Holiday Condos

Problems for time sharing

One week in a luxury vacation retreat each year for the rest of your life for just $8,000, plus a small annual maintenance fee. That is the appeal of time-sharing ownership, the hottest and most controversial part of the depressed residential real estate business. New housing starts are at their lowest point since World War II, but during the past seven years the time-share business has exploded from $50 million to $1.3 billion in annual sales.

Time sharing allows people to beat the high cost of vacations in $100-a-night resort hotels. Instead, they pay anywhere from $3,000 to $15,000 to buy rights to a week or perhaps as much as a month each year in a villa, bungalow or apartment. Typical of such deals is the package offered by the newly built Snug Harbor Marina Village in Fort Myers Beach, Fla. Snug Harbor charges a moderate $2,500 to $6,000 a week for two bedrooms and two baths, plus the use of a village-owned fleet of 22-ft. to 25-ft. cabin cruisers docked outside. About 100 miles to the north in Madeira Beach, Fla., another attractive timeshare, the 46-unit Commodore Beach Club, has been in operation since January 1981, and is already 95% sold out.

Yet as the popularity of time shares has increased, so too have the booming new industry's headaches. High-pressure salesmen have flocked in, bringing with them direct-mail promotions that lure unsuspecting customers to distant resorts with promises of expensive-sounding sweepstakes gifts. Then the customers are cajoled into buying time-share condos at high interest rates. Says Democrat Claude Pepper of Florida, whose House Select Committee on Aging has been holding hearings related to abuses in the industry: "Many of these offerings are legitimate. But a high percentage of them turn out to be frauds."

Once they become part-time owners, people sometimes find that their dreams turn into nightmares. During a year, dozens of families can wind up occupying a unit, with some stealing the linen or perhaps wrecking the living-room sofa and thereby adding to upkeep costs. Says Barney Logan, a condo dweller in Honolulu, whose 47-unit building now includes about a dozen time-share apartments: "When we first came here, nothing was said about time sharing. Then the flood started. There was overuse of utilities, maintenance costs went up, and sometimes you couldn't even get an elevator, there were so many people in the building."

Some time-share management companies have gone bankrupt, leaving the hapless owners helpless. In picturesque Estes Park, Colo., the historic Stanley Hotel was converted into a time-share condo project, and more than 2,000 units were sold for $5.5 million. In 1979 James Quincy, a Colorado real estate promoter, stepped in and bought the company. The project went bankrupt in 1980, leaving the building effectively unmanaged until 2 1/2 months ago, when it reopened under new management.

In an effort to spur protective legislation for time-share consumers, the National TimeSharing Council Board of Governors will meet this week in Orlando, Fla., to adopt a tougher "model act" for state governments without such laws. Though time sharing can be an inexpensive vacation alternative, it also quite plainly remains for now an investment that requires careful planning and close investigation.

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