Hammer and a Feather

The zipline to nowhere...

2011-12-21T14:24:00.000-05:00

It's time to revisit a sore spot. Of course, it involves Sterling Webb. And now, i want to involve the City of Sevierville.

When it was announced, last February, that a zipline was being considered across the French Broad River, i fired this email off to TVA and Jim Bryant with the City of Sevierville:

Hammer and a Feather

Mon, Feb 14, 2011 at 4:12 PM

To: Jim Bryant , adsummitt@tva.gov

Subject:

A question about the proposed zipline across the French Broad River

Dear Mr. Bryant ~

In all the stories about the proposed zipline, the developers' names are never mentioned.

I'm asking you point blank: Is it Eco Summit Development? Is Sterling Webb involved with the development in any shape, form or fashion?

The reason i ask is because Sterling Webb has left a trail of broken dreams and unpaid people in Sevier County. You can read a lot about him, here:

http://hammerandafeather.blogspot.com/2009/05/teetering-on-bring-of-insanity.html

and here:

http://hammerandafeather.blogspot.com/search/label/Sterling%20Webb

People like me are afraid that Mr. Webb will tear the place up and then abandon the project as he runs for his life. Not to mention another string of unpaid contractors, etc.

Sincerely,

Hammer and a Feather

--
http://HammerAndAFeather.blogspot.com
"If it ain't right, it ain't right."

Guess what?!?!? No answer. From anyone. This only confirmed our (yours and mine) collective thinking that it could be another Sterling Webb financial fiasco.

Now, on the Teetering on the Brink of Insanity post, comes this comment:

Anonymous said...

He's doing a new zipline at the river using all undocumented workers and with questionable engineering. Someone will get killed on that contraption he has built. I hear it's a good place to buy your drugs from his Mexican buddies. How does this guy keep getting away with screwing over everyone he comes in contact with? He's like Sevier County's own little Bernie Madoff.

12:58 AM, December 21, 2011

Oh, how could all those TVA and City of Sevierville Powers That Be fall for Sterling Webb's latest grift? Those folks could not POSSIBLY believe this is all a good idea! It makes me, personally, think that Sterling is buying them lunch, everyday.

You infer whatever makes sense to you...

No Tennessee justice for early-bookers and non-complainers!

2011-09-04T18:31:00.000-04:00

According to an article in The Mountain Press, Patrick Landers and James Devane (the co-owners of Hickory Mist cabin rentals) are being sued by the company who processed credit cards for Hickory Mist.

Patrick and James are being sued for the amount the processor had to refund to the 200 (+-) people who had used a credit card to make a vacation rental deposit within 60 days of the card holder's complaint (you have to complain within 60 days of the transaction to be eligible for a charge-back).

The article states that amount is $352,598.41 (wow! that's precise, eh?).

If the report that the escrow account was short $838,000 is taken at face value, and if at least $700,000 (+-) was guest deposits, then 485,401.59 (+-) worth of guests were SCREWED. If the average deposit was $1200 (+-), that means that 404.5(+-) people lost their money.

Now, changing the law is a great idea, but let's be realistic: Some Tennessee rental companies are DEEPLY in to their no-interest-no-set-payback escrow accounts.

Deep. Deep. Deep.

Nobody is stopping them. It isn't against the law in Tennessee to close your doors and ignore the people who paid money for a deposit against a future rental.

There is NO way those cabin rental people are going to allow a law to pass that requires them to bring their escrow accounts UP to being only one-third short. Of this, i am pretty sure ~ given the nature of the Tennessee legislators and their love of ~~bling~~ campaign donations.

Let's face the fact that the Tennessee Real Estate Commission is tired of dealing with the errant rental companies (i'm sure the real estate agents are tired of the vacation rental people getting preferential treatment).

Let's dump the whole shebang in the lap of the Tennessee Department of Consumer Affairs. Let's have an Act of law called the Tennessee Vacation Rental Act. Let's be plagiarizers and copy the North Carolina Vacation Rental Act. Word for word. Especially this part:

§ 42A-16. Advance payments uses.
(a) A landlord or real estate broker shall not disburse prior to the occupancy of the
property by the tenant an amount greater than fifty percent (50%) of the total rent except as
permitted pursuant to this subsection. A landlord or real estate broker may disburse prior to the
occupancy of the property by the tenant any fees owed to third parties to pay for goods,
services, or benefits procured by the landlord or real estate broker for the benefit of the tenant,
including administrative fees permitted by G.S. 42A-17(c), if the disbursement is expressly
authorized in the vacation rental agreement. The funds remaining after any disbursement
permitted under this subsection shall remain in the trust account and may not be disbursed until
the occurrence of one of the following:

(1) The commencement of the tenancy, at which time the remaining funds may
be disbursed in accordance with the terms of the agreement.
(2) The tenant commits a material breach, at which time the landlord may retain
an amount sufficient to defray the actual damages suffered by the landlord as
a result of the breach.
(3) The landlord or real estate broker refunds the money to the tenant.
(4) The funds in the trust account are transferred in accordance with G.S.
42A-19(b) upon the termination of the landlord's interest in the property.

(b) Funds collected for sales or occupancy taxes and tenant security deposits shall not
be disbursed from the trust account prior to termination of the tenancy or material breach of the
agreement by the tenant, except as a refund to the tenant.
(c) The tenant's execution of a vacation rental agreement in which he or she agrees to
the advance disbursement of payments shall not constitute a waiver or loss of any of the
tenant's rights to reimbursement of such payments if the tenant is lawfully entitled to
reimbursement. (1999-420, s. 1.)

YES! Let's put it in writing and make it a law that a guest of a Tennessee vacation rental company is entitled to a refund ~ even if the company closes their doors.

These poor screwed people would then at least have a leg to stand on when it came to using the courts to get a refund (i heard one fellow lost $7,000 at Hickory Mist, being double-whammied because he had paid his deposit early and by check).

Hello? Is anybody listening?

Vic Milton is here; ask him a question

2011-08-01T23:43:00.000-04:00

Those of you who are regular visitors to Hammer and a Feather have probably seen the name 'Vic Milton' bandied about...

... well, he's here. He posted on July 29th on the "Sterling Webb Jumps the Shark" thread:

Anonymous said...

(vmilton758@aol.com)says, if you want to know what I FACTUALLY know, email me! Some of you including the Hammer got things all wrong.You want to bury the son of a bitch (Sterling Webb)- then stop complaining and band together and do something about it! I'm onboard!!! Vic Milton

6:05 PM, July 29, 2011

Now, that's great if you want to email him, but i was hoping that we could start a kindasorta Question and Answer in the comments of this particular post.

I have no idea if Mr. Milton will cooperate, but i'm betting he needs to vent. Just like YOU do.

Ask away... and, Vic, if you are reading this and feel obliged to answer as you are able, thank you in advance.

I now feel sorry for Bob Leedy!

2011-05-30T02:47:00.000-04:00

I know! I can't believe it, either! I actually feel sorry for Bob Leedy!

What could Bob have possibly done to illicit even one iota of sympathy from the Hammer? After all, he used escrow money for his own personal toys.

But ~now~ Bob feels railroaded to me.

I mean, what is the difference between what Bob did and the Fontaine Cabin Rentals and Hickory Mist fiascos?

TELL ME THE DIFFERENCE!

Oh yeah, the rental companies get to spend their escrow money, and the real estate companies do not. The heartache this combination of lax laws and unchecked spending has caused is immeasurable... MUCH more heartache than Bob Leedy caused with his little "operating escrow" account self-loan.

Read more about the sordid messes caused by TCA 62-13-104 (B)(3),(D)(i):

Fontaine's Cabin Rentals:
http://www.themountainpress.com/view/full_story/8090303/article--Abrupt-closing-of-cabin-rental-company-creates-concern-?instance=homesecondleft

http://sniitch.com/listsniitches/company/fontaine_cabin_rentals/

Hickory Mist:
http://themountainpress.com/view/full_story/13379837/article--Cabin-firm-closes-doors--co-owners-face-lawsuit-?instance=most_recommended

http://www.wbir.com/news/local/story.aspx?storyid=170233 (there are so many comments removed from this article that it must have been a sputtering spit-fest that included a conspiratorial kool-aid reference - open the replies to see what i mean)
http://www.wbir.com/news/local/story.aspx?storyid=170589
http://www.wbir.com/pdf/amendedcomplaint.pdf

http://www.wate.com/story/14680348/smokies-cabin-rental-company-closes-abruptly-customers-upset

I wonder how many other companies are in trouble? When is the State going to fix this problem with our poor tourists in Tennessee? Who knows... it might fix itself by August when the rental companies who are dipping can't recover from a bleak Spring and an uneven Summer. Yeah, that's what happens in a Ponzi scheme.

