A total of $3.5 million in claims against Seatime Associates Inc., an Ocean City resort "time-share interval" firm, has been declared valid by the Maryland Real Estate Commission.
The commission ruled last week that Seatime sold intervals in units to which it did not hold a clear title, sold time shares in units it never owned and, in some instances, sold space in the same apartment for the same period to more than one person. The investments of nearly 1,500 buyers, including a number from the Washington area, were affected.
About $900,000 from the state's real estate guarantee fund will be needed to clear debts and other encumbrances against the Seatime intervals, according to Martin Kandel, a Maryland assistant attorney general representing the real estate commission. The money will not go directly to interval purchasers.
Although individual claims add up to $3.5 million, a clear title to one apartment will benefit several interval buyers in many cases.
In the type of time sharing sold by Seatime, a customer buys a fractional interest -- usually for one or two weeks -- in a resort condominium on a long-term basis. The buyer receives a deed for his or her share of the property.
The Seatime ruling was the largest single award made during the 10-year life of the real estate guarantee fund, said E. C. Hilley, executive vice president of the Maryland Association of Realtors. The fund contains about $1.3 million, made up of one-time assessments of $20 each for every licensed real estate sales person or broker, Hilley said. The guarantee fund was established to aid people who have been damaged by the misconduct of licensed brokers and sales people.
When the fund falls below $250,000, Maryland brokers must be asked for additional contributions. This never has happened, and Kandel said he does not expect that a reassessment will be necessary because of the Seatime award.
While several other claims pending against the fund total "several hundred thousand dollars," the state expects to be able to sell shares still available in the Seatime apartments once the encumbrances are cleared, Kandel said. This income would be used to reimburse the real estate fund, he said.