Defaulting on Maintenance Fees

[OldPantry]

While the morality discussion is fun, it's a bit away from the question I asked when I started the thread. What is REALLY happening to defaulters? I suspect it varies from state to state, and HOA to HOA. Is anybody getting liens (on property like houses or cars); is anybody getting their wages garnished? Are the real consequences anything worse than a black mark on a credit rating? If so, how long does that black mark persist? Curious minds want to know.

 

[timeos2]

What matters is this association problem and they have to deal with it. They can take action and make changes at the resort to lessen the likelyhood of defaults and they can take action to deal with the defaults when they do happen. But they have to do something. To do nothing is, I think, bad management of the resort and perhaps illegal or immoral itself

If, as is the case in the vast majority of cases, the BOD/Association is following the law and operating the resort to the standards it was built to and doing it as best they can then what, exactly, actions can they do to" make changes at the resort to lessen the likelyhood of defaults"? It costs what it costs, the law in amny areas say they cannot vary the fees by season and that is what the buyer agreed to. Why do the majority of owners have to change to meet the whims of the (hopefully) small number that choose to default rather than properly transfer their ownership to a new owner? Answer - they don't.

The rules were put in place on day one, they don't change - only the amount owed may. If everyone could get out of contracts or refuse to pay because the cost isn't what they consider to be "fair" then I doubt another gallon of gas would be sold today as that is clearly a breech of trust and value. They are charging whatever they can and tough for you if you don't like. Try putting it on your charge card and then say you won't pay because "it's too much". Doesn't work. You commit to the purchase of a tank of gas or the annual fee of your timeshare/condo. There is no guarantee of what that cost will be.

 

[timeos2]

While the morality discussion is fun, it's a bit away from the question I asked when I started the thread. What is REALLY happening to defaulters? I suspect it varies from state to state, and HOA to HOA. Is anybody getting liens (on property like houses or cars); is anybody getting their wages garnished? Are the real consequences anything worse than a black mark on a credit rating? If so, how long does that black mark persist? Curious minds want to know.

Yes, there are liens placed on the property as well as foreclosures filed. The black marks can exist up to 7 years or more. It's not deadly but can hurt. No garnishments for annual fees (maybe in extreme cases for mortgages but unlikely).

 

[OldPantry]

Yes, there are liens placed on the property as well as foreclosures filed. The black marks can exist up to 7 years or more. It's not deadly but can hurt. No garnishments for annual fees (maybe in extreme cases for mortgages but unlikely).

Yes, of course a lien on the timeshare. How about on any other property the defaulter might own?

 

[Ridewithme38]

While the morality discussion is fun, it's a bit away from the question I asked when I started the thread. What is REALLY happening to defaulters? I suspect it varies from state to state, and HOA to HOA. Is anybody getting liens (on property like houses or cars); is anybody getting their wages garnished? Are the real consequences anything worse than a black mark on a credit rating? If so, how long does that black mark persist? Curious minds want to know.

alot of times when you go to apply for a job, a new car, a credit card, rent a home or even to refinance you home....they will run your credit report...so what is really happening to people who default of their TS's is they are now unable to find jobs, cars or rent places to live...because the HOA/BOD was unable to keep the value within the resort...these people are now homeless and unable to survive...they become victims of the system and only can survive with the help or the Unemployement and welfare system....alot of people in the welfare system are stuck living in lower income areas and become so depressed that they turn to drugs and alcohol to help them just get through the day...with the high costs of healthcare and addictiveness of drugs they are unable to support their habit because their low credit scores keep them from being able to get a job...these people now begin doing things that they normally would never have done...theft, robbery, murder....and become products of the prision systems in and out for the rest of their lives

All because of an evil TS HOA, who thought it was more important to ruin someones credit then ask how they could help

 

[timeos2]

Yes, of course a lien on the timeshare. How about on any other property the defaulter might own?

No. Not unless there was a court order and that is unheard of for timeshare fees.

 

[AwayWeGo]

You Typed A Mouthful.

I'd enjoy the fun of having some attorney try to lawyer-whip me

More power to you.

Meanwhile, I would greatly enjoy the spectacle of an el slicko timeshare company being brought to heel across the board via sweeping injunction issued by a small claims court.

Wouldn't that be something ?