So, now i feel like Bob Leedy is being picked on unfairly. If Robert Vick and Patrick Landers get to spend THEIR escrow money ~ then Bob should get to, also!

Forshizzle! Bob Leedy and Sterling Webb were almost cell mates!

2010-11-23T18:28:00.002-05:00

It's true, folks. Hammer and a Feather went fishing for information, thanks to this commenting tipster in the "Eschewing Obfuscation" post:

Anonymous said...

To the above poster:
Please contact the Sevier County District Attorney, ASAP. They will need copies of your lease, but only if it is signed by Bob; and copies of any receipts for payments.
Bob was just indicted/arrested today on 5 counts of impersonating a licensed professional (or something like that).
I'm so happy Sevier County is finally doing something!
I would send also contact an attorney to see to whom you should pay your rent.

10:48 PM, November 15, 2010

Truly, there it was in the Seymour Herald, along with another surprise:

2010-11-15: Robert A Leedy, 68, of Sevier Impersonation of a Licensed Professional, was released on $10000 bond.
2010-11-18: Sterling Ernest Webb, 42, of Sevier Contempt of court, was released on $1500 bond.

We all know that Bob's problem was continuing his business as usual, which was REALLY bad after losing his broker's license. Hopefully, Bob's was able to bond out without having to dip into his pretend escrow account.

But, what court order did Sterling Webb violate? Is there a myriad of court orders? A plethora? A bunch? Sterling probably beat up a kid for his milk money just prior to being arrested, so he at least had his chump-change $150 bail.

Any tipsters out there? If so, please vent, vent, vent.

Seymour Herald link:
http://www.seymourherald.com/policebeat/arrests/2010/11/

Sterling Webb at Sterling Springs by any other name is still Sterling Webb at Sterling Springs

2010-10-20T06:37:00.004-04:00

And add Wahoo Vacation Club, and Skytrek Ziplines to Sterling Springs and Overlook Resort to Mr. Webb's list of aliases.

There's no way to name them all because, no doubt, there are many names that Sterling Webb has used in order to get people to do business with him.

A new one has popped up: Eco Summit Development Group, LLC. Well, that is the name in a magazine article, anyway. A full-page ad in Knox Life promotes Sterling Webb as the President of Eco Summit Development Group, LLC. Here's a link and a quote:

http://virtual.angstromgraphics.com/publication/?i=46248&p=23

Webb says the mortgage crisis exposed flaws in Sevier County's investment properties.

In this slick 'special advertisement' is also where Sterling declares himself as Eco Summit president. It's really a cool online publication; use the Zoom tool to read every word written about Sterling being a jewel of the Smokies.

And let's just hope and pray that the Bullock Group of Knoxville got their money. You can check out the REALTORs ad for The Green Mountain Cabin here: http://www.realestatesmokies.com/Homes_For_Sale/TN/Sevierville/15434447.html

Here's what i was able to find out about the name of Sterling's new LLC, according to what is published in the magazine ad:

Eco Summit Development Group LLC
2 messages

Hammer and a Feather

Mon, Oct 18, 2010 at 3:25 AM

To: business.services@state.tn.us

Dear State Department ~

In September 2010, Sterling Webb, d/b/a Eco Summit Development Group LLC advertised rental properties for sale in a Knoxville online magazine.

Could you please verify that Eco Summit Development Group LLC is a legitimate Tennessee limited liability company?

This function of your website seems to be unavailable. So, i thank you, in advance, for your time to answer my question.

Sincerely,

Hammer and a Feather

--
http://HammerAndAFeather.blogspot.com
"If it ain't right, it ain't right."

Angie Tatum

Mon, Oct 18, 2010 at 8:53 AM

To: Hammer and a Feather

I apologize for our website being down at this time. I have reported the issue to the appropriate staff.

We do have a record of Eco Summit Development, LLC, control #635130 (listed without 'Group"). Their articles of organization were filed on 07/08/10 and their address is listed as 1081 Towering Oaks Dr, Sevierville, Tn 37876. Their registered agent is currently listed as United States Corporation Agents, Inc, 3903 Volunteer Dr, Suite #200, Chattanooga, Tn 37416.

If I can be of further assistance, please contact me at angie.tatum@tn.gov

Best wishes,
Angie Tatum, Supervisor
Division of Business Services

Isn't it funny how that address, 1081 Towering Oaks Drive, is the address he uses for his Wahoo game.

As for Eco Summit Development Group, LLC vs Eco Summit Development, LLC vs Eco Summit ~ well ~ how the man keeps up with it all, i don't know... anyone with that much going on could easily make that mistake.

In the meantime, people are still hurting from their association with the stinging nettle* known as Sterling Webb:

On Monday, October 19th, a person using the screen name 'Lost Everything' said

I invested my entire life savings into a cabin in sterling springs only to have it go belly up.

Questionable situations,and hollow promises is all i ever experienced.

I am not the only one who has been a victim of sterling springs, There have been several and our stories are pretty much the same.

http://www.topix.com/forum/county/sevier-tn/T43FPCSE6HQ8H3LVK

On Sunday, October 18th, Debbie in West Virginia, in regards to the Wahoo Vacation Club said

I have owned this for over a year and have yet to rent a condo for the price listed on my contract. Very unhappy. There is no management personnel to talk to, and no one to complain to, only the service personnel, whom I might add have been very helpful, but they have no authority to make anything right.

http://www.merchantcircle.com/business/Wahoo.Vacation.Club.865-286-5860/review/read?cid=1237802

Hey. You all be careful out there. If you stumbled on this blog because you are checking on Sterling Webb before you invest money with him, please investigate some of the other posts and comments here so you'll at least know what you're getting yourself into...

*Okay, i know that a stinging nettle has medicinal properties when used to make a tea ~ and therefore is not a good analogy for the pain that can be inflicted by Sterling Webb..

UPDATE: It's amazing that Sterling was able to pull himself together to set up his new LLC, considering all the turmoil he was enduring. This is according to the comments for June and July 2010 at http://hammerandafeather.blogspot.com/2009/05/teetering-on-bring-of-insanity.html#comments

Sterling Webb Lost The Benefit Of The Doubt With Me

2010-07-08T02:38:00.000-04:00

It looks like things didn't go so well for Mr. Bob Burns and his marketing efforts for Sterling Springs Resort and Spa and Zipline and Vacation Club.

There is no tellin' what happened between Mr. Burns and Mr. Webb. Perhaps Mr. Burns smelled a rat.

(Remind me to tell you the story, someday, of how Mr. Webb came into possession of the property now known as "Sterling Springs". It's NOT pretty. For now, let's go back to the original thought.)

So, exit Mr. Burns?

Enter, My Realty Source.

Here is a direct quote from their website (http://www.myrealtysource.com/recommended-opportunity/sterling-springs-resort/):

During my visits over the last 6 months, Sterling Springs has maintained a 97% Occupancy Rate, with absolutely zero vacancies from Thursday-Mondays. As of today, the resort is entirely booked until October 15, and is in desperate need of rental inventory. Don’t believe me? Fly down and see for yourself. We are offering a “Fly and Buy” to all of our investors. If you fly to the resort, we will put you up in our private cabin (if available through management), give you a compimentary ZipLine pass, and reimburse your travel expenses upon successful closing.

If were anyone else but Sterling Webb, i would say C*O*N*G*R*A*T*U*L*A*T*I*O*N*S!
If it were ANYONE else, i might ALMOST believe them. But, given the probable source of the data, i can't help but think that his claims are fabricated. Sterling's fabrications are always whoppers.

... sorry folks, but the man has lost the benefit of the doubt with me.

