Apr. 21, 2005 - A group of time-share owners at Island Links on Hilton Head Island has sued the resort's management company, charging the developer changed the resort's covenants without approval from property owners and levied "one time" assessment fees that would deny owners the right to use their property if the fee was not paid.

Reba Management and Island Links Horizontal Property Regime, both controlled by island-based developer Dwight Trew, made changes to the master deed, the property association's covenants, without approval from any property owners, the lawsuit states. Changes require approval from 66 percent of time-share owners, according to the lawsuit. The lawsuit, filed in Beaufort County Court of Common Pleas, lists 66 plaintiffs.

The amendment to Island Links' master deed indemnifies all past officers and directors for actions taken while in office, and releases the developer from obligations to pay dues and assessments, according to court documents. It also allows the regime to use companies, such as contractors, that have ties to the regime's board members, grants Trew's company a rent-free sales office and the right to impose special assessment fees.

The regime board of Island Links consists of Columbia-based attorney Thomas Vernon and Hilton Head-based attorney Dean Pierce. Vernon is the attorney representing Trew and Reba in the property owners' lawsuit, and Pierce is Trew's in-house counsel, which presents a conflict of interest, the lawsuit charges.

Vernon, who denies any conflict of interest, said Tuesday from his office, that the master deed contains a provision that as long as the developer owns more than two units in the property, the developer reserves the right to amend the master deed at any time.

The lawsuit states that last July, property owners were charged assessment fees in addition to annual maintenance fees of about $1,200 per ownership week. That meant a 1/10th share -- five weeks a year -- received a one-time fee of about $6,000 in addition to about $3,000 in annual fees. The one-time assessments totaled $3.6 million.

In a letter to property owners, Reba Management said the one-time fees were necessary to cover repairs and refurbishments not covered by existing reserves following years of neglect by previous owners.

Reba performed an extensive evaluation of the resort to establish what work was required, the letter states, and determined the resort needed exterior paint, new furniture, new appliances and renovations to the clubhouse, including new exercise equipment.

But lawyers for the property owners claim Reba Management has not used reserves for routine repairs and maintenance. Reba also has failed to provide an annual budget and explain how it intends to spend the special assessment, the lawsuit states.

Rick Wieters, attorney for the property owners, could not be reached for comment Tuesday.

Before it was amended, the master deed stated that if the annual assessment fee is insufficient to pay for necessary maintenance, the developer must make up the difference, court documents state.

"This requirement ... has been completely eliminated by Amendment 16, which is a substantial change from the Master Deed as it existed at the time a majority of owners purchased their property," court documents state.

The property owners charge in the lawsuit that Trew and his company have an interest in developing and selling remaining units at Island Links as soon as possible for the highest possible price. The developer has a conflict of interest with the property owners, and the more money spent on cosmetics at the resort, the easier and faster units will sell.

The property owners are seeking a declaratory judgment from the court as to whether the one-time assessment is legal and if the developer can amend the master deed without the owners' approval.

-----

To see more of The Island Packet, or to subscribe to the newspaper, go to http://www.islandpacket.com.

Copyright (c) 2005, The Island Packet, Hilton Head Island, S.C.

Distributed by Knight Ridder/Tribune Business News. For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail [email protected].