Fees are one of the more straightforward sections, but include a couple important areas worth emphasizing:

(1) Membership Fee / Bond / Deposit
Is it comparable to similar clubs and how has it changed since the club was formed? The fees tend to go up, as early members are rewarded for joining early. Are the terms competitive – in other words, what percentage is refunded if you want to leave the club? It is critical to know that the club you are interested in understands the importance of not using the revenue from member deposits to run the club’s operations. These dollars are capital needed to fund real estate acquisition and to set a reserve to allow members to leave the club.

(2) Annual Fees / Dues
How much and what do they cover? You should be aware that this can change each year, as the clubs realize what their real operating costs are. For example, grocery shopping may be included and then next year the club could charge for the service. As with any type of membership club, there will be heavy users of services. Sometimes clubs have to initiate fees to discourage the “abusers.”

(3) “Equity” Participation
Truly understand what this means and will it have real economic value for you.

(4) Multiple Tiers / Programs
You should take time to understand the different tiers (Ultimate Resorts has five) and which one is the right fit. Also ask if can you change at the end of a year or even during a membership year. Can you upgrade or even downgrade if you realize you are not using the club as much? When you downgrade, what percentage of your original deposit do you get back?

Summary
Make sure the membership level you choose is a good fit to your needs – not the one that they want to sell you. Verify that it is competitive to other clubs in the same class as the one you are considering. For clubs that are offering “equity” memberships, make sure you really understand what they are offering.

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Critical due diligence questions
• Is there an initiation fee (where 0% is refundable)
• How much of it is refundable?
• Is there any guarantee that the refundable portion will be returned?
• Does there have to be new members on a waitlist to get the refundable portion back?
• How much of the initiation fees go to paying for operations and sales of the club?
• How much of the initiation fees go to paying for real estate?
• What is the annual fee? If there are multiple programs, please specify each tier.
• What is the daily fee?
• Are members purchasing an equity stake in the homes?
• Is there a side-by-side real estate investment opportunity?
• What is the allowable annual fee increase?
• What is the historical annual fee increase?
• What percentage of the deposit is used for club operations?