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

 

[SueDonJ]

I disagree. A contract is a meeting of the minds between two or more parties. This can be evidenced in several ways, including both written and verbal (incl. promises) contracts. When one party fails to perform under the contract/promise, then they are in default and the other party (parties) has/have every right to pursue their performance via the courts. Promises may be harder to litigate, but if the injured party/parties [plaintiff(s)] can show damages resulting from reliance on the promise then they are likely to either win compensation or forced performance from the defendant(s).

There is ALWAYS an implied consequence of default in a contract - that the courts will force you to perform if/when the other party/parties take action against you. Not stipulating consequences in a contract in no way removes the right to sue over non-performance. That's just plain silly.

But we're talking about timeshare obligations and contracts here which DO contain stipulations related to defaults. There isn't any need to argue for an implied consequence in the absence of stipulated ones. So the other parties - developer/management company/owners - can pursue through the Court, but what is it going to get them?? Simply, all parties are going to be forced by the Court to comply with the stipulations. No doubt the judge will rule, "you haven't satisfied your financial obligations and your contract says the developer/HOA can pursue foreclosure and take your timeshare away. So ordered." But where does that leave the other owners? Still in the same place absorbing the costs for those who have defaulted!

The contracts for my timeshares give Marriott/the BOD the rights to spread those costs among the HOA. If what you're suggesting (not sure here) is that the owners' association could band together and file suit against defaulters for collections, I don't see how the Court would find in favor of the owners when the spread costs stipulation is a part of the contract to which owners agreed. Especially in the case of defaulters for whom dire financial straits led to the default - you can't get blood from a rock. Plus, the Court very seldom will rule against a contract unless one of the parties is gaining an artificial advantage through the status quo. In the particular case of Marriott timeshare resorts and shared MF costs, Marriott as the developer/owner is also assuming the added burden on the intervals they're holding, therefore they are not gaining an artificial advantage.

For me this really is just another issue of legalities with timeshares that do not favor the owners and never will. Unless the owners can muster the majority vote necessary to force changes to the governing documents, then the owners are pretty much stuck. Sure we can pressure our BOD's to find some creative solutions, but in the end the fees have to be paid somehow and BOD's are not magicians.

I do agree that defaults are probably the single biggest issue facing timeshare HOA's today, and in the current economic climate it doesn't seem like that is going to change anytime soon. But I still see it as simply a contract issue, and think that presenting it as a moral issue to gain sympathy votes from the Court or support from the owners is, IMO, a useless endeavor. Plus, truthfully, I don't want the added burden of piling on to what must already be a mountain of sadness for those in legitimate financial straits, and I don't want the responsibility of judging who is in those straits or not. It's not exactly a prayer but, "walk a mile in a man's shoes ..."

 

[ronparise]

If, as is the case in the vast majority of cases, the BOD/Association is following the law and operating the resort to the standards it was built to and doing it as best they can then what, exactly, actions can they do to" make changes at the resort to lessen the likelyhood of defaults"? It costs what it costs, the law in amny areas say they cannot vary the fees by season and that is what the buyer agreed to. Why do the majority of owners have to change to meet the whims of the (hopefully) small number that choose to default rather than properly transfer their ownership to a new owner? Answer - they don't.

The rules were put in place on day one, they don't change - only the amount owed may. If everyone could get out of contracts or refuse to pay because the cost isn't what they consider to be "fair" then I doubt another gallon of gas would be sold today as that is clearly a breech of trust and value. They are charging whatever they can and tough for you if you don't like. Try putting it on your charge card and then say you won't pay because "it's too much". Doesn't work. You commit to the purchase of a tank of gas or the annual fee of your timeshare/condo. There is no guarantee of what that cost will be.

John

Of course you are right..I didnt mean to suggest default should be anyones first step..only a last resort, And Im sure an association doesnt have to do anything different than they have always done.

But it is true that I dont have to pay the fees, you might sic your collections people on me, you might take me to court, you can ruin my credit, You can even string me up my my thumbs and throw rocks at me but if Im past caring you cant collect.

All Im trying to say is that if there are too many like me you will have a problem.

