, Crist says, because timeshare scammers are the only groups that ALREADY appear to have access to plenty of owner records. The only way they could have gotten them is from the companies that hold the records (most typically, by bribing someone in the organization to release owner data) or through highly sophisticated Internet searches.

An Assembly committee analysis of the bill notes: "Bills similar to this have failed passage over the question of whether or not timeshare nonprofits should be held to the record-release standards of nonprofits generally. The logic behind provisions for the release of member contact information is that it allows members to communicate, organize, and take action if there are problems with the management of the corporation — a form of democratic self-policing..."

In its ruling, the appellate court said timeshare entities need to strike a balance between protecting owner privacy while allowing owners to exercise their First Amendment rights to communicate with other owners. "A danger exists in allowing too free an access to membership lists," the court said. "However, the potential for abuse must be balanced against a member's legitimate need and rights to utilize lists in election contests and for purposes reasonably related to a member's interest."

Crist says the proposed legislation does not satisfy the competing contest between owner privacy and disclosure.

"This bill may be well intentioned, because protecting owner privacy is extremely important, but it sets up a process for owner communications that is so cumbersome and expensive that it effectively blocks the communications. And that's no accident. This bill was deliberately drafted to accommodate the wishes of developers who want to maintain total control over owner communications," Crist said.

Senator Sensitive to Owner Privacy Issues

AB 634 sailed through the California Assembly without a single objection and was sent to the state Senate on a 79-0 vote on May 11, 2015. It is now in the hands of the state Senate Judiciary Committee, where it is stalled. Why? Because the committee chairwoman, Sen. Hannah-Beth Jackson (D-Santa Barbara), has had personal experiences with timeshares (according to Calderon's office) that made her very sensitive to the bill's competing issues: owner privacy vs. disclosure.

"We are trying to thread the needle between making (owner lists) confidential for certain purposes but not for people to legitimately talk to each other," said an analyst familiar with the bill. "Sometimes owner information should be shared. If you're an owner who has legitimate ideas, there is no way to communicate except through the management company, but they might have a conflict of interest. Right now, there is now way to check on this, because no one is overseeing it."

The California Legislature is in recess until January. Calderon's bill will come up for reconsideration in the Senate Judiciary Committee in 2016 while both sides work on alternate language to resolve the competing issues in the bill. Both sides say they are optimistic.

What Alternatives Do We Have?

Shep Altshuler, an industry veteran, publisher of TimeSharing Today magazine and organizer of the Timeshare Board Members Association, said there are alternatives to resolve the disclosure dilemma.

"The tension over denying owners access to the owner rosters for legitimate purposes has been going on for decades. The majority of owners know that, while they are denied access, fraudulent operators appear to have unfettered access. Denying access and suppressing free speech through legislation are further examples as to what taints the image of timeshare ownership. A mechanism should be put in place, where owners can disseminate legitimate communications through an independent third party not controlled by the developer or HOA. Third party companies that administer ballots already exist. Why not use them?"

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About the author

This answer was provided by RedWeek's Chief Correspondent, Jeff Weir. Jeff is a California-based journalist who has covered California, Congress, and the White House. He also has roots in Silicon Valley, where he directed public relations and marketing programs for high-tech companies. He is also a timeshare owner and member of RedWeek.com.

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