A NEW PERSPECTIVE

All About Sunset Provisions

Sunset provisions were typically included in the governing documents of most legacy timeshare resorts developed through the 1990’s. A sunset date is defined as the planned termination of the timeshare, or shared ownership, regime of a resort property. Many developers included the provision as a precaution if the project failed. It created an opportunity for owners to assess the fiscal health of their association and decide whether to continue.

Without clear legal guidance or a practical arrangement, the sunset event can confuse owners and create chaos. In most states, once a timeshare property’s regime sunsets, owners become tenants in common because the timeshare-use plan terminated. Legally, owners can then coordinate among themselves to use their week(s). However, mastering this task is virtually impossible, and continuing to operate under an expired use plan can put the board, the owners, and resort’s staff in legal jeopardy.  

sunset provisions
sunset provisions

Addressing the issues and implementing a plan prior to the sunset is a better option. Resorts at this stage in it their lifecycle are typically distressed, with an intractable amount of non-performing association-controlled inventory that burdens current owners with the bad debt.

Planning is important, as multiple processes are required. Keys to smooth transitions are:

  • Short-term solutions to keep the resort operating 

  • Working with the individual owners to help fulfill what’s best for them

  • Real estate evaluations and capital investment

  • Cleaning up deeds (normally abundant in legacy resorts) 

Capital, Resources, Accessibility

These processes require a strong company with the capital, the resources, and accessibility across states to get the job done. Once a property has been restructured, it can be sold in lieu of partition, distributing the proceeds to all stakeholders including current owners.  

“Most states have favorable legislation to ensure this type of sale is achievable and that the proceeds from the sale are fairly distributed among owners.”

Alex Krakovsky – CEO Lemonjuice Solutions.

For many owners, their timeshare has provided years of enjoyment, and they have been loyal and reliable. As times change, so have owners’ needs. The result is that many legacy resorts are struggling with increasing delinquencies, escalating fees, special assessments, deteriorating units, and an aging ownership base who find it difficult to continue paying maintenance fees or travel. Timeshare exit companies are taking advantage of many aging owners by charging thousands of dollars to help them terminate their ownership. Unfortunately, most owners do not realize that paying a third party to exit their timeshare has a negative impact on the resort they’ve loved for many years. 

Meanwhile, most timeshare resorts are in prime vacation destinations and have significant real value. If your resort needs help navigating a sunset provision or wants to restructure, let us help. Lemonjuice Solutions is the industry leader in restructuring timeshare properties and reimagining resorts. We have the people, resources, and technology to achieve your desired result efficiently and effectively. From timeshare program restructuring and right-sizing to full plan terminations, Lemonjuice Capital delivers positive outcomes for timeshare associations and owners, typically with no out-of-pocket costs for its services.

Experience the Difference with
Lemonjuice Solutions.