Is it right that Ive broken a promise, is it right that I stuck you with my debt. is it right. No thats not right, but its a fact and the association has to deal with it

To answer the OPs original question: there may be consequences legal, financial and moral. It will probably be easier and certainly be better to give your timeshare away(perhaps with a financial incentive) than to default on your maintenance fees

 

[OldPantry]

alot of times when you go to apply for a job, a new car, a credit card, rent a home or even to refinance you home....they will run your credit report...so what is really happening to people who default of their TS's is they are now unable to find jobs, cars or rent places to live...because the HOA/BOD was unable to keep the value within the resort...these people are now homeless and unable to survive...they become victims of the system and only can survive with the help or the Unemployement and welfare system....alot of people in the welfare system are stuck living in lower income areas and become so depressed that they turn to drugs and alcohol to help them just get through the day...with the high costs of healthcare and addictiveness of drugs they are unable to support their habit because their low credit scores keep them from being able to get a job...these people now begin doing things that they normally would never have done...theft, robbery, murder....and become products of the prision systems in and out for the rest of their lives

All because of an evil TS HOA, who thought it was more important to ruin someones credit then ask how they could help

Not to mention wars, pestilence and the four horsemen of the apocalypse.
Bad HOA, naughty HOA!

 

[timeos2]

A well run resort Association realizes that defaults will happen - if we like it or not - and the key is not letting them get out of hand. That is done through a combination of having reasonable fees (as best they can be), resort quality maintained and staying on top of those that do become delinquent by stringent collections up to and including speedy (as fast as allowed) foreclosure. The last step is having an outlet in place once those foeclosures happen so the other owners aren't on the hook for the fees. That is a key part too many resorts ignore & they sit on far too much unpaid inventory in the Association name. They need to actively market that as well as rent what they can. It is a big job that if ignored can quickly spiral out of control.

 

[AwayWeGo]

Live & Learn.

Not to mention wars, pestilence and the four horsemen of the apocalypse.

-- hotlinked --​

Apocalypse ?

Shux, I thought it was the 4 Horsemen Of The Acropolis.

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

 

[Ridewithme38]

-- hotlinked --​

Apocalypse ?

Shux, I thought it was the 4 Horsemen Of The Acropolis.

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

i bet the owners of that TS defaulted on their contracts! That hasn't been maintained at ALL!

 

[bjones9942]

SueDonJ -

I think we're approaching this from different perspectives. I from the point where people are defaulting simply because they're tired of what they have; you from the point that they've become destitute and the cost has become a heavy burden.

I'm also not so sure that a resort would be satisfied with simply foreclosing on the property. Fees were due and unpaid up until the point of foreclosure and I'm fairly certain they would want to recover. To my knowledge, the only courts of law that take financial burden into consideration are the bankruptcy courts (ok, sometimes traffic court). Frankly, this is where I believe anyone in financial trouble should be. Defaulting on a $50/mo timeshare obligation is not going to dig anyone out of a financial hole. Bankruptcy has a good chance of doing that.

But we're talking about timeshare obligations and contracts here which DO contain stipulations related to defaults.

I was responding to your assertions about the lack of stipulations. You can't just turn it around on me and now speak to contracts that DO have stipulations. You'd make a good politician!

I think I've beaten my point of view into the ground. I'm changing the direction of my energies towards actions that may get me drinks with Ron in hell. :whoopie:

 

[bjones9942]

-- hotlinked --​

Apocalypse ?

Shux, I thought it was the 4 Horsemen Of The Acropolis.

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

i bet the owners of that TS defaulted on their contracts! That hasn't been maintained at ALL!

I blame the spring-breakers! This used to be a great place with a wonderful view!

 

[e.bram]

Originally Posted by bjones9942 View Post
"I'd enjoy the fun of having some attorney try to lawyer-whip me"

One area where I and bjones agree.
Considering the financials of the potential suit, I don't think John Edwards would take the case.

 

[hotcoffee]

. . . I do agree that defaults are probably the single biggest issue facing timeshare HOA's today, and in the current economic climate it doesn't seem like that is going to change anytime soon. . . .

Sticking to my constant gloom-and-doom themes in many of my posts due to an economy that I see progressively getting worse over time (while acknowledging that there will be some up periods in the graph of the downward trend), I cannot imagine the rate of defaults dropping. In fact, they will probably increase.

One of my concerns is: what happens if someday it becomes impractical to travel to far away timeshares for many of the owners? I think it might be nearly impossible or the owners to give away those timeshares. I, for one, would never accept a timeshare that I thought I would be unable to use even if it were given to me absolutely free. In fact, even if you paid the first year's MFs and all closing costs and offered to give me some cash, I probably would say "no thanks." I would not want the headache of trying to find someone else to take it off my hands.

What is the likelihood of the above doom-and-gloom scenerio happening? I think it could happen to the timeshares in the tropics because you have to fly to them. State-side timeshares might still be worth something to people who can drive to them. I think timeshares are highly susceptable to economic downturns due to their tending to be relatively far from one's home.