According to a comment on a prior post, the Wahoo Vacation Club is in shambles. It was believable to me when the anonymous commenter states that the employees did not get paid "as a parting gift":

"Wahoo Vacation Club that Sterling Webb owns has closed it's doors as of Friday the 25th of June,but as a parting gift to his employees he did not pay them.Wonder what his new scam will be now since nobody in Severville will do business with the con-man anymore.We can just hope someone will call the labor board and the feds will get him."

1:34 AM, June 26, 2010

Sterling Webb is the type of person who would take food out of peoples' mouths if it benefited him.

He is a known falsifier of things. And that makes me leery of "Fly and Buy". If Sterling Webb is involved, it feels like a Ponzi-Palooza scam.

And i hope the My Realty Source people don't get screwed over in their business deal exclusively huffing and puffing Sterling Webb and his damn mess.

Sterling Webb Jumps The Shark

2010-03-22T02:09:00.017-04:00

Do you have the will power to turn down 1100% Return On Investment (ROI) when looking to buy real estate?

Mr. Bob Burns from Miami Florida hopes you do not... Mr. Burns is marketing Sterling Springs for Sevier County's illustrious Mr. Sterling Webb. If you click on that link, you will see the full-page ad (in all it's glory) and contact Mr. Burns for yourself ( In case you are the lumber yard or cell phone company or innocent victim recently wronged or ripped off by Mr. Sterling Webb, Or in case you are a guest who walked in on beer bottles and condoms ).

I honestly believe a license from the Securities and Exchange Commission (SEC) is required to counsel an investor and sell an investment ~ but that was probably just another rule that fell by the wayside in a greed stampede.

Mr. Burns posts a very nice chart that shows you can expect over an 1100% return if you'll just turn loose of a little bit of money and invest in a One Bedroom Gold Mine in Sterling Springs Resort.

The only problem is that Mr. Burns bases his 1100+% return projections on an 82% occupancy rate and 15% appreciation. That means that he believes your new little Bank 'O Webb will be booked 299 and one-third days out of 365, and your new One Bedroom would increase in value from $378,500 in 2008 to $543,400 by 2013.

Uh, yeeaaah. Riiiiight. (The beer bottle and condom thingie is not the way to build repeat guestship, and anything over a 60% occupancy requires extreme repeat guests.)

Maybe one of the commentators from the previous article about Mr. Webb would like to get out their wallets, invest, and maybe recover some of what they say they have lost:

I would lust like to add that the investors were not the only ones screwed by Sterling. A local lumber supplier was screwed out of over 100K in logs and other materials

10:17 PM, July 12, 2009

Yes we lost our hard earned money, and now we live in an apartment and dream about buying a home that we cannot because of his lies and our purchase. Not only did he not pay us, he stole all of our appliances, blinds, electrical fixtures and more to put in another cabin, we only know this because he and his partner Victor Milton had a fight and he let us know. I gave the serial number to my appliances to the Sevier county police along with the cabin that the items were put in. Still waiting for prosecution. We should sue him. Thanks for this Blog.

7:08 PM, February 17, 2010

The man is a lier and a cheat.Do not do business with this man or his many company's,you will lose your money.

12:04 AM, March 11, 2010

Yes I agree. We handled advertisement for him in 2008 and still haven't been paid.

10:41 AM, March 17, 2010

Did people snap up luxury cabins in Sterling Springs? Will Sterling Webb finally get to build his helipad? Will Sterling ever build the long-promised spa? Did Bob Burns make some fat commissions? Why did Sterling change the zip-line's name from Wahoo Ziplines to Skytrek?

Will the innocent property owner get their appliances back? Will the advertising firm get paid? People say Sterling Webb has lots of law enforcement friends in Sevierville ~ so getting a warrant served might be a little hard in that good ole' boy town.

Stay tuned for Karma.

http://www.nuwireinvestor.com/opportunity.aspx?id=622

http://saveyour.info/tags.php/tennessee

http://www.sterlingspringsresort.com/cabin-investments.php

UPDATE 3/28/2010:

Holy Moly! I think these guys talked someone into investing pension money** in Mr. Webb's dream of a resort with a spa and helipad!

**Look at the lower left-hand corner of the linked-to page.

http://ypiproperty.com/property.aspx

http://ypiproperty.com/resources/1/PDF/Sterling%20Springs%20Resort%20&%20Spa%20YPI.pdf

ANOTHER UPDATE 3/28/2010:

Maybe this is why Sterling Webb decided to change the name of Wahoo to Skytrek: Because they got an 'F' from the BBB.

http://www.bbb.org/knoxville/business-reviews/vacation-club/wahoo-two-in-sevierville-tn-90004552

Who Knew? Not Cooperating Costs A Lot Less!

2010-02-04T16:42:00.008-05:00

I love the intertubes. ("Intertubes": What the former United States Senator Ted Stevens from Alaska calls the internet.) Since the late 90's, every-day people have been doing their business online. This puts everybodies' business ~ online.

Old newsletters become a snapshot of an organization's personality. Let's look at the Tennessee Real Estate News-Journal (an Official Publication of the Tennessee Real Estate Commission) ~ for instance:

In the Summer 2000 TREN-J, there is a very nice explanation of exactly what makes up a Vacation Lodging Service (VLS) license. An excerpt:

Both types of firms [real estate
offices and VLS licensed offices] are
subject to the same requirements
regarding handling of escrow
funds which include: proper and
timely deposit and disbursement
of all funds received by the VLS
firm, proper accounting procedures
to assure compliance with
TREC regulations, retention of
records, review of records by
TREC, and discipline when mishandling
or misrepresentation of
funds is determined.

Bill Stewart, the TREC Auditor, contributed to the Fall-Winter 2001 edition with "Primer on Escrow Accounts" and includes a distinct paragraph relating to vacation rental management companies:

For vacation lodging operations,
all funds received for a
customer to reserve or occupy a
rental unit must be deposited to
and maintained in the escrow
bank account until that customer
has checked out. Multiple units
and multiple reservations of
each unit at any point in time
make detailed records keeping
a necessity. Bank statement
reconciliation should be coordinated
with the accounting records
on which monthly reports to unit
owners are based. Reservation
deposits must be maintained in
the escrow account until they
become earned rental revenue.
Rental revenue due a unit owner
must remain in the escrow
account until properly paid to
that owner. Commissions or
expenses deducted from rental
revenue and due the firm must
be disbursed at least monthly.
Sales and hotel/motel taxes are
additional examples of amounts
that may be included in funding
requirements depending on firm
procedures.

Very interesting! Thank you, Mr. Stewart!

Oh, yeah. I forgot to mention that the TREN-J, published about quarterly, always has a DISCIPLINARY ACTION section. Yup. Every issue. The DA section is what makes that publication the gossip rag of the industry.

Two very interesting disciplinary actions appear in the same issue as Mr. Stewart's escrow article. I would go so far as to say ~ dare i say ~ that these two companies were actually the INSPIRATION for what now feels like a lecture on escrow accounting from Mr. Stewart:

EAGLE PROPERTY MANAGEMENT,
INC.
Lic. No. VLS254741
Pigeon Forge, TN
Following an audit of the firm where
a deficit in the escrow account was
found, Principal Broker Bradley K.
Walker agreed to the following: (1)
pay a civil penalty of $7000.00, (2)
have the firm be on probation for
one year, (3) fully fund the escrow
account, and (4) provide the
Commission with quarterly reconciliation
reports while on probation.

and

TIMBER TOPS
Lic. No. 255489
VLS Applicant
Sevierville, TN
The respondent, at the time of
audit, was found to have a
substantial escrow account deficit
and was also operating an unlicensed
branch office. For these
actions the respondent agreed to:
(1) pay a civil penalty of $11,100.00;
(2) fully fund the escrow account
and make restitution of all monies
due by 09-30-01; (3) be on
probation for a period of one year;
and (4) provide the Commission
reconciliation reports on a quarterly
basis while on probation.

Chad McCarter at Great Smokies Management Corporation (Echota) also received a fine and probation in that issue, but only to the tune of $3000 for his substantial escrow deficit. Otherwise, the rest of the hand-slappings for Tennessee licensees is pretty boring.

