The San Pedro Sun has this week, lots of good info. Sueño Del Mar Closes - Timeshares Act put to the test
Many who visit San Pedro leave with a dream of some day owning a piece of Belize. Sueño Del Mar offered a new concept in resort ownership called fractional living. Now the 140 families who invested in this property are living a nightmare since the property closed its doors in mid-September as a result of falling into receivership.
In an interview with Kevin Meyer, former Sueño Del Mar manager, The San Pedro Sun found out that after much consideration, management decided to close on September 12th as they determined their next course of action. On September 13th, receiver Mark Hulse was appointed by British Caribbean Bank to take over Sueño Del Mar. Once control was handed over, the receiver relieved the staff of their duties and shut down the resort.
The debate now is if investors in Sueño Del Mar are protected by The Timeshare Act of Belize. In October, club members and part owners of Sueño Del Mar started copying letters to the The San Pedro Sun, wherein their concerns were relayed. The common sentiment in the letters is that the owners' rights are not being considered. One letter in particular states, "As members, we are no longer allowed to visit or stay at the Resort. Our personal property is under the Receiver's control... the Bank will not recognize the membership interests, and that the mortgage will cut off the Club and its members entirely. He says the Timeshare Act does not apply, and that he has "six legal opinions" saying the members have no rights. On the bank's behalf, he says that the only way the members will ever see the Resort again is if they buyout the bank's mortgage position. To do that he says, the members must pay all of the principal and the accrued interest which has retroactively been set at 15% per annum..."
The Belize Tourism Board (BTB) also disagrees with the Receiver's position. In a letter to a concerned investor, BTB's Director of Tourism Seleni Matus wrote, "The Timeshare Act is ‘the' legislation in force in Belize that governs all timeshare accommodations and there can be no dispute that Sueño Del Mar is and was at all material times a timeshare accommodation," Matus added that "Unfortunately, the law in Belize does not give us authority to give directives to a Receiver in these circumstances and we are unable to join in any litigation." A Sueño Del Mar member said they are considering all their options, including legal action. One of the letters sent to BTB and other Tourism Stakeholders states, "Most recently, the Receiver has advised us that he will not talk to any of us. He will only talk to our attorneys. So, many of us are now going to get our first experience with local law firms."
From the inception of Sueño Del Mar on January 1st, 2006, sales of the fractional ownership took off in the booming economy. Located 12 miles north of San Pedro, the exciting new venture appeared destined for success. The beautiful grounds and buildings brought in investors who bought fractional ownership starting at $50,000US. Ever hopeful of expansion and continued growth, the management at Sueño continued investing in their project, financing further buildings and upkeep.
With promising future projections, Sueño management took on a loan from Belize Bank International (now British Caribbean Bank - BCB) to continue expanding. Then, in mid-2008, world economic troubles hit Sueño and sales, which were mostly directed to US and Canadian citizens, pretty much halted. With increasing expenses for maintenance and administration, Sueño management found itself in deficit. To keep the development afloat, and to offset expenses, a loan was applied for at BCB, but was denied on December 24th, 2008. By then, the total figure owed to BCB was $4 million.
Going into Receivership meant that BCB's appointed Receiver would be in charge of the operations at Sueño. According to members, the gravity of the situation took many by surprise, for according to their Member Update Notes, the sense of urgency was not noticeable. August 10th, 2010's notes included a statement saying, "Working on leads and tours, sales remain very slow, ahead of last year's sales at this time, we remain optimistic about the remainder of the year...Continue to meet/communicate with the bank on a bi-weekly basis, they are still working with us, Interest payment of $350,000 due in January..." However, a month later, on September 12th, 2010, Sueño was closed.
The Timeshares Act that was passed in early 2009 is intended to protect the investor. For example Part IV, Section 17 reads: "in no event shall the foreclosure, exercise of power of sale or pursuit of any other right or remedy under a mortgage, other debt instrument, charge or lien covering all or any portion of a timeshare property or accommodation (whether covering real or personal property or both) extinguish or impair a purchaser's timeshare rights in a timeshare unit, irrespective of whether or not any such mortgage, other debt instrument, charge or lien is given or filed on record prior to completion of the development of the timeshare property, accommodation or units". If the Timeshare Act is applied to the Sueño Del Mar situation, the Club members should have access to their property in the times that they have allotted. The Accommodations Act would apply to memberships that were bought before the Timeshare Act was enacted.
In speaking to Mr. Hulse of Baker Tilly Hulse, his appointment was under the Mortgage Document as a receiver, and as such, he is seeking a purchaser for the property. Mr. Meyer also stated that finding a buyer to take over the development is in the best interest of all involved. "Sueño Del Mar is the test for the Timeshare Act of Belize," he stated. All research indicates that it is in the best interest of all involved to uphold the Act and respect owners' rights.
According to Meyer, it was a combination of a poor economy and lack of revenue from sales that had caught up with the developer. Sueño turned to its lending institution BCB for help, inviting them to look over their books and explaining their plans to either find a new investor/buyer for the development. The option for receivership was not one they wanted to take, but had push come to shove, according to Meyer, they would have welcomed the assistance and would have been happy to make the transition as smooth as possible. "All Sueño management wanted to ensure was that the nearly 140 families that had fractional ownership at Sueño Del Mar would have their assets protected," said Meyer.
Belize markets itself to investors who choose to spend time within our borders; spending thousands of dollars while here to pay for food, tours, shopping and more. Many choose to buy several weeks a year to have a guaranteed place to stay whenever they decide to come back for vacation. Numerous calls placed to BCB came to a head on Thursday, November 18th, 2010, when Mr. Christopher Coye opted "not to comment" on the issue. The question remains, will Sueño Del Mar be the undoing of Timeshares as we know it in San Pedro, and for that matter, Belize? What will happen to the 140 guaranteed families who travel to our country and spend time and money in the country?http://www.sanpedrosun.com/news/sueno-del-mar-closes-timeshares-act-put-test/