What does all of this have to do with this thread? My gloom-and-doom outlook for the U.S. economy suggests to me that MF defaults will likely get worse rather than better.

 

[OutAndAbout]

Maybe i don't understand what everyone is upset about

Are you guys this upset about possibly .48cents more on your bill because of one or two people defaulting...then i understand this thread being directed at the owners who are doing that

OR

Are you guys upset about LARGE NUMBERS of people defaulting from the resorts every year?

Both. You've made a commitment and there's no excuse to just ignore that commitment without proactively seeking other alternatives, regardless if the commitment is $0.10 or $10.

A perfect example of why there's no excuse not to try to work something out:

I called the resort and told them what was going on and asked them for some help finding a solution. They downsized her contract to something she could afford. Instead of ignoring the situation and waiting for them to foreclose, it is better for the resort to have someone else paying those maintenance fees. The resort can now resell the timeshare she originally owned. She went from a 2 bedroom lockoff to a 2 bedroom EOY in a different building. Her debt went from $40,000 down to less than $10,000. Because we dealt with it, the equity she had built up went towards the new unit.

It never hurts to call and try to make some kind of arrangement. Do not ignore your obligations, they don't just go away.

 

[OutAndAbout]

Thanks for putting that list together, OutAndAbout - interesting stuff there.

Note, these number should be taken with grains of salt as there always has to be some assumptions made when backing into totals:
*For states where properties are part of the maint fee, are the taxes part of the default amount?
*Should Bad Debt be included or subtracted from default (possible double-counting)
*Many resorts have 1br/2br/3br villas & these totals are based on the overall average rather than default by unit size
*Maintenance Fees sometimes include, sometimes exclude property taxes, depending on the state
*Maintenance Fees include the developer subsidy & FL club
*etcetera

The one fact we do know, US$7.6mm in Marriott timeshare defaults budgeted in 2011 (see totals & averages at the bottom)