This DISCIPLINARY ACTION appeared in the July 2001 issue of TREN-J:

OAK HAVEN RESORT
Lic. NO. F255329
Sevierville, TN
Principal Broker Chuck B.
McCarter agreed to pay a
$1000.00 civil penalty, be on
probation one year, provide the
Commission with quarterly reports
about the escrow account
and fully fund the escrow
account after an audit of the firm
revealed a deficit in the escrow
account.

Fast forward from Fall 2001 ~ 4 or 5 months, to TREN-J VOLUME: 11 - SPRING 2002 - NUMBER: 3. If you go look at it, scroll down to the DISCIPLINARY ACTION section to see what i see:

MOUNTAIN VALLEY
PROPERTIES, INC.
Lic. No. FM 254925
Pigeon Forge, TN
Following an audit conducted by
Commission staff which noted a
deficit in the firm’s escrow account,
Principal Broker David B.
Myers agreed to the following:
Pay a civil penalty of $4,000.00,
have the firm placed on probation
for a one year period, fully
fund the escrow account by November
30, 2001, and provide
the Commission quarterly reconciliation
reports while on probation.

And, on the same page, this little gem:

MOUNTAIN RENTALS
OF GATLINBERG
Lic. No. FM 255738
Gatlinburg, TN
Principal Broker Ted L. Mullikin
agreed to pay a civil penalty of
$1,000.00 for refusal to provide
a Commission auditor access to
information required to complete
an audit and further for acting as
principal broker of the firm after
expiration of his license.

Here's what i read into this: 5 companies were fined $23,100 for allowing the Auditor in the door. One company, Mountain Rentals owned by Ted Mullikin of Gatlinburg, was fined $1,000 for not... OMG! This means crime pays in Tennessee.

Yes, it makes me mad at the fined offenders for disrespecting their escrow accounts. But it just doesn't seem fair that not complying with the Auditor's request for access to the books results in a much, much, much, much smaller fine.

And did you just ask yourself "Why didn't Ted get probation like the others?" I asked myself the same thing. For goodness sakes, Ted's hands were even dirtier because he was operating without a license. Was the $1,000 harsh (not) penalty he received punishment for ignoring his license or ignoring the Auditor?

With this kind of disparity, you can see the attitudes and conduct that led to the rules being changed in 2003 so that these poor rental companies don't have to be fined for driving Jags and Escalades and Mercedes, anymore (aw, the real estate agents don't get to cash in on the rule change that would let them pay for that stuff from their escrow accounts).

Harvesting the Fruit from the Money Tree

2010-01-26T11:45:00.013-05:00

Dear Tennessee Guest ~

I'm so so sorry to risk your money. But, the Great Sensible Wise State of Tennessee allows me to do it... so it must be OK with you, too.

You see, if i go out of business, you are SOoL [ that's code for 'out of luck' ]. The UNlucky part for you is that you will not get a refund and you will not have a reservation.

I spent over a million dollars of your money on clothes and cars and this and that. Sometimes my Operating Account was unable to cover my great big payroll so i would need to make a transfer to keep my employees happy (and, because i don't know exactly what i'm doing, it takes a lot of personnel to keep things going).

It isn't all bad... i will get to keep my cars and clothes, and i'll have enough cash to start up somewhere else. Nothing will happen to me because i operated within the law. Thank God the Tennessee Real Estate Commission does not care about you ~ or i would be the one who was SOoL.

Sincerely,
Your Licensed (or not) Vacation Rental Management Company in Tennessee

Dear Tennessee Vacation Rental Property Owner ~

Oh my. I am so sorry your check is late, again. My escrow is short, again. I had to wait until i had made enough advance bookings and gathered enough advance deposits to make a deposit into my escrow account to cover the owner checks, again.

Now, i'm sweating my taxes, again. But i do have confidence in the booking public ~ they will come through for me, again and again. Thank God for that magic little paragraph in the rental contract that allows me to spend their deposit as i see fit. That's how i use their money to pay you. I realize this is a Ponzi Scheme (and that you are SICK, SICK, SICK of such a damn thing), but the State of Tennessee allows me to operate this way without any interference from a regulating agency.

I SHOULD be holding everyone's money safe and sound in my escrow. I SHOULD never take a penny for myself until i'm entitled to it. I SHOULD never have to worry about covering your checks and the tax checks and the cleaners' checks. But that is the price i am willing to pay in order to live my life in the fashion of which is too tempting not to when there is all this lovely, free money available to me (again, thank you State of Tennessee, and thank you to my cohorts who lobbied like hell to get the law changed in 2003). I don't want to run my business leaner and meaner and within my commission income.

I know, i know... because it's a Ponzi, i can never get out of the rental business. Well, except that i could, if i wanted to. [laughing] I will just go home one day if i feel like it and you will probably lose your house to foreclosure (because i owed you so much money). Not to sound callous, but why should that matter to me? Nothing bad will happen to me because i operated within the law. I don't think i'll even bother to get a license when i crank back up in the business. I've observed that this something the Tennessee Real Estate Commission feels is NOT any of THEIR business.

...sorry 'bout your luck,
Your Licensed (soon not) Vacation Rental Management Company in Tennessee

A NOTE FROM HAMMER: I'm not exaggerating. I wish i was.

The Operating Escrow Account (Eschewing Obfuscation)

2009-10-26T01:48:00.032-04:00

Robyn Ryan is my new hero. When given the opportunity to perpetrate a schadenfreude, she did not waste it.

The event was a TREC meeting.

The setting for this bit of poetic justice was the morning of October 2, 2009, in a small ampitheatre-turned-hearing-room in Kingsport Tennessee.

The cast of characters involved were various and sundry TREC (Tennessee Real Estate Commission) commissioners, a judge, some clerks, some observers, the aforementioned Robyn Ryan, and ~ wait for it ~ Bob Leedy!

For those of you who've been personally degraded by Robert A. (Bob) Leedy in the past, and have been waiting with endless patience for Mr. Big Broker Bob to get his comeuppance, Ms. Robyn Lynne Ryan will be your hero, too.

Robyn is an attorney. Bob worked as a broker, and was seemingly buying trucks by writing checks from his escrow account. The two went head-to-head in a match of wits at the morning-long hearing. Bob was so out-gunned, it almost made you feel sorry for him. That is, until he would act like an ass.

Ms. Ryan hasn't been long at that post (assistant general counsel, Tennessee Real Estate Commission at the Department of Commerce and Insurance), but she knew exactly how to dash cold water on Mr. Leedy's hot, long-standing, nerve-grinding, attitude!

CLICK HERE FOR THE VIDEO*

Listen closely at 1:48:54 when Robyn asks Bob "What is an Operating Escrow?"

Bob replied that he didn't know exactly what an Operating Escrow was, except that it was really his money and "my CPA said it was legal".

She gave Bob a chance by then asking "is your CPA a real estate agent?"

Now, Ms. Robyn gets a mushy fist-bump from me for this because, as everyone knows, most CPAs do NOT have a clue about how to manage an escrow account. They get stuck on looking for the 'profit', and have total meltdowns when told there is none. Neither do CPAs understand the co-mingling thingy. Of course, Bob answered her last question by saying "i don't know."

Bob tried very hard to explain that it made perfect sense to him that even though tenants' rents and deposits were held in that account, it was really his account because it was in his name with his social security number. He referred to it several times during the course of the hearing as his "Operating Escrow".

I was rewarded with a 'funny' when Ms. Robyn read aloud to the Commission from a letter Mr. Leedy had sent them in 2007. He had been charged (with improper dealings), found guilty and fined in 2006. I know you won't believe this, but apparently TREC had trouble collecting...

In an act of snark when forced to pay, he told the Commission (and i'm paraphrasing here) 'he'd heard the State was pulling back on TREC's budget, and they obviously needed his $1000 to pay the light bill'. Even though i could only see the back of his head in the video, it was evident he regretted committing his charming, rapier wit to paper, that long-ago day.

After everyone had their say, the Commission took about 3 seconds to decide to revoke Mr. Leedy's long-held Broker's license and impose a hefty fine.

Mr. Bob had hardly finished his closing argument (did i mention, in his hubris, Bob represented himself) before the motion was made, seconded, and a unanimous vote carried to protect the public from Bob Leedy.

