An Ocean Boulevard property down in Myrtle Beach, South Carolina recently gave up on their quest to build a popular destination in the U.S. Southeast. Sand Castle Timeshare Owners Association Inc is now filing for bankruptcy in order to deal with their unobtainable dream. The failed timeshare operation got started back in 2007 by putting 2,028 weekly intervals on the market. But the operation quickly realized the demand for their resort just wasn’t there. Over the last decade, only 35% of their units have been occupied.
Leading up to court proceedings, the exact reasoning behind the noteworthy timeshare downfall has been vague at best. It’s been deemed one of the oddest bankruptcy claims to hit the South Carolina docket in a while. Local attorney from Nexsen Pruet, Rick Mendoza, told local news outlets that the filing was unique to anything the state has ever seen. He currently represents the failed timeshare owner’s association with law partner Ron Jones. He said, “This is the first time I’ve been involved in something in this particular situation.”
Apparently, hundreds of timeshare owners initially invested in what was once called Sand Castle South, only to simply lose interest. Although the property management company purchased two full floors at the popular Sandcastle Oceanfront Resort in one of the most popular tourist cities in America, they weren’t able to keep buyers engaged. In the end, investors-turned-fractional-owners quietly stopped paying the obligations that kept the resort alive. Maintenance fees and other costs were abandoned, along with essentially all the 39 vacation units across both floors.
Secondary Investor Plays Role in Failed Timeshare
What makes the bankruptcy claim interesting is the fact that Sand Castle South received financial help from Festiva Adventure Club back in 2013. Herbert H. Patrick claims his company took a chance on the Myrtle Beach resort by purchasing its unsold inventory – even though it was on the verge of becoming a failed timeshare. While Patrick acknowledged the deal was not “financially well” from the get-go, he told reporters he believed his experience in the industry would stabilize the operation.
You see, Patrick’s Festiva Adventure Club is a derivative of another one of his companies called Zealandia Holdings. This venture is a stakeholder in a number of timeshare investment projects. Oddly enough, Patrick is also the president of the Bankrupt Owners Association. During July 9th’s meeting of creditors, he remembered being overly optimistic even though “the association (he invested in) was on the verge of bankruptcy.” After funneling over $1 million into the revival of Sand Castle South, he thought it would only be a matter of time before he’d reverse the resort’s previous fortunes.
But unlike Patrick’s other investment ideas, he quickly found out “there just wasn’t any usage for those weeks.” After paying nearly $1000 for every interval, Festiva Adventure Club was unable to cultivate any public interest and eventually walked away, officially classifying Sand Castle South as a failed timeshare investment. After five years on lifeline, the resort lost its financial heartbeat and Patrick moved on to pursue other financial obligations with alternative investors.
Did Sand Castle Ever Stand a Chance?
Since the summer of 2019 began, all of Sand Castle’s condos have basically been vacant. While some owners are still considered in “good standing,” there aren’t a lot of perks to owning a piece of this failed timeshare operation. The property management company has never been able to figure out how to sell their units or how to hold their buyers accountable for payment. It’s hard not to assume something fishy is going on down in the Southeast. It wouldn’t be surprising considering a multitude of scams swallow up consumers in this popular tourist region.
Either way, the five hundred – or so – fractional owners at Sand Castle South will be receiving a lovely notice of foreclosure soon. The good news is, after creditors are paid in full, leftover proceeds could be paid to the timeshare owners who remained current. According to Rick Mendoza, the property management company hopes to sell the remaining 39 units at a court auction. Jones claims they are currently “looking for a buyer.” Hopefully a successful tenant at the Sandcastle Oceanfront Resort can take over and turn things around.
Failed Timeshare Ownership Isn’t Always the Buyer’s Fault.
The outcome of this story goes to show how unpredictable buying a timeshare can be. Hundreds of failed timeshare operations impact the pockets of consumers every year. While it may be difficult to see something like this coming, there are certain things you can look for to avoid let down. Before you agree to buy into something that seems promising, make sure you’re sure it’s best for you.
If you find yourself in a timeshare contract that just doesn’t make sense, there’s no reason to give up hope. Being proactive and exhausting all of your options with the resort will inevitably help you legally walk away from your agreement, free and clear of all obligations. Preventative measures will help you avoid foreclosure and the thought of facing bankruptcy yourself. To learn more, you can schedule a free consultation with us or proceed with an eligibility form below.