There are several legal conflicts that have been created through the transition of the original Playa del Sol on Playa Los Muertos to the Blue Seas Resort.
The original Playa del Sol is a mix of condominiums, "fractionals" and timeshares. And it is also marketed as a hotel and resort. This is one of the most bizarre legal structures for a building that we have seen. For instance, the legal description of this real estate continues to be Playa del Sol, but apparently all new documents use the name Blue Seas Resort.
Apparently the developer has migrated all timeshare owners to other Playa del Sol locations. That is not unusual in the timeshare business. And made changes that may be detrimental to fractional and condo owners, which is unusual.
There are pages and pages of legal issues that need to be addressed. We are going to address only the risk issues that we normally review.
There is no delivery risk as the building is complete. There is no construction risk. Environmental risk is below average for the location.
Operational risk is high. It is impossible to determine what parts of what appear to be three buildings that are common elements owned by condo owners, or are owned by the timeshare developer. The fractional units do not appear to be fractionals as we define them legally in Canada and the US. Should an elevator, the parking garage, internal pipes etc. need to be replaced, we do not know how costs would be assigned. There should be a separate legal entity which owns things such as the pool, but we haven't seen any evidence of such entity.
Financial risk is high for this product. There are many specifics of the financial structure which make it impossible to assess probabilities of cash flow. We would not finance anything.
Our recommendation is to pass on timeshares and fractionals.
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