Thank you, Ms. Ryan, for your decorum and aplomb during the hearing. And, for shutting down Bob Leedy every time he went on a wiggley-room tangent (ohhh yesss, Dear Reader, Bob annoyingly ignored Discovery rules and then acted all wounded when Robyn set him straight). And, Ms. Ryan, could you maybe take at another little oxymoron going on in our great state?

*http://regbdlist.state.tn.us/Media/Tennessee%20Real%20Estate%20Commission2009-10-02.wmv

PS: I'll update this post with a link to the TREC minutes when they are posted.

Backing in to how your money was lost

2009-10-26T00:41:00.007-04:00

Let's hear this story backwards:

Defendant admitted that the advance deposits that Plaintiff kept on all sixteen units, and not just on the ten units Defendant said he had accepted, went toward the purchase price. Some people had paid advance deposits on the six units that Defendant claims he did not accept and Defendant admitted those people never received a refund.

Source of snip: IN THE COURT OF APPEALS OF TENNESSEE AT KNOXVILLE

Assigned on Briefs December 7, 2006

Defendent and Plaintiff: ROBERT W. BIBLE, D/B/A CHALET VILLAGE CHALETS v. TED MULLIKIN, ET AL. (Mountain Rentals in Gatlinburg)

The Problem: Ted didn't pay Bob all his money. Your slap in the face is on page 6.

Ted and Bob didn't even have the benefit of the new provision in the VLS rules ~ yet, they still treated the escrow account as petty cash. If the guests in those six units didn't get to come and stay, and perhaps no one told them, and they didn't get a refund, then - well, i guess they just got screwed all around.

This all began in 2000 ~ and i know that if you are one of those guests unwittingly embroiled in all this b.s. that you have NEVER forgotten about it.

Allow me to at least offer you an embarrassingly belated apology.

Just because it's crazy doesn't mean we have to keep doing it

2009-07-24T18:34:00.011-04:00

There is a difference between a situation and a problem. Generally speaking, you can throw money at a situation and it will go away. Once, there was not enough hot water at my house. The solution: install a separate water heater that was plumbed piggy-back style to the existing water heater. That was a situation because it could be fixed with the $ tool.

On the other hand, if money cannot fix the situation ~ it is a problem.

You know the situation i'm talking about... something is horribly wrong with the Vacation Lodging Service escrow rules. If rubbing elbows with certain Legislators got the legislation passed that allows vacation lodging service (VLS) licensees to dip deep-down into their escrow accounts (with no ramifications), then how can tightening the rules and laws just because it's the right thing to do compete with said elbow friction?

(...sorry for the rambling sentence, but DANG ~ i get so mad when the root of the problem hits me square in the face!)

In other words: What's a voiceless, victimized sect of a population to do?

Tennessee's visitors do not have a Political Action Committee (PAC) that i can find. So far, the folks at Smoky Mountain Rental Owners Association are the only people in the entire great State of Tennessee ~ that i can find ~ helping out Tennessee property owners as a group. How are visitors' and owners' rights protected when the SoT allows ambiguous, self-serving rules and laws? Could we even have a tiny rule that licensees must publish their license number?

Just because grifting and Ponzi schemes have been the 'norm' since 2003 does not mean we can't rise up AS CONSUMERS and cry "Shenanigans!". Are the POWERS that BE afraid people won't get licensed if they give the money part of the rules more integrity? This situation is additionally unfair to the companies who sell their body parts, rather than spend the money held in trust.

The 107th General Assembly convenes in Nashville, Tennessee on January 12, 2010. Getting some ideas to a committee might be a good place to start! This means victims and concerned individuals starting the letter-writing, now. Some may view this and that and this as a Smoky Mountain situation, but it is a state-wide ~ nay, NATION-wide problem, since visitors and property owners come from all over the map. Remind the 'Legs' to budget for the public relations campaign to repair Tennessee's broken image.

CLICK HERE for a fascinating and easy-to-read wrap up of the 106th General Assembly. I hope you are as appalled as i am when you read the part about making home-schooled childrens' diplomas weigh as much as public school diplomas. Wha? They didn't already? Well ~ glad they took care of that bit of business!

It's like Tennessee needing a law that you can't marry your first cousin.

Beg your pardon

2009-07-09T13:36:00.009-04:00

The problem: UNlicensed rental companies stealing peoples' money because it's a cakewalk.

One solution: Make it a crime* in Tennessee to operate an overnight lodging service business without a license.

Then, we tighten up the license laws and see if Dolly will write and record a public relations commercial ('specially since she has a vested interest in this stuff, now, and for some reason Dollywood even got a VLS license even though Starr Crest already has one).

The jingle could go something like this:

Come on back!
We've cleaned up our act!
Don'tcha know we've made it so's
you won't get ripped or gyped or hosed.
Forgive us for our slip ~
We didn't mean to let 'em dip ~
It seemed OK back then, you see
but now we've stopped that big parteeeeee!

Dolly might do better with the music than the blue grass tune in my head. It will take a bit to get the word out about Tennessee's accepting responsibility to create laws and rules that PROTECT the public ~ not open up loopholes for thievery.

Tightening up the license law is a different matter. May i wholeheartedly start the list of things that would help everyone ~ the licensees included:

A) Let's find a middle ground for what companies should be doing with their escrow.

We could have a great compromise that allows the companies to draw down one-third of their escrow deposits. So, it's the best of both worlds. The companies don't have to feel like they're starving in a bakery, and the guests and owners don't have to worry about the company legally spending all the money and then folding.

The auditing process will be an entire blog post on it's own. I intend to take the Tennessee Real Estate Commission to task (Surprise!) over their current auditing process, with suggestions for how to make it better, easier, and how to deal with the 'Great Compromise'.

B) Bond the rental companies. And make 'em display the bond number.

This was the intent when TCA 62-13-104 was amended in 1998 to include vacation lodging service businesses. Of the three proposed amendments, the first one required licensed company to procure and proclaim a $50,000 bond. Amendment #1 failed to become part of Public Chapter 881, but the other two passed. Amendment #2 became the new paradigm for rental companies and Amendment #3 gave it six months to be promulgated.

Maybe Amendment #1 to SB3310 was ahead of it's time. Maybe now's the time.

There aren't too many solutions for unlicensed rental companies. However, the A+ American Vacation boys would have had to think twice about giving Tennessee a bloody nose to go along with that black eye if they had to get a bond.

Sure, crooks and liars could fake a bond number on their Homeaway.com advertising, but it's a different internet today than it was in 1998 - so maybe everybody's bond number has to link off to an official site (similiar to the licensee list on the right) where the bond AND license can be verified. Or a toll-free number underneath the bond number... i know you get my non-rocket-scientist mind's drift.

Would the likes of Steve Lear and Scott Adams (the A+ boys) had a more difficult time preparing for their scheme if they'd had to get a bond to be believed? If A+ did have a bond would there be fewer totally screwed sad folks today?

If you're a traveling or vacation property owning Tennessean, help me - i'm begging you! Help me peck away at Representatives Montgomery and McCord, and Senator Overbey (and your OWN legislators) unti their sense of what's right overcomes their sense of donation pockets.

And to all of our friends in the family of states, who love the short drive into what's basically an opulant Canadian biosphere ~ please come back. Ask questions when you book. I've taught you how it's supposed to be and you can email me (hammer.feather@gmail.com) if you're not sure. Check out your rental company (you'll find a list of licensees to the right) and please, thoroughly enjoy your stay.

*Okay. I know it's already a crime in Tennessee to operate an overnight rental company without a license. The problem is no one at the state level seems to know this.

Oh NO! They DIDN'T!

2009-06-25T19:11:00.010-04:00

They did, and it was awful. Just awful.

Two guys, Steve Lear and Scott Adams cooked up a company called A Plus American Vacations. They accepted lots of deposits and payments. You are correct if you are thinking "I bet they skipped".

It's heart-wrenching, too. Some of the stories are so sad, that one commentor is recommending the death penalty. (eek!)

You know how hard we all save to get out of the house and take that vacation, so you can imagine how it would feel to wake up one morning thinking everything is fine and so looking forward to your trip ~ and then you get a phone call, email, or a letter in your mailbox informing you that, uh, your reservation has been canceled and there is, gulp, no refund.

