Real Estate & Property Law

Suit claims timeshare sales by Marriott Vacation Club are a racketeering scheme

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A would-be class action claims the Marriott Vacation Club’s timeshare program is a racketeering scheme that sells “illusory” interests in real property.

The suit (PDF), filed last Friday in federal court in Orlando, alleges that timeshare buyers in Marriott’s points program pay closing costs, recording fees, title policy premiums and real estate taxes—but they don’t own title in any real estate, report the Orlando Sentinel and the Real Deal.

Timeshare buyers “are being duped into believing they are obtaining title to a real-property interest … when, in fact, they are merely getting a right-to-use license,” the suit says.

The suit says purchasers are led to believe they are buying title to a Florida timeshare estate in real property through a beneficial interest in a Florida land trust. Buyers use their points to book days at timeshares held in the land trust.

Deeds recorded for the interest in land trust property use “arbitrary codes” that don’t correlate to any parcels of real property in Florida, the suit alleges. “Instead, these codes represent nothing more than a contractual right to occupy units in Marriott-owned units,” the suit says.

The points system is different than traditional timeshare sales in which buyers purchase fractional interests in real property. Marriott used the traditional system before the real-estate collapse left it with an increasing number of foreclosed timeshare properties, the suit says.

Also named as a defendant is the First American Title Company, the trustee for the Marriott land trust.

The suit was filed by Anthony and Beth Lennen, an Indiana couple who own a timeshare in Marco Island, Florida.

A spokesman for the Marriott Vacation Club, Edward Kinney, told the Orlando Sentinel that the industry is highly regulated and “we follow every aspect of the state regulatory compliance for vacation ownership sales.” A spokesman for First American says the company doesn’t comment on pending litigation, but it looks forward to the opportunity to defend its rights in court.

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