Monday, January 5, 2009

More Letters To The Editor

The following letters, one by an owner of several fractions at Playa del Sol/Blue seas and a rejoinder by Ken Molinaro, the developer and primary owner of the resort, were the first ones published in the PVMirror that addressed the ongoing saga of the Blue Seas.

Dear Editor,

In 1998, we purchased a 4-week Fractional ownership at Playa
del Sol on Los Muertos Beach. We were told that only 4-week Fractions and full time ownership would be sold, and never time share (According to Article 23 item XII). In 2000, Ken Molinaro decided, without the legally required 75% homeowners’ approval, to change a by-law, that he was going to sell timeshares at Playa del Sol. This was the beginning of darker things to come. Time share buyers were told that they would have deeded ownership to their time. How can you have a deeded timeshare when you don’t physically have a permanent unit as do Fractional owners? The Playa Del Sol sales people were making illegal promises and misrepresenting the facts to timeshare buyers to justify Ken Molinaro’s greed. In 2007, the owners of the time shares in Playa del Sol on Los Muertos were told that starting in 2008, they would no longer be able to use the time they had planned and paid for, and that they had to use units in Playa del Sol Grand, and Playa del Sol Costa Sur. In August 2008, the name of Playa del Sol was changed to “The Blue Seas Resort“ at a meeting that several attorneys in Puerto Vallarta said was illegally called and held. This meeting was held on August 1, 2008, and even though the law calls for meetings to be held on the premises, the meeting was held in Ken Molinaro’s office and fractional owners were not permitted to attend. Once again, Ken is selling time shares, this time to a totally new group of clients. Another tactic that Ken employs is not sharing independently audited financial information with the homeowners or their board. He causes us to believe that he is commingling all of his corporations’ records. Additionally, there is currently a lawsuit in the courts, sponsored by over 130 fractional and full time owners, seeking to stop the sale of time shares at Playa del Sol Los Muertos. We feel that Ken Molinaro has grossly mismanaged our investment. This man has to be exposed as a large fraud.


Owners of Fractions 11, 12 and 13.

Ken's rejoinder:

Dear Editor,

I do not believe in fighting one’s battles in the “letter to
the editor” section of any publication, but feel that I must make at least a brief reply to the letter from “Owners of fractions 11,12 and 13”. Due to on-going legal disputes with these owners, I have been cautioned by my counsel not to go into any specifics, but to respond only in general. That being said, I would like to state unequivocally that what was said about me and my company in that letter was inaccurate, erroneous and downright libelous. The owners of Playa del Sol Los Muertos were guaranteed certain things contractually and they have been given those things from the opening of the project up to and including now. I have never cheated them, stolen from them or defrauded them in any way. I do not manage their “investment” for them, so I have no way of mismanaging that investment. “Grossly mismanaged, illegal promises, misrepresenting, greed, and fraud are all strong words, easily said; what is not so easy is the ability to back them up with facts.

Ken Molinaro

I can hardly wait to get down to my little paradise in the sun.

Just a personal comment. What Ken says about the owners getting everything they were promised in their purchase agreement from the opening of the project is not true.

Case in point, we were promised a gymnasium and it was several years before Ken, under pressure from the owners, finally installed a small one behind the reception area.

We were promised a pool with a Jacuzzi. The pool has a small whirlpool thing at one end that has never worked, to my knowledge.

We were told we would have a private, members only, beach club. Ken claimed that the two lavatories, used by restaurant customers and staff as well as owners, satisfied that promise.

Our by-laws specifically forbade the sale of timeshares at Playa del Sol and that was one of the big inducements to buy. It certainly played a large part in my decision to buy. Ken, somehow, managed to change the by-laws to permit timeshares. His reason for doing so was that he was unable to sell fractions during the summer months. Yet when I tried to buy a summer fraction I was told they were all sold. That Mexicans liked to take their summer vacations in Puerto Vallarta and had bought them all. The truth was that the fractions were never put on the market so that Ken could retain a majority ownership and could have inventory when he began selling timeshares. Something he had planned to do from the beginning.


  1. The Playa del Sol Costa Sur is one of most bizzare legal arrangements I have ever seen in my business life. What people refer to as "fractionals" are not legal fractionals as we refer to them in Canada and the US. They are actually more like timeshares even though they are refered to as "fractionals'. The original developer does have the legal right to make changes to "his" fractional and timeshare based real estate by changing the by-laws LEGALLY (if he can create quorum he can do it with limited support by the owners, but quorum requires rules and he didn't follow the rules), but I am mystified as to how he can rebrand the condo owners real estate, including the exclusive use common elements, under a new name. That requires more than just a change to the by-laws, it requires a change in the escritorio, and no change has occured. In addition, the developer appears to have transfered some condo common elements out of the Playa de Sol Costa Sur legal structure to a new legal structure, something that is simply impossible to do because the developer does not have title to the original common elements, only the condo owners have such title.

    As for the beach club, legally there is no private beach club. There may be a federal concession but that only refers to the actual business of operating the club, not allowing use of the beach. Anyone can occupy the beach using their own chairs, umbrellas etc. As for a federal concession, who owns it? First right of refusal has to go to the "owner" of the abutting property, whoever that might be.

    This is going to be a long, drawn out battle. I think I would just sell out.

  2. Costa Sur needs an online owners assotiation.
    Our fees have gone up again and now a special assesment is being charged to do upgrades that are long over due. What have the fees benn used for upto now? Perhaps buying and renovating other resorts. Any suggestions?