There are so much misinformation and myths circulating around here.  Let me separate one such myth from reality.  There two main types of timeshare: deeded and not deeded.  Hawaii Revised Statutes HRS § 514E provides the Hawaii timeshare law and defines those, see the definitions below.  The timeshare by Shell Vacations Club (“Shell”) here at the Ilikai is not deeded.  That is, Shell owns their 123 units.  What they sell is points for the right to use.  Take a look at the definitions below.  Shell’s timeshare falls into the (2) category in the HRS § 514E-1 timeshare definitions. 

Please note that the fact that Shell’s timeshare is not deeded could be considered good news.  Why?  Because Shell holds the deed to those units.  This should make it easier for them to get out of here.  If it were deeded timeshare, it would be way more involved for them to cease their operations, because there would be circa 52 deeded timeshare owners per unit.  Just imagine that!

Speaking of which, as I reported earlier, an Ilikai affiliated entity is looking into setting up deeded timeshare here.  This is not a rumor, it is from a reliable external source, I have more detail.  With the current lawsuit against Shell, there is not much they can do.

I am writing this because I keep hearing from some owners this mythic claim that Shell’s timeshare is “points-based,” and thus, supposedly, it is not really timeshare but more like a hotel, and thus, Shell’s operations are legal.  Hello!  This is absurd logic.  What’s worse is that these owners allege that they hear this type of interpretation from certain Board Directors.

Almost all of timeshare is points-based these days.  Deeded or not deeded – almost all timeshare plans these days are points-based.  That’s the timeshare norm these days.  I encourage you folks to attend a timeshare presentation.  I have been to a few, it is very educational.

Back to the HRS § 514E-1 timeshare definitions: Pursuant to HRS § 514E-1,

“”Time share plan” means any plan or program in which the use, occupancy, or possession of one or more time share units circulates among various persons for less than a sixty day period in any year, for any occupant.  The term time share plan shall include both time share ownership plans and time share use plans, as follows:

(1) “Time share ownership plan” means any arrangement whether by tenancy in common, sale, deed or by other means, whereby the purchaser receives an ownership interest and the right to use the property for a specific or discernible period by temporal division.

(2) “Time share use plan” means any arrangement, excluding normal hotel operations, whether by membership agreement, lease, rental agreement, license, use agreement, security or other means, whereby the purchaser receives a right to use accommodations or facilities, or both, in a time share unit for a specific or discernible period by temporal division, but does not receive an ownership interest.

“Time share unit” means the actual and promised accommodations, and related facilities, which are the subject of a time share plan” (emphasis added).

Note that HRS § 514E-1 clearly states, “excluding normal hotel operations.”  I.e., the Hawaii timeshare law itself clearly differentiates between “normal hotel operations” and “timeshare.”  Timeshare is also taxed very differently than hotels, among other differences.

As a reminder, here is what the Ilikai covenants (Declaration and Bylaws) say about permitted uses of Ilikai apartments:

1. Pursuant to Section 7(a) of the Ilikai Declaration, “[t]he owner of each apartment within the building shall use such apartment only as living accommodations for hotel or apartment purposes” (emphasis added).
2. Pursuant to Article VI Section 1(a) of the Ilikai By-Laws, “[t]he owner of each apartment within the building shall use such apartment only as living accommodations for hotel or apartment purposes” (emphasis added).

Now compare that with the timeshare definitions in HRS § 514E-1.  HRS § 514E-1 clearly states, “excluding normal hotel operations.”  The Hawaii timeshare law, HRS § 514E, itself clearly differentiates between “normal hotel operations” and “timeshare.”  How can anyone argue that Shell’s timeshare operations are same as hotel and thus should be allowed here?!  Why is our Board of Directors refusing to cite and fine Shell for violations for using their units for timeshare purposes even though the Ilikai Declaration and By-Laws only permit hotel and apartment uses?

This entry was posted on Tuesday, December 8th, 2009 at 11:52 pm and is filed under Timeshare & Shell Vacations Club. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.