Before the pandemic even started, and timeshare resorts found themselves in a backpedal, Diamond resort owners were already feeling a little slighted. According to a 91-page class action lawsuit that was proposed this past August, Diamond (DRI) has supposedly been billing its members for the “burden of operating expenses” with “inflated annual fees” in an “unlawful” fashion. Although buyers have struggled to pinpoint the reason for ever-increasing dues for maintenance and special assessments, it appears they’re beginning to catch on. But will they be able to prove it?
What Does the Timeshare Lawsuit Entail?
The suit claims that Diamond resort owners have long dealt with this issue. Because of this, Diamond Resorts Management, Inc., ILX Acquisition and a number of corporate executives are included in the class action as defendants. It goes on to say, “Year after year, the Association’s controlling Directors, acting in concert with DRI’s principal executives and property management company, secretly shifted massive amounts of DRI’s internal corporate overhead expenses to the timeshare owners under the guise of legitimate common expenses of the Association.”
Despite vague explanations regarding the additional annual charges of the timeshare product, plaintiffs allege that DRI: “Concealed illicit hidden subsidies by means of false and misleading annual budgets disseminated to members electronically and through the mail.” While it’s proven difficult for vacation owners to uncover sales deceit in the past, physical (supposed) evidence makes this case intriguing.
Who’s Involved and Why Are They Filing Suit?
Class members include thousands of current and former Diamond Resort Owners from the Premiere Vacation Collection Owners Association. This involves an array of resorts in Indiana, Arizona, Colorado, Nevada and even Mexico and those who made purchases between 2011 and 2019. During the sale, buyers are required to make an initial payment “in the neighborhood of $20,000” in order to receive a points certificate. Upon signing, they are responsible for paying assessments every year.
According to the DRI lawsuit, these usually cost around $2,000 per year. Plaintiffs claim these points certificates are used by members to book resort reservations, like a form of currency. At the same time, they’re also supposed to be used to calculate member voting rights and how much they’re charged for annual assessments. But according to the lawsuit, many Diamond Resort owners don’t feel as though the association’s board of directors is managing this ethically.
In fact, they claim the defendants are maintaining “absolute power” over fiscal affairs. In other words, they’re accusing DRI of packing their board of directors, (who are said to be democratically elected) with DRI executives. The lawsuit explains this by stating the defendants’ total membership share, including points from unsold timeshare units, is multiplied by nine to determine the companies’ voting power. This may allow them to minimize owner control and put a “stranglehold” on the association’s finances.
So, What Exactly Is DRI Accused of Doing?
Plaintiffs inevitably claim that defendants have consistently fixed annual budgets with a “reasonable approximation” of common expenses. This lawsuit states that the budget has never fully explained the subsidies that are paid to DRI to cover its overhead expenses. The lawsuit continues to argue that Diamond Resort owners have been misled about what they’re contractually obligated to pay as a result of each budget being “materially misleading”.
The lawsuit states that this information is not materially available or understood and many weren’t initially aware they were also paying for “billing, accounting, general and administrative fees” as well as “indirect corporate costs.”Therefore, the total amount charged to Diamond Resort Owners every year was “materially greater” than necessary.
Sadly, DRI members were forced to use persistence just to receive this type of information. “A labyrinth of vaguely-labeled hyperlinks on DRI’s website” was used to describe the process. Even after discovering breakdowns of fees, they were still left in the dark. Owners claim corporate subsidies were often “generically described” as “administrative costs” instead of what they really were.