Here is a Florida example of a condominium association dealing with timeshare.  Ocean Walk Resort in Daytona Beach is a mixed-use project consisting of regular condominiums and timeshare units owned and managed by Wyndham:  ”Civil Action Filed against Wyndham”, “Timeshare, condo group square off in court,” Take a look also at this blog-style posting with more information on the situation and interesting comments from readers, “Having a combo of timeshare and condo-hotel is the problem.  Not the legal system, not the law.”

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).

Here is a case with relevance to the Ilikai lawsuit against Shell Vacations Club (“Shell”) to cease timeshare operations at the Ilikai: O’Connor v. Resort Custom Builders.

In  this case, some individuals (“appellees”) owned a home in a subdivision located in a resort area.  These appellees sought to sell interval ownership interests, or timeshare, for that home.  However, the subdivision had a restrictive covenant stating that the homes were to be occupied for residence purposes only.  Appellants sued to prevent appellees from selling interval ownership interests, i.e., timeshare, in their home.  Appellees in turn claimed that other communities in the area permitted timeshare, and that they should be allowed to do the same.  They also pointed that the subdivision covenant did not explicitly prohibit timeshare. They also claimed timeshare was similar to rental of property, and that they should be allowed to proceed with timeshare because it was similar to rentals.  The lawsuit outcome was this: The court ruled that appellants had a right to restrict the use of the land in accordance with the restrictions delineated in the subdivision covenant, – i.e., not allowing timeshare.  The court also ruled that it was immaterial that other entities in the same community had permitted timeshare.  The court also ruled that rental of property was not equivalent of timesharing.

The arguments by the individuals attempting to sell timeshare in the above case show similarities to the arguments by Shell and some brainwashed-by-Shell individuals, incl. some brainwashed-by-Shell Ilikai owners.  Brainwashed-by-Shell individuals claim that timeshare is permitted in other properties in Waikiki, that the Ilikai covenants (Declaration and Bylaws) do not explicitly prohit timeshare, and also claim that timeshare is supposedly no different than rentals – that’s the common arguments by the brainwashed-by-Shell individuals.  (P.S.: I do fully recognize the importance of Hawaii specific statutes and cases.)

As you may or may not know, but an Ilikai neighbor, Discovery Bay, had their own share of trouble with timeshare.  (Discovery Bay is a 42-story twin tower condominium complex across the street from the Ilikai.)  Back in the 1980s, Paradise Palms Vacation Club acquired eight units at Discovery Bay and started points-based timeshare operations.  Discovery Bay pursued a lawsuit to prevent the use of units for timeshare purposes and succeeded removing timeshare operations from the premises.  Good for them!

There was also a related lawsuit: Federal Trade Commission (F.T.C.) v. Paradise Palms Vacation Club, 1986 U.S. Dist. LEXIS 19109 (W.D. Wash. 1986 ) (click on the link to view) alleging developer’s misrepresentations about location, availability and exchange privileges of Hawaii timeshare units. 

Discovery Bay

In F.T.C. v. Paradise Palms Vacation Club, it was alleged that timeshare developers sold some 3,000 timeshares at $6,000 a share by using promotional material depicting Discovery Bay, luxurious Hawaii condominiums near or on the beach at Waikiki.  However, the defendants were unable to deliver the advertised Hawaii timeshares to more than 20% of the timeshare owners.  The remainder were offered “comparable” units in Lake Tahoe and Ocean Shores, Washington.

Several years later, the Paradise Palms case was resolved by the entry of judgments against the timeshare developers one of which described the following misrepresentations:

“(A) That each (timeshare owner) would be able to vacation in a luxurious condominium unit in Hawaii every year for decades to come.  In fact, the Club’s luxury units would accommodate no more than 20% of its members.  The large majority of (the) vacation units were not in Hawaii at all, but rather in an apartment building in Lake Tahoe, Nevada, and a motel in Ocean Shores, Washington.

(B) That (defendant) owned the entire 42-story, twin tower Discovery Bay condominium complex in Waikiki. In fact, the Club owned only eight Discovery Bay units, all of which were the subject of litigation seeking to prevent their use for timesharing purposes.”

Note that the lawsuit was separate from the other lawsuit that succeeded to cease timeshare operations at Discovery Bay.