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Can I file a lawsuit against Welk Resorts?

If you bought a timeshare from Welk Resorts and weren’t told the truth during the sales presentation, or they haven’t performed under the contract like they promised, you may be able to file a lawsuit. And you may be able to get out of your Welk timeshare.

Welk Resorts isn’t operating as a separate company anymore, but that doesn’t mean it’s gone: if you own one of their timeshares, you’ve probably heard that Marriott bought them out and has renamed it the Hyatt Residence Club. That makes them what’s called “assignees” under the contract – they’ve taken over the role of Welk. Legally we call that “standing in the shoes” of Welk Resorts. They have the same responsibilities and obligations that Welk did.

So can you file a lawsuit?

First, you have to have a good legal claim, and you have to be within the statute of limitations. But before it was sold, Welk Resorts was being sued by the California Attorney General for allegedly engaging in unfair and deceptive practices in selling people timeshares. There was a settlement in 2020 in that case, and the suit alleged that Welk sold its “Platinum Program” deceptively. Here’s some examples of things that the California Attorney General alleged were happening:

1) Falsely claiming the timeshare interests were real estate transactions

2) Claiming there would be a “buy back” program at Welk where you could sell your timeshare back later, when that wasn’t true

3) Claiming there was a program to rent out your timeshare when it didn’t actually exist

4) Making fake claims about tax benefits of the timeshare

5) Making misrepresentations about the resale value of the timeshares

6) Faling to inform some people about their right to rescind during the “rescission period” and how to cancel their purchase. You can read more about how to rescind a Welk timeshare here, but it will only help you if you just bought one recently.

Welk denied all of this, but stipulated to a judgment against it.

You could have a legal claim for all kinds of reasons that might get you out of your timeshare, or even win you money. These are examples, but basically anything that is fundamentally unfair or deceptive usually has a legal basis to sue. Many states have laws that let consumers sue when they’re misled, and there are also basic fraud claims.

Then there’s the issue of whether promises were kept. If they promised you something and didn’t do it, that’s a breach of contract, and might be a breach of warranty, too. When someone breaches a contract, the general rule is it excuses the other person from performing their end of the deal. That makes sense: if you buy a timeshare and can’t ever use it, for example, should you have to keep paying? But legally you have to file suit to prove it, otherwise you risk having your credit score destroyed.

Can I sue Welk Resorts, or do I have to arbitrate?

One big question is whether to file a lawsuit in court against Welk, or do you have to arbitrate?

Welk contracts that have been filed publicly in lawsuits have arbitration clauses in them. But some courts have refused to enforce those clauses and have let people sue anyway. That’s because the Welk timeshare contracts are vague about how the arbitration is actually supposed to work.

Here’s what one court in California said about Welk’s arbitration clause in refusing to enforce it:

“Applying these standards, we agree with Plaintiffs that the procedures set forth in the Dispute Resolution Provision are so vague and ambiguous as to be unascertainable and, therefore, unenforceable. As Plaintiffs note, the Dispute Resolution Provision does not use the terms “arbitration” or “arbitrator.” Rather, it requires the parties to submit their disputes to an undefined “dispute resolution process.” A “dispute resolution process” can take myriad forms, both judicial and nonjudicial, including civil litigation, negotiation, neutral factfinding, organizational ombudsman, voluntary or mandatory settlement conferences, mini-trial, private judging, early neutral evaluation, judicial arbitration, and contractual arbitration.”

Lewin v. Welk Resort Grp., Inc., No. D073774, 2019 Cal. App. Unpub. LEXIS 2129 (Mar. 27, 2019).

Another court could disagree—but this argument has convinced other judges as well.

That begs the question: do you want to arbitrate, or do you want to file a lawsuit? That’s a harder choice. Arbitration is often cheaper, which is why companies want it instead of court. But that also means it’s cheaper for you as well. On the other hand, in a lawsuit, the threat to Welk is a lot bigger. If you go to court, you can get more documents and get testimony from their employees. But all that costs money. If your main goal is to get out of the timeshare and stop paying ever-increasing maintenance fees, you might actually want to do arbitration.

If you’re looking for a lawyer to help try to get you out of a Welk Resorts timeshare, call us at 657-845-3100 or e-mail us at contact@kneuppercovey.com. We may be able to help. Our attorneys protect consumers in all kinds of cases, including timeshare disputes. We believe arbitration or a lawsuit is the only realistic way to “exit” a timeshare while avoiding destruction of your credit. There are no guarantees—winning a lawsuit or arbitration is never guaranteed—but anyone who’s experienced deceptive or misleading sales presentations might have a good case.

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