(US$)
[B]BAD DEBT EXPENSE	∑ Bad Debt	Owner	Maintenance  #    Default	
[U]  2010	  2011	    ∆	  2011        Interest	    Fees  Default  Rate  Resort[/U][/B]
 09.00 	 09.01 	   0.1%	 101,180	11,227  1,200.00    84.3   0.8%	Aruba_OceanClub
 02.50 	 05.00 	 100.0%	 115,911	23,175	1,207.82    96.0   0.4%	Aruba_SurfClub
 03.20 	 04.56 	  42.5%	  50,019	10,969	  952.79    52.5   0.5%	AZ_Phoenix_DesertRidge
 07.02 	 19.81 	 182.1%	 255,000	12,875 	  984.35   259.1   2.0%	CA_LakeTahoe_TimberLodge
 13.13 	 13.81 	   5.2%	 474,843	34,384	  877.74   541.0   1.6%	CA_Newport_NewportCoast
 01.25 	 01.25 	   0.0%	  15,045	12,036	1,065.35    14.1   0.1%	CA_PalmDesert_DesertVillasI
 04.88 	 04.88 	   0.0%	 100,050	20,502	  950.72   105.2   0.5%	CA_PalmDesert_DesertVillasII
 06.09 	 06.81 	  11.8%	 174,302	25,595	  957.27   182.1   0.7%	CA_PalmDesert_ShadowRidge
 06.97 	 10.02 	  43.7%	  35,941	 3,588	1,148.45    31.3   0.9%	CO_Breckenridge_MountainValley
 18.94 	 19.09 	   0.8%	 202,526	10,609 	1,137.41   178.1   1.7%	FL_FortLauderdale_BeachPlace
 05.53 	 06.09 	  10.1%	  22,260	 3,656 	1,511.68    14.7   0.4%	FL_MarcoIsland_CrystalShores
 67.52 	 70.91 	   5.0%	 514,948	 7,262 	1,296.93   397.1   5.5%	FL_Miami_Doral
 05.00 	 05.00 	   0.0%	 130,050	26,010 	1,035.99   125.5   0.5%	FL_Orlando_CypressHarbour
 16.18 	 16.18 	   0.0%	 750,073	46,350 	1,094.85   685.1   1.5%	FL_Orlando_GrandeVista
 30.00 	 42.32 	  41.1%	 679,998	16,068 	1,039.26   654.3   4.1%	FL_Orlando_HarborLake
 16.91 	 13.98 	 -17.3%	  32,797 	 2,346 	1,300.56    25.2   1.1%	FL_Orlando_ImperialPalm
 05.61 	 05.53 	  -1.4%	  24,493	 4,429 	1,351.17    18.1   0.4%	FL_Orlando_LakeshoreReserve_
 04.65 	 05.83 	  25.4%	  36,198	 6,209 	1,131.58    32.0   0.5%	FL_Orlando_RoyalPalms
 07.32 	 07.77 	   6.1%	  31,080	 4,000 	1,130.14    27.5   0.7%	FL_Orlando_SabalPalms
 05.63 	 05.63 	   0.0%	  26,391	 4,687 	1,641.91    16.1   0.3%	FL_PalmBeach_OceanaPalms
 17.08 	 18.96 	  11.0%	 333,049	17,562 	1,445.70   230.4   1.3%	FL_PalmBeach_OceanPointe
 09.89 	 35.09 	 254.8%	 150,010	 4,275 	1,270.79   118.0   2.8%	FL_PanamaCity_LegendsEdge
 10.42 	 11.47 	  10.0%	 137,593	12,000 	1,562.54    88.1   0.7%	HI_Kauai_BeachClub
	 08.79 		  13,770	 1,566 	1,775.65     7.8   0.5%	HI_Kauai_Kalanipuu
 15.71 	 15.37 	  -2.2%	 182,000	11,845 	1,547.73   117.6   1.0%	HI_Kauai_Waiohai
 24.04 	 25.94 	   7.9%	 614,564	23,688 	1,876.12   327.6   1.4%	HI_Lahaina_OceanClub
 17.73 	 21.45 	  21.0%	 455,021	21,218 	1,646.03   276.4   1.3%	HI_Oahu_KoOlina
 08.97 	 15.57 	  73.6%	  66,702	 4,284 	1,089.00    61.3   1.4%	MA_Boston_CustomHouse
 10.96 	 12.19 	  11.2%	  82,868	 6,798 	  815.00   101.7   1.5%	MO_Branson_WillowRidge
 16.18 	 16.27 	   0.6%	 150,823	 9,270 	1,011.00   149.2   1.6%	NJ_Absecon_FairwayVillas
 26.00 	 30.00 	  15.4%	 667,000	22,230 	1,015.95   656.5   3.0%	NV_LasVegas_GrandChateau
 06.51 	 03.25 	 -50.1%	  42,266	13,005 	1,000.00    42.3   0.3%	SC_HiltonHead_Barony
 03.39 	 03.48 	   2.7%	  51,469	14,790 	1,084.16    47.5   0.3%	SC_HiltonHead_GrandeOcean
 06.14 	 06.51 	   6.0%	  13,280	 2,040 	1,080.00    12.3   0.6%	SC_HiltonHead_HarbourClub
 12.61 	 13.31 	   5.6%	  57,233	 4,300 	1,047.00    54.7   1.3%	SC_HiltonHead_HarbourPoint
 08.27 	 08.71 	   5.3%	  13,065	 1,500 	1,350.00     9.7   0.6%	SC_HiltonHead_HeritageClub
 04.34 	 04.40 	   1.4%	  27,060	 6,150 	1,048.00    25.8   0.4%	SC_HiltonHead_Monarch
 05.88 	 03.22 	 -45.2%	   4,106	 1,275 	  930.64     4.4   0.3%	SC_HiltonHead_SunsetPointe
 11.34 	 13.13 	  15.8%	 131,869	10,043 	1,071.08   123.1   1.2%	SC_HiltonHead_SurfWatch
 07.50 	 08.46 	  12.8%	 157,288	18,592 	  964.00   163.2   0.9%	SC_MyrtleBeach_OceanWatch
 34.56 	 39.75 	  15.0%	 180,147	 4,532 	1,483.39   121.4   2.7%	StKitts_BeachClub
 11.25 	 11.94 	   6.1%	  95,926	 8,034 	1,297.60    73.9   0.9%	USVI_StThomas_FrenchmansCove
 08.25 	 08.42 	   2.1%	  78,154	 9,282 	  959.85    81.4   0.9%	UT_ParkCity_MountainSide
 02.24 	 02.24 	   0.1%	  15,017	 6,694 	1,128.53    13.3   0.2%	UT_ParkCity_SummitWatch
 04.15 	 09.57 	 130.6%	  97,978	10,238 	  966.00   101.4   1.0%	VA_Williamsburg_ManorClub
									
[B]		       7,591,363       531,188 		 6,548.1 	Total-Sum
 12.29 	 14.29 	  15.4%  168,697         11,804 	1,158.13  245.15   1.2%	Average
[/B]