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What happens if you just STOP paying maint fees?

Discussion in 'Buying, Selling, Renting' started by thomtaylor, Feb 22, 2009.

  1. thomtaylor

    thomtaylor TUG Member

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    I'm relatively new to timeshares, having inherited a couple. I'm very pleased with them, but discouraged to discover that what my father had spent hard-earned dollars for are worth so little on a secondary market. One I own just sold for $1 on e-Bay, and I understand most charities won't even take them now -- because they are considered more of a liability than an asset.

    I'm concerned that with the economy the way it is, fewer people will be able to manage their maintenance fees, which in turn further drives down the market values, and (because these fees cover fixed costs of the operators) will also drive UP the maintenance fees, further and further. What incentive do the operators really have to keep down maintenance fees, especially when they are not developing new properties?

    Since there is always a hassle in unloading timeshares (even at $1), what would happen when owners simply stop paying their annual fee? Are they foreclosed upon, does it hurt their credit, or is there some kind of relief from government -- such as what's proposed for homeowners (ie, can you walk away from your timeshare and not suffer a consequence). I was really alarmed to see that ABC Nightline video, and how owners can be responsible for damages to their property far in excess of money they've already spent, for what may be essentially worthless to begin with.:eek:

    Any legal opinion, or firsthand experience on this, is greatly appreciated...
     
  2. DeniseM

    DeniseM Moderator

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    Welcome to TUG!

    I'm not an attorney, and I didn't sleep at a Holiday Inn last night, but if you stop paying you maintenance fees, you will be turned over to collections and it will hurt your credit.

    I would not look at resale value, because timeshare aren't an investment and usually couldn't be sold for a profit, even in better times. I'd look at the vacation value YOU get out of them.

    We have a lot of great info. here, hopefully you will stick around and talk timeshare with us! :hi:
     
  3. thomtaylor

    thomtaylor TUG Member

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    that's understood... and I'm fully in favor of the concept of that, but what is the "value" when the cost of maintenance fees exceeds (and often by an excessive amount -- look at the Manhattan Club posts) the costs of otherwise getting a T/s rental (seems like most getaways are cheaper than maintenance fees in this economic environment).

    That's why many of these T/S's are selling on e-Bay for $1. What owner rights are there to question or refuse payment of maintenance fees?
     
  4. AwayWeGo

    AwayWeGo TUG Review Crew: Expert TUG Member

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    You Can Walk Away From A Timeshare But You Can't Walk Away From Trouble.

    Click here for a clue.

    -- Alan Cole, McLean (Fairfax County), Virginia, USA. ​
     
  5. Htoo0

    Htoo0 TUG Member

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    I'm not an expert but usually you're stuck. Depends on the T/S however. If they have ROFR then you might offer to sell it to a friend cheap and hope the place buys it back. You can contact the place and ask if they'll take it back. I'm not an attorney either but I wonder if you could just refuse to accept an inherited T/S? Of course, if you pay once and/or use it you're probably out of luck.
     
  6. AwayWeGo

    AwayWeGo TUG Review Crew: Expert TUG Member

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    All & None.

    Timeshare owners should get involved & get interested in resort management & pore over the annual budget tables line by line & feel free to ask the HOA-BOD members anything & everything they'd like to know about costs & fees & expenses, etc.

    That's on the 1 hand.

    On the other hand, once the HOA-BOD has considered & established the resort budget & divvied it up into each owner's share, payable in the form of mandatory annual maintenance fees, then it's each owner's obligation to pay up in full & on time, no ifs or &s or buts.

    When a timeshare is managed by an owner-controlled independent HOA-BOD rather than by a captive HOA-BOD that functions as an arm of the timeshare company, it's easier to appreciate the distinction between stiffing a timeshare company on the 1 hand & stiffing your fellow timeshare owners on the other hand. Your unpaid timeshare bills jack up my maintenance fees, & those of all the other owners.

    It is the HOA-BOD's responsibility to keep the timeshare nice, & to keep it improving (because if it doesn't keep getting better it will start getting worse), in a way that preserves the owners' pride of ownership & enjoyment of the resort so that they'll remain willing to pay what's owed when due.

