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THE
IMPORTANCE OF USING A TRUSTEE
Holiday
Ownership has been one of the tourism industry’s great success stories
of the 1980’s and 90’s and the indications are that its unparalleled
growth will continue. Discerning
customers in an increasing number of countries are buying a lifetime
of holidays in more and more resorts.
In this constantly
changing and expanding framework it is essential to provide a system
of administration which has been tried and tested in the
real market, whilst remaining flexible, cost effective, and
most importantly being able to provide the necessary long term protection
for the Purchaser.
The Trustee
System takes account of all these factors:
This system has been tried and tested since the early 1980’s
and its concept has withstood the demands of many years of practical
application.
Its flexibility has been proven by its use in resorts
and markets in more than 50 countries world-wide.
The cost-effectiveness of the Trustee System is illustrated
by the fact that the prohibitive costs of transferring ‘realty rights’
are virtually eliminated, benefiting Developer and Purchaser alike.
The long term protection of the Holiday Owner after completion
of his purchase is at the very heart of the Trustee System.
YOUR
PROTECTION
The Trustee’s prime
responsibility is to protect the long-term interests of the Holiday
Owner by ensuring that he receives an inalienable, legal ‘Right
to Occupy’ the holiday unit he has purchased.
On execution of the
Deed of Trust, the Trustee is provided with the rules and guidelines
for the operation of its day to day activities.
HOW
THE SYSTEM WORKS
Firstly and fundamentally,
why does the Purchaser need long term protection?
The holiday buyer
is purchasing in one large instalment the right to use resort accommodation
for many years to come. As
such he needs to be sure that his holiday home will be available
for his use, not just this year but throughout the period of his
ownership.
How then can the
availability of this accommodation be ensured by the Trustee?
The Trustee will first make various legal checks to satisfy himself
that the Developer is the legal owner of the property being transferred
into trust and that it is not charged or encumbered in any way.
Hence the Trustee is able to establish that at the time of
purchase all is in order
But what if the Developer reneges on its commitments?
What will happen to the future Rights of Occupation of the
Holiday Owners? For instance:
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POSSIBLE
PROBLEM
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WITHOUT
A TRUSTEE
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WITH
A TRUSTEE
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What
if the Developer sells the resort property to a Third
Party without informing the Holiday Owners?
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The
Third Party will own the property and will be legally
entitled to cancel the Holiday Owners’ rights.
They may lose everything
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The
Developer cannot sell and a Third Party cannot buy without
the Trustee’s swift intervention.
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What
if the Developer gets into financial trouble and mortgages
the property to a Bank or similar institution in order
to raise money?
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The
Bank may decide to foreclose on the Developer and take
possession of the property.
The Bank will then be entitled to cancel the Holiday
Owners’ rights.
They may lose everything.
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The
Trustee will simply not allow the Developer to mortgage
the property to a Bank or any other entity.
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What
if the Developer goes into liquidation?
After all, no company is guaranteed to stay economically
viable forever.
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A
receiver will be appointed to handle the company’s
affairs.
He may decide to sell the resort property without
regard to the rights of the Holiday Owners.
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The
Trustee will stand between the receiver and the trust
property and will be able to prevent any sale.
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What
if the Developer sells more Holiday time than is available
at the resort?
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There
would be more Owners than actual units and some Owners
would not be able to take their holidays.
In extreme cases the whole system would disintegrate.
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The
Trustee scrupulously monitors the sale of Holiday Intervals
and will not allow a resort to be oversold.
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How
does the Trustee manage to do this?
It sounds too good to be true!
A guarantee against
the possibility of eventualities such as these is provided by the
Developer settling a Deed of Trust and appointing the Trustee as
protector of the Holiday Owners’ legal Rights of Occupation.
The Trustee is
given control over the Trust Property so that the Developer is effectively
prohibited from dealing with it in any way.
The Trustee takes the advice of legal experts on the best
way to accomplish this – whether by having the property vested in
its name, by taking out a mortgage over the property, or by some
other mechanism suited to the local situation.
As a further safeguard where appropriate the Title Deeds
are retained by the Trustee for safe keeping and to prevent their
transfer to a third party.
Thus control over the Trust Property remains in the hands
of the Trustee and it would be quite impossible for the Developer
to alienate the rights of the Holiday Owners after they have received
their Holiday Certificates.
The Trustee also retains an original of each Purchase Agreement
signed by a fully paid up buyer and only the Trustee is authorised
to issue the Holiday Certificates that evidence the Holiday Owners’
Rights of Occupation.
Why
should the Trustee be trusted?
Hutchinson &
Co Trust Company Ltd is registered with the United Kingdom Registrar
of Companies as an authorised Trustee and is the only timeshare
Trustee in the world that conducts its business wholly onshore.
Trust Law originated in Britain and is a cornerstone of English
Law. Onerous duties
are imposed on any Trustee and the English Courts would take strong
action against any violation of a Deed of Trust or any negligent
action by a registered Trustee Company.
If the Trustee gets into financial difficulties itself
or breaches the terms of the Trust Deed, will the Holiday Owners’
position be jeopardised in any way?
No.
Firstly the Trustee and the Developer execute the Deed of
Trust stating that the property is held for the benefit of the Holiday
Owners. This
is a legal document which is binding not only on the Trustee but
also on any liquidator who may be appointed to deal with the Trustee’s
assets. The Declaration
of Trust made by the Trustee when he signs the Trust Deed legally
separates Trust assets from those actually belonging to the Trustee
and would be accepted as such in the event of the financial failure
of the Trust Company itself.
No claim by a creditor of the Trust Company could be made
against property held in Trust for the Holiday Owners.
Even the total disappearance of the Trustee would not affect the
rights of the Holiday Owners.
The ancient law of equity ‘will not allow a Trust to fail
for lack of a Trustee’ – a court of competent jurisdiction would
be empowered to appoint a temporary Trustee until a permanent replacement
could be found.
Secondly,
the Trustee carries insurance cover against any negligence of its
staff.
Can the Trustee still provide protection if the resort is
under construction at the time a Purchaser buys a holiday unit and
the Developer fails to finish the project?
Yes, the Holiday Owners can still be protected by the Developer
depositing a capital bond with the Trustee.
The amount of the bond would be determined by reference to
the number of Holiday Owners and the amount of work that needs to
be carried out. If
the Developer were to collapse the Trustee would step in and use
the bond towards the cost of completing the resort.
If you are buying Holiday Ownership ask
yourself the following:
Is my holiday investment safe today?
Will it be safe tomorrow?
Will it be safe for years to come?
With Hutchinson & Co Trust Company Ltd the answer to all these
questions is “YES”!
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