Here's my conjecture of how their operation worked:

They didn't have a brick and mortor store, nor a website.
They either really did have a unit(s) to rent, or they made up a unit(s) to rent.
They listed these units (real or phantom) on www.VacationRentals.com (and other websites belonging to HomeAway.com) as available for booking.
They only accepted checks as payment.
They left with the money, informing the ex-guests that they were in foreclosure, etc.

It was really very simple. It really was too easy. Steve and Scott told people they were a company. There are 15 people or more (who have come forward) out a couple of thousand apiece. Many more details will come to light, but the basic premise of what Steve and Scott were doing appears to be pure premeditated theft.

It's all over TripAdvisor and the news. I'm guessing this: (Click Here) was on the air on Thursday, June 25th, 2009.

There was one report that the Sevierville Police Department was telling folks "it could turn out to be a civil case". That's assumed to be policespeak for "you have to get your own lawyer". But: DANGIT. If lying and defrauding people isn't criminal, then something is very wrong and disturbed with the way my mind works.

If this turns out to be a well-planned scam, we can only pray that the POWERS THAT BE (that was screamed ~ but i'll whisper "Tennessee Real Estate Commission" and the "Attorney General's Office") will get off their well-fed asses and work to promote and pass laws that protect the public instead of allowing the Legislature to argue over a saggy pants ban.

(Isn't Scott Adams the Dilbert artist?)

UPDATE 11/29/2010:
They've been CAUGHT! Click HERE to read Jamie Satterfield's story in the Knoxville News Sentinel!

KnoxNews link:
http://www.knoxnews.com/news/2010/nov/28/fraud-schemer-strikes-plea-deal-provides-names/

Welcome, Dear Tennessee Guest

2009-06-21T12:34:00.015-04:00

Dear Tennessee Guest ~

Welcome to our beautiful state! I know, i know... it's hard to believe that God would put so much eye candy in one place. You will find that on the surface, it seems we knock ourselves out to make Tennessee a great way to enter and enjoy the Great Smoky Mountains National Park.

We've gone to a great deal of time, money and trouble to offer you a plethora of other activities, in case you become bored with the grandeur of the scenery.

Since you probably want to stay safe and financially solvent during your time in Tennessee, there are a few things of which you should be aware:

1) It's so embarrassing that we now allow 'Guns in Bars'. It's supposed to be illegal for someone to consume alcohol if they're packin' a concealed weapon, but it's hard for a restaurant server to tell if they are - indeed - carrying a gun. We so apologize for the vocal 3% of Tennessee's population (the concealed weapon permit holders) who thought that tequila and guns could be safely mixed in public. The other 97% felt there was no way it would pass.

Ask a cocktail waitress how many marriage proposals she's received from tables of men just sittin' around shooting tequila. Do you get it, Dear Tennessee Guest? Shooting off guns or marriage proposals whilst shooting tequila?

Our Governor, Phil Bredesen, vetoed this idea when it came across his desk, but the aforementioned 3% seemingly (appearance is everything) donated enough money to their Representatives and Legislators to have the veto overturned. Following his beat-down, Governor Bredesen was quoted as saying

"I still think I'm right," he said. "I still think that guns in bars is a very bad idea. It's an invitation to a disaster."

Your best bet would be to either bring your own gun (in case a fight ensues at the local Applebee's), or stick to restaurants that don't have a saloon on the side.

2) Unfortunately, July is the time for sneaky sales tax increases to become effective. Some counties raised their bed tax, some raised their local option sales tax.

I know this makes you mad, Dear Guest, but think of the ignorant Tennessee kids who will never really see any benefit from these tax increases, even though the kids were used as props to strong-arm the citizens into approving the tax increases. One example is so blatant that it would be funny if it wasn't really a tragedy. School Superintendents around the country can take notes if they're interested in raising the values on their own personal properties while only raising a few eyebrows.

3) Dear Guest, you're probably renting a cabin or condo during your stay in Tennessee. You're probably doing this to save money because you can eat in every meal, and not have to worry about the 'guns in bars/restaurants' thingy. However, since 2003, your deposit money has been subject to being used for making luxury car payments. A tiny paragraph in your guest agreement makes all the difference.

True or not, it's bad that in June 2009, rumors circulated that, in Tennessee, American Patriot Getaways was filing bankruptcy and Timbertops could not pay their owners for May 2009. These are two large, huge, enormous rental companies and their good or bad business practices affect a lot of people... in a wide-spreading, tentacle sort of way. It could spell exponential train wreck-like carnage of a 25-unit company behaving badly. We can only hope that these rumblings really are just rumors.

The problem is they (the rental management companies) have the ability to put your money into their operating account ~ immediately upon your payment. If you cancel, or otherwise become eligible for a refund, your money is refunded from their operating account. That is, IF there is enough money in their operating accout to make your refund. This is not how it's supposed to be handled. And the property owners are taking a drubbing, too, because it's their rent money being spent out from under them. A dipping management company depends on current deposits to fund last month's owners' checks. Icky, eh?

If you ever come across a rental company that brags on the fact they hold your money in an escrow or 'trust' account until your departure, try every way in the world to stay with that company. You'll find there aren't very many of them in Tennessee. It could be said that there is not enough of a profit margin in the overnight rental business to drive a luxury car. You have to draw your own conclusions about them 'that do'.

4) One last tip: As you pass through Tennessee, do not look at any fly ash. It has a little-known effect of disabling your outrage hormones.

Be well, drive safely, and enjoy your stay, Dear Tennessee Guest.

Sincerely,

Ninety-seven percent of the population of the Great State of Tennessee

Teetering on the bring of insanity

2009-05-20T23:53:00.008-04:00

It's always fun to play developer/investor until someone gets screwed. WATE.com, based out of Knoxville, featured just such a story on the evening news, Wednesday.

Mr. Sterling Webb at Sterling Springs in Sevierville, TN, would pay unwary owners huge amounts of rent (regardless of how much - or not much - the unit actually rented) during their first months of ownership. The owners would be so impressed, they couldn't wait to buy another three-bedroom cabin... Good thing, too, because Mr. Webb needed that money to pay the other owners the huge rents. And he would need more lot/cabin sales to pay the new owners.

Apparently, Mountain National Bank happily went along with all of this, funding construction loans for units that might not be built for a while.

Fast forward a couple of years into the future ~ 2009 to be precise: Times are hard, sales are down, owners aren't getting very much money ~ and now the owners are finding out about things.

...wonder how much Sterling Webb has in his escrow account, today. Gee, i also wonder if Mr. Webb has a VLS license, as required by the State of Tennessee? Gosh, i wish the State would give a damn.

How Did We Get Like This?

2009-04-29T02:04:00.007-04:00

Why is the Great State of Tennessee working against visitors and vacation property owners?

The POWERS THAT BE (i yelled that) only seem interested in pushing Bills for campaign donations and getting re-elected. To hell with one particular Bill's ramification sufferers.

As previously posted, something went awry in 2003 with the system in place to protect a management company's scheduled guests, property owners, and the State's own tax department. Where there were once controls in place to keep the management companies from spending money they were holding in trust (on cars and furniture and such), there lurks now only ambiguity. Avarice, greed, and people totally spazzing out due to being totally ripped off is the new paradigm.

Good grief! How in the world... How in the heck... did we get like this?

(Click on one link and it will ask you for a username and password. Use your Back button to return to this blog ~ then click on the other link to actually see the report. It's crazy that this works, but it does!)

Is it just me, or do YOU also think it looks like large campaign donations were made to key legislators to reap a huge benefit for overnight vacation rental management companies? That benefit was the ability to grab that money* out of what is still considered a TRUST account. That's right. Vacation Lodging Service (VLS) licensees in Tennessee are still required to keep an ESCROW account ~ they've just been allowed to spend the crap out of it since 2003.

(YooHooooo) HEY! Powers That Be! I'm fixin' to chronicle some very bad results of this little side-step of yours. How can you just sit there, pocketing your campaign swag, and watch some of the management companies financially rape our guests and property owners?

*Clicking on 'grab that money' downloads the .pdf of the Public Act that passed on May 21, 2003, and went into effect June 4, 2003. Here's the URL:

http://www.state.tn.us/sos/acts/103/pub/pc0277.pdf

Guest Posters Can Make The Best Points, Sometimes!