    In any case, owners' responsibility to pay stays with the owner, so the only responsible way to end the obligation to pay timeshare maintenance fees is to transfer ownership of the timeshare to somebody else via sale or donation.

    Sometimes a timeshare HOA-BOD will accept a deed-back, but that's not automatic & not universal.

    -- Alan Cole, McLean (Fairfax County), Virginia, USA. ​
     
  7. AwayWeGo

    AwayWeGo TUG Review Crew: Expert TUG Member

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    We Have Met The Deadbeats & They Are Us.

    When the timeshare company is still in charge & still selling timeshares, their incentive is to keep the mandatory fees as low as possible -- by putting off maintenance of newish stuff that's not apt to go into disrepair right away, by putting the lowest legal amount into the Reserve Fund for future renovations, & by charging off some of the amenities to the sales effort rather than to resort operations. They do that so that their timeshare sellers can point to the advantage of low, low maintenance fees when they're giving customers the high-pressure sales pitch.

    By contrast, when the timeshare company no longer calls the shots (after management takeover by an independent, owner-controlled HOA-BOD), reality begins to set in. Then costs of all those neglected & postponed maintenance items have to be met -- most likely with insufficient money in the Reserve Fund to pay for all that catch-up maintenance. Fees are apt to go up -- possibly way up.

    Not only that, depending on how badly the Reserve Fund was shorted under timeshare company management, there could also be a mandatory Special Assessment on top of rising maintenance fees.

    It is also possible that there could be considerable slop in the system when the independent HOA-BOD takes over from timeshare company management. The timeshare company's main focus is to sell-sell-sell. Everything else is secondary, including keeping owner (i.e., billing) records complete & accurate & up to date.

    The HOA-BOD's most important obligation is to get those owner billing records squared away & keep'm squared away -- you can't bill the owners if you don't know who they all are & where they all live.

    Next, the HOA-BOD has to make collections a priority. Every unpaid maintenance fee bill jacks up the bills of all the other owners, just to offset the shortage caused by the deadbeats. Obviously that's no way to run a timeshare.

    Thrifty, responsible budgeting is a must. Ditto careful budget execution. Every dollar spent must return value to the fee-paying timeshare owners.

    The whole enterprise is easier said than done -- all the more so when you keep in mind that the elected members of the HOA-BOD are unpaid volunteers, doing what they do strictly for the benefit of all the owners, without any special benefits to themselves other than (possibly, when no one is looking) the chance to take home a suitcase stuffed with extra Timeshare Soap.

    Once the timeshare company is out of the management picture, then the regular walking-around timeshare owners like you & me take over responsibility, which we exercise via electing our own HOA-BOD -- even volunteering as board candidates ourselves if we are motivated in that direction. (I tried that once myself, last year. Got soundly thrashed in the voting & proxy counting. So it goes.)

    -- Alan Cole, McLean (Fairfax County), Virginia, USA. ​
     
    Last edited: Feb 23, 2009
  8. e.bram

    e.bram Guest

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    AwayWeGo:
    The cards are stacked agianst us. The managment company and present BOD are tied together like the Holy Roman Empire. You or I will will never get elected to the BOD.
     
  9. thomtaylor

    thomtaylor TUG Member

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    WOW, this is a lot of great information

    You are absolutely right that the problems stem in part from owners not getting involved. But it's not easy. Here are a few suggestions:

    1. The owners need a real advocate in congress. I presume that might be a Florida or California rep, but owners congregating on forums like this need to have somebody who is not in the pocket of the hospitality industry lobbies. Many people may be finding that they've bought "Glengarry Glen Ross" properties and need to have an champion -- for instance, legislation that allows owners to return deeds (and not to timeshare developers, who will just overprice a resale as they do in primary markets, but to some clearing house that all current owners would benefit from), with perhaps some tax advantage.

    2. Enforcement of some real stiff penalties for those who've been "stiffing." Inevitably scapegoats surface whenever markets crash, or things go wrong, but that's also the time that the real sharks come out. Years ago a friend pointed out somebody who'd actually done prison-time for his roles in timeshare scams. Some elder-law attorneys could really have a field day pursuing some of the wrong-doings in civil courts, another reason to have a good ally in DC.

    3. Who is actually on the BOD/HOAs of these places? I know I could dig up that information, but here's a suggestion to TUG: have another tab on reviews page for members-only to find easily (and with good contact info) those people who are charged with serving their interests. I'm sure most would find they are friendly, helpful and like-minded; one of the best things about ownership (and places like this site) is the sense of community.
     
  10. timeos2

    timeos2 Tug Review Crew: Rookie TUG Lifetime Member

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    Do your homework before you buy. Best are independent, owner controlled resorts

    Unfortunately the answer to this question is an absolute "it depends". In theory almost all resorts were set up to be turned over to direct owner control by an elected BOD. But when the various multi-resort systems came along and the unanticipated reluctance of Developers to relinquish management of even sold out resorts those original intentions are often ignored or badly twisted so the real power/control remains with the Developer. That is NEVER a good thing for owners. Yet it seems more and more to be the standard rather than owners actually controlling the resorts as used to happen.

    I own at both types and by far I prefer the ones that followed the rules and documents and turned control over to the owners. Those resorts are more responsive, better managed, have lower fees and overall represent a much more satisfying ownership. But even that type can be ruined by bad management (Westgate certainly comes to mind) and failure to adhere to the Association documents and State regulations. Hopefully those can be brought under control eventually but it won't be easy. As for the others owners have to decide if the quality/value delivered overcomes the lack of owner input/control. If not often the only answer is to dump those as the really large systems aren't likely to be taken over by the owners due to the massive voting rights and (unfair) control wielded by the Developer. No one has the time/money needed to break that control.
     
  11. AwayWeGo

    AwayWeGo TUG Review Crew: Expert TUG Member

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    1st Things 1st.

    I'd rather see the country's leaders concentrate on serious national matters & skip trivial stuff like timeshares.

    -- Alan Cole, McLean (Fairfax County), Virginia, USA. ​
     
  12. oregonguy

    oregonguy Guest

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    And that's what keeps me on the sidelines. I understand the resell is low, that the value is in the vacations. What I can't get past is if I change my mind and say I've had enough and no longer want the timeshare, I am in a situation where it is either really difficult, or maybe even impossible to say I've had enough. I could be obligated to pay those fees past my own lifetime.

    Maybe the economy will change the model a little. I've actually given some thought to DVC because at least there is a finite time period.
     
  13. AwayWeGo

    AwayWeGo TUG Review Crew: Expert TUG Member

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    Easy Timeshare Exit Strategy.

    Click here for information about points-timeshare lease opportunities -- 3 years (renewable) RTU.

    You like it, you re-up for 3 more years.

    You don't like it, you simply let it expire.

    The most trouble-free exit strategy in timesharing.

    -- Alan Cole, McLean (Fairfax County), Virginia, USA.​
     
  14. oregonguy

    oregonguy Guest

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    Thanks, I will definitely check that out
     
  15. thomtaylor

    thomtaylor TUG Member

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    As if the country's leaders have done a great job of THAT so far... And I don't know why consumer protection of (most elderly) investors could be considered trivial, especially when it's related to the mortgage abuses that are largely the root of today's economic mess. That any developers were pitching T/s's as an "investment" is tantamount to pump-and-dump stock-market schemes that leave trusting people wiped out (I sat in some of those sales meetings years ago & luckily walked out). Just reading some histories on this site, it seems that many have lost tens-of-thousands (or more), that their families will never see back by entrusting "established," publicly traded developers -- I would hate to think what's happened to those who dealt with the shady operators. (For instance, obviously these up-front "scams" are doing OK taking in money, or they wouldn't continue to operate). Sites such as TUG are invaluable resources but often come too late in alerting prospective owners to many of the problems T/s's face -- all the more need for vigilant oversight.
     

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