2009-04-19T03:32:00.012-04:00

You can see the original post and it's replies, by clicking here.

The Author of the post has given his permission for it to be re-posted on this site, and you'll need a little context for the best reading enjoyment. Part of what you need to know is that this poster, Tom Stone, is from the stunning hills of North Georgia. (This awesome close up of a dollar bill is compliments of SqueakyMarmot at Flickr.)

Something else: Georgia does not have any rules about keeping an escrow for the monies that belong to guests, owners, and the tax people. Is it possible that common sense wafts on prevailing winds in the Blue Ridge Mountain area? Mr. Stone, Mr. Stone (yelling loudly to get his attention) ~ blow some of that stuff over this-a-way!

Enjoy:

Are you keeping two sets of books? Maybe you should...

by Tom Stone

Originally posted at VacationRentalsCommunity.com on 4/17/09

I read a comment from a cabin owner on a local website, where she said they are 4-5 months in the rear from their rental management company for the rents collected. Why would anyone tolerate this! Would you let a guest rent your vacation rental and pay you for their rental six months after their stay?

My guess that this situation is the result of the management company dipping into money which wasn't theirs, meaning the owner's portion of the rental receipts. They were probably in a tight place, and used the funds to cover operating expenses, figuring they could make it up when cash was flowing in the right direction again. I recently heard about another management company which wanted to sell, but they had dipped so deeply into the advance deposits, that they could not sell for the price they wanted and needed.

Maybe you shouldn't keep two sets of books, but you should have two checking accounts. #1 is your Operating Account which is your money to play with. #2 could be called an Escrow or Trust Account, where you hold deposits, taxes collected, housekeeping fees and cabin rental receipts. The second account is where you hold money "In Trust" to distribute it as required. All money you receive from guests goes into your Trust Account.

It is very important that you wrap your head around this: It is not your money! This money is actually someone else's not yours. This money belongs to the guest, until they check in; the owner of the property you are managing; the housekeeper who cleans the property; and the taxing authorities, not you. When a guest checks in, you can remove your portion of the rental as commission and deposit it into your Operating Account. I do this once a week, usually on Thursday, when I cut checks for the week. Some states require you have a separate Escrow or Trust Account, but many, including where I live, do not.

When it is time for you to cut Owner's checks, pay sales tax receipts, pay your housekeepers, or maintenance items, it all comes out of your Trust Account. The money will always be there, in sufficient amounts to pay whatever funds are due. When the money is due to be paid out, its there because you have not become confused about whose money is whose.

When a property owner places trust in you to manage, market and oversee their property, do you give them reason to trust you with their money too? It's something you should think about.

Ten to One ~ it's probably an understatement

2009-03-19T12:31:00.008-04:00

If Vacation Lodging Service (VLS) licensees and real estate brokers are under the same supervisory commission, and if one reason for this is because both types of businesses (overnight rental company and a real estate office) are holding, in trust, as fiduciaries, other peoples' money ~ then why should ONE of these two not be afraid of the big bad wolf (Tennessee Real Estate Commission, or also fearfully known as TREC)?

Consider this: Yes, there was a time in the real estate business when there weren't enough title companies to go around (pre-1990's) and most Tennessee real estate brokers did hold all the earnest money usually given to the listing broker to hold on behalf of usually the buyer.

Brokers did draw the closing documents and do their own closings and dispersed large sums of money from their escrow accounts (even if the sale was funded by a bank!). If you take that community standard and couple it with the fact that, during that time period, almost all earnest money deposits were at least 10% of the purchase price (pre-buyer agency) ~ that was a dang lot of money lying around in escrow accounts in the State of Tennessee.

However, Tennessee real estate brokers had the fear of TREC instilled in their hearts. This was before the internet, so it must have just been a whisper campaign that TREC would come kill you if your escrow was out of balance EVEN ONE PENNY! You can take this to mean that brokers felt that TREC would have them killed over a penny.

At the time, the TREC folks must have been pig farmers and concrete plant owners, because brokers really were skeered. These days, most real estate brokers want the title companies to hold the earnest money deposit on a real estate transaction.

But, it begs a question: Why haven't VLS licensees been afraid of being killed over a penny? You say "well, they USED to be" and that is true ~ but why haven't they been respectful of other peoples' money and fearful of TREC since 2003?

To put it in perspective for you,

if there are ONE million dollars sitting in real estate brokers' escrows, right now, on behalf of people from all over America anticipating the closing of their real estate purchase in Tennessee,
there should be TEN million (or way more) sitting in escrow with the Vacation Lodging Service licensees.

This is money that should be sitting in VLS escrow coffers, every penny earmarked in some shape, form or fashion as

guest advanced deposits,
money due to owners for checked-out rentals,
money due to the pest control guy and the rental company as commissions earned,
money collected from the guests and owed to the tax authorities.

So, for every One million of real earnest money being held in escrow accounts around Tennessee, there should be TEN million of VLS's guest, owner, tax, and vendor peoples' money.

And how much is there really being held in Tennessee VLS escrow accounts that really belongs to someone else? I would be suprised if it was more than 50 cents.

My black eye.

2009-03-18T18:04:00.006-04:00

Sometimes you feel like you get a black eye and a bloody lip when you work at an overnight rental company. Guests can be brutal; owners can be, well, owners (owners: people with enough time on their hands to watch every step you make).

The pseudo black eye as described, above, can be dealt with and managed to a degree. Good thing, too! And, it's good that the bad days are balanced out by the days when the guests love you and the owners praise you.

However, the black eye that a shot and a beer won't cure is the reputation that Tennessee is getting around the rest of the nation. Absentee property owners have been ripped off by so many property managers in this mecca of opulant scenery and lying bastard property managers, that they are starting to talk about it amongst themselves.

They're not whispering, either. They're yelling.

Some property owners have lost their life savings. Some have lost property ~ and not because of their overnight rental sitting empty, either. Owners have not been paid for actual rentals in their property. This means they had to pay the utilities for a reservation that they were never paid for. KaPOW.

The Robber Baron State

2009-03-16T20:11:00.006-04:00

Calling All Criminals: Come on up, down, or over to Tennessee! Are you currently running a Rob Peter To Pay Paul operation? Hey, that's no problem, here.

We've got the 'blurb'. The 'paragraph'. The 'notice to the public in a timely manner'. The "Dear Guest ~ In accordance with TCA-62-13-104(D)(i), your monies are going into my operating account, blahblahblah..."

When a property manager receives money from a guest in anticipation of an upcoming rental, that guest believes that they will get full credit for every penny paid on their behalf.

What does the Guest really have? Oh yeah, a belief.

When an owner places their property with a licensed (or license poseur) vacation rental manager, they trust the manager to diligently turn over all monies due to them from that vacation rental.

What does the Owner have? A belief ~ and a little more. The Owner and the Manager have a fiduciary relationship. It was created when they all signed an agreement for the Manager to rent the Owner's property.

But some Managers act like Robber Barons. They think it's OK to use the Guests' deposits and the Owners' net profits any way they see fit, as long as they have enough to cover the Guests' refunds and the Owners' checks :::::::drum roll:::::: when the time comes.

This concept of trust and accounting due an Owner from a Manager was re-affirmed in Tennessee by a judge in 1998 when Vacation Lodging Service locations were moved from Consumer Affairs to the Tennessee Real Estate Commission. The VLS licensees were required to keep the guests' and owners' money in an audited escrow account. Of course, that was watered down when it passed without the bonding requirement. But at least it passed.

Things seemed to rock along OK ~ until along came the (D)(i) insertion in 2003. Ah, the Barons.

Company B was 'B' for BAD

2009-03-14T21:54:00.013-04:00

There was once a super nice, ethical man named Don Shults. Don was a hard worker, and I say 'was' because, God rest his soul, he worked himself right into the ground. Now, before Don went to meet his ancestors, he sold the rental company he had built from the ground UP. Great Smoky Mountain Vacation Rentals.

Don didn't realize it, but in July 1999 he sold his company to a financial rapist. The Financial Rapist ran wild with the company's escrow money until around March 2001. Finally, enough of the owners were missing enough money and were collectively not feelin' the love e-nough that ~ they complained.

But it wasn't until January 2007 that justice was served and restitution ordered for that particular fiasco.Click HERE to read the sordid court document that details the trial, the witnesses, the injured, and the verdict.

However, as justice was taking it's sweet time - some how - some OTHER people were running the show at Great Smoky Mountain Vacation Rentals. We would have to check with the owners on that program at that time to know if the OTHER people were doing a good job with their fiduciary duties as a property manager. It's almost moot, however, because the OTHER people sold it to some MORE people. The name of the 'some MORE people' is Roy Duane Wilhite.

So, a person named Duane Wihite is running the now-beleagured property management company known as Great Smoky Mountains CABIN Rentals. It did deteriorate to the same tired story:

Mr. Wilhite

fanfarelessly closed his doors on October 1, 2008;
owed his owners back rent money;
was seemingly unconcerned for the guests who had paid deposits, much less the guests who were were completely paid up in advance;
filed Chapter 7 Bankruptcy in November 2008.

What was Mr. Wilhite's problem? We may never know the WHY, but we can easily deduce the HOW. What if it was Drunken Uncle Ponzi?

You know how Drunken Uncle Ponzi comes around and spends all the money that's EARMARKED, so the poor company owner has to have more reservations in order to get more advance deposits so he can fund the owner, vendor and tax checks that USED to be funded ~ but D.U.P. struck, again. It really hurts when half of your inventory is pulled in one fell swoop commensurately reducing your dipping ability.

Company A: swallowed up

2009-03-13T12:12:00.003-04:00

Company A was 'A' for awesome!

But how could the Owner, a kind, gentle human ~ hardworking, ethical, and smart ~ have known what would happen to the new endeavor, along with everything else this Ethical Person had acquired in their lifetime of physical toil?

However, when the rubber met the road and the company closed it's doors, it was a simple matter to write checks out of escrow for

the balances due to owners,
amounts due to taxes,
and one check to the company taking the units with the respective advance bookings including the corresponding advance deposits.

Props to Company A. Props to the Owner and the meticulous bookkeeper behind the smooth closing-out of Company A's books.

A tale of two woes

2009-03-11T09:56:00.001-04:00

The next two posts will detail two American Dream working-man stories. One has a saddish, but noble, ending and one ended in a tempest.

One company shall remain anonymous out of respect for their conduct and aplomb; the other shall be blasted all over these pages as more exposure to their dastardly deeds. Yes, they will be named ~ but as you're reading, please think about the many other companies that YOU know are behaving the same way.

They just haven't been exposed.

The Pros of it and the Cons of it

2009-03-08T17:29:00.002-04:00

Reasons to operate your overnight rental business in an ESCROW fashion (even though the law in Tennessee doesn't requre it):

1) You can sleep at night, knowing that if you wake up the next morning and decide not to be in the rental business, anymore, you know exactly who gets what so you can get OUT;

2) The guests, owners and the tax people can sleep better at night, knowing you are not using THEIR money to pay your employees or furnish your own personal cabins.

Reasons NOT to operate your overnight rental business in an ESCROW fashion (because the law in Tennessee allows it):

1) You can use the advance deposits to pay your payroll, or other office operating expenses;

2) You can use the money people think you are holding for fun things, like fancy cars, furniture, etc., etc.

What does it matter? If more people are going to make more reservations and give you more advance deposits ~ you can use that money to pay the people you owe, now.

Oh, wait... that sounds like a Ponzi scheme.

What ogres will do for money

2009-02-28T22:39:00.003-05:00

Long ago and far away, a princess was married to an ogre who liked to raise fighting cocks. The princess was really interested in the science of it, and the ogre in the sport and money parts.

Sometimes the ogre would get mad because his beloved sport was threatened by pending Acts. The ogre would go see other ogres and they would collect money to give to an ogre representing them in front of the king. This rep ogre would plead the case of the cock fighting ogres (sometimes under great duress ~ but the ogres back home had given him a great deal of money, so he was willing to take a black eye for it) and eventually the rep ogre would win out by bartering and trading his vote around to get done what his ogre-people back home needed to get done.

What if how it was done for ogre-cock-fighting back in the day is the same way you put the wheels in motion to get the laws changed to way financially benefit vacation lodging companies? And what if it was much to the detriment of the ~~roosters~~ Guest and Owners?

In other words, let's start looking here* to see how a law such as TCA 62-13-104D(i) could have been introduced, passed, and unleased on the unsuspecting guests and property owners in Tennessee.

*http://www.tennesseeanytime.org/tncamp-app/search/pub/report_full.htm?reportId=1651

Wha?

2009-02-22T01:23:00.000-05:00

This was added to TCA 62-13-104-3 in May 2003. The sponsors were Clabough and Miller. Phil Bredesen signed it in to law in June 2003 (click here to see the original Act as a .pdf):

(D) (i) No funds shall be distributed from the escrow/trustee account until the customer's stay is complete, unless such distribution is in accordance with terms disclosed to the renter in writing at the time of making the reservation, or within a reasonable time thereafter not to exceed three (3) days, mailed to the renter through the United States postal service or transmitted to the renter via electronic mail, facsimile, or other tangible form of communication. Commissions earned by the firm and the revenue due owners shall be disbursed at least monthly. Funds held in escrow shall be disbursed in a prompt manner without unreasonable delay.

Is it just me, or do two distinct sections jump out at you, too? I can't figure out what the first sentence has to do with the second and third sentences. The latter two are easily understood and not hard to implement.

The first sentence talks about informing the public that the rental company is spending their deposit money as soon as they get it ~ regardless of the guests' arrival date. In other words, as long as a vacation rental management company, in the great State of Tennessee, has the following verbiage in it's guest agreement:

Pursuant to the provisions of the Tennessee Code Annotated, Title 47, Chapter 18 and Title 62, Chapter 13, Section 62-13-104(b)(3), Subdivision (D)(i), T***** T***, LLC discloses the following policy as of June 4, 2003: "All advance rent deposits, damage deposits and balance of rent due are deposited into a bank escrow clearing account. These deposits are considered income to T***** T***, LLC upon receipt and may be used immediately. Any refund considerations are expensed from the general books of T***** T***, LLC on a case by case basis."

then that company will be considered good to go as far as plundering the monies their supposed to be holding in a trust account as a fiduciary.

But the law's in the way...

2009-02-13T00:53:00.001-05:00

If you've been reading from the bottom up, then you're up-to-date on the hypothetical question of "What to do?" about being a really big overnight rental company that has lots and lots of money in escrow.

And, yeah, (sucking teeth). You need that juicy money, but there's a pesky law standing in your way. Tennessee Code Annotated, Title 47, Chapter 18 and Title 62, Chapter 13, Section 62-13-104(b)(3), Subdivision (D) ~ Prior to May 2003.

Prior to 2003, the VLS rules were that a vacation rental management company was not entitled to any monies until the guests' departure.

Do you dip?

2009-02-12T11:36:00.001-05:00

What if you started a property management company in Tennessee? Let's say you grew and grew and grew until you had almost 400 units on your program, and every time someone checked in or booked a future reservation your coffers grew and grew and grew ~ commensurately.

Are you with me? Big rental company with lots of money they are holding as deposits on future reservations?

Now, let's say the rules in Tennessee state that you, the professional vacation rental management company, are not supposed to touch this money until the guest departs.

But you need money! OMG, it's soooooo tempting! All that money sitting there in an account ~ just drawing interest.

You could pay your payroll with it ~ or back taxes ~ or, or, just about anything you might need money for to help you operate your business. Hell, if you could pay your office's electric bill with it, why not go a step further and use it to buy a new dining room set for your own personal rental cabin?

What to do? What to do? What to do? What to do? What to do?

The First Ping

2009-02-12T11:29:00.001-05:00

If i have a personal blog for my family, a business blog for the software company ~ how am i supposed to gripe or pay homage?

Ergo: Hammer and a Feather.

My kids will tell you that i raised them with a "hammer and a feather". I came down hard, when called for ~ yet, i was the first to praise and condone when they earned it. In the business world, i heard it called "a velvet brick".

...how 'bout a velvet wrapped hammer. This blog is for what's making me insane.