Maintenance Fee Liability

[Robert D]

I'm contiplating buying a TS and have a question about the liability associated with the maintenance fee for a TS. I've never seen a TS deed or contract but want to know if you are legally obligated to continue paying the maintenance fee or if you can stop paying at any time and forfeit all of your rights to the TS? If you are legally liable for the maintenance forever, this is a huge liability that makes the purchase of any TS a big risk.

 

[JillChang]

That's why you see so many cheap timeshares for sale on eBay....people unloading their unwanted units...

 

[Hoc]

To supplement what Jill said, yes, you are obligated to pay the maintenance fee for as long as you own the unit. Some of us rent out our units and avoid paying the fee by having the rental income offset the fee. Not all units will rent easily, so that's not always an option.

Lots of folks bought poor traders that they never use, and can never rent, since nobody really wants to spend a week in the Ozarks in the middle of winter. So, they try to dump it on ebay to get out from under. Sometimes, they are successful.

 

[Kola]

Compare apples and apples, not oranges

While most people dislike paying maintenance fees few readily admit that these fees include essential cleaning services, the cost of heating /cooling, insurance fees, etc. as well as mandatory reserves for refurbishing, roof replacements, etc. You pay all these and other fees, plus profit, every time you rent a hotel room. With very few exceptions, you get a lot more from a purpose built timeshare. You cannot just walk away from paying the cost of hotel room rentals unless of course you are unable to travel anywhere or have so many friends or relatives willing to provide free accomodation.

Most people who are used to staying in timeshares are reluctant to go back to a cramped hotel room. Over time cumulative benefits from enjoying timeshares are substantial. While it is true that excess timeshare inventory is offered at rental prices well below the going maintenance rate of a given resort, such inventory is mostly off-season and/or represents unsold units.
If you really have to dispose of your timeshare in most cases you can sell it at a nominal price or donate it to a charity.

Kola

 

[Dave M]

I'll make a comparison.

If you buy your own home, you're responsible for the maintenance, repair, roof replacement, landscaping, utilities, etc.

Similarly, if you buy a condominium, the condo association pays for all of the expenses you would normally have paid for a single-family home, except that you'll pay for some of the utilities yourself. The condo association charges each owner a fee to provide funds to pay those expenses.

If you (and perhaps some other owners) stop paying your condo fees, the condo association will not have enough money to cover expenses and the property will soon be in a shambles. Thus, condo associations are formed in a manner such that acquiring ownership in a condo legally obligates the owner to make the required fees. Doing otherwise would make the financial arrangements for condos completely unworkable and condos would not exist.

A timeshare resort is set up exactly like a condo association. The primary difference is that instead of one owner for each condo unit, there are usually 50 or 51 owners for each condo unit.

Thus, in order to make a timeshare resort financially viable for both you and me, we are each legally obligated to pay our maintenance fees on units we own.

 

[e.bram]

The main point is are you obligated for more than the value of the TS itself?

 

[mshatty]

Yes.

When you become a TS owner you become subject to the declarations and covenants of the timeshare. One of those obligations is to pay annual maintenance fees.

 

[JoeMO]

I was told by an experienced, and I think reliable, timeshare reseller that if you no longer want the resort there is a procedure. Contact the resort and tell them you no longer want the week and you are going to stop paying the MF. The resort will take ownership of the week after you have not paid your MF for a year or two. He told me that it was a common occurance and there is nothing the resort can do to prevent it, but they appreciate you letting them know what is going on. I don't think they could file a lien or take any legal action becuase it is your week.

I am just passing on what I was told. I don't know if it is true or not, but it sounds plausable.

 

[Werner]

It seems that something important is being left out of this discussion. When you walk away from a legal financial obligation your credit rating will take a hit. That could cost you far more in future interest charges than the maintenance fee you want to walk away from. Don't you think that the developer or HOA is going to report your late payments to the credit agencies?

 

[Dave M]

I was told by an experienced, and I think reliable, timeshare reseller that if you no longer want the resort there is a procedure. Contact the resort and tell them you no longer want the week and you are going to stop paying the MF.

Generally an extremely lousy idea.

Because you are legally obligated to pay the MFs, based on the legal documents (called CC&Rs) to which your ownership in a timeshare resort or condo association is subject, any or all of the following can and often do happen when an owner stops paying:

• The delinquent payments are reported to credit agencies, as Werner accurately states, damaging the owner's credit rating.
• The resort adds late fees and interest to the unpaid amounts, as entitled by the CC&Rs.
• The resort turns the unpaid amount over to a collection agency, which adds its own fee as it collects the unpaid amounts.
• Finally, the resort turns the unpaid amount over to an attorney, who might send a warning letter and eventually files suit for collection. Based on the wording in the CC&Rs, the owner, instead of having to pay $500 or so for the annual maintenance fee, must now, after the court judgment, pay upwards of several thousand bucks in maintenance fees, interest, late charges, collection fees, attorneys fees and court costs.

Still there are a few resorts that won't bother with strenuous collection efforts and will, in fact, start foreclosure proceedings to take back the week. There are other resorts that, if contacted, will be willing to take a week back. However, to simply stop paying maintenance fees and hope that the problem will go away would be foolhardy.

 

[Hoc]

I don't think they could file a lien or take any legal action becuase it is your week.

That is absolutely wrong. In virtually every declaration of timeshare, there is a provision that allows the association to place a lien on your unit for unpaid fees, and to foreclose on the unit if the fees remain unpaid.

 

[elaine]

A resort or the HOA has every right to pursue legal action--most won't

Most take back the weeks and then try to sell/give them to someone who will pay maint. fees--some resorts run 2-1 specials--buy a red week, get a "Free" blue week, etc.

BUt, that doesn't mean that a resort could not take legal action or file with credit report--and yes, they can file a lien against the week, so that anyone who "Took" the week would be subject to back maint. fees.

Usually, when the resort/HOA resells a week, one of the things that they do is to give clean title (forgive the old maint. fees), b/c they would rather have someone who is going to pay in the future.

THis is a BIG issue for highly seasonal resorts(some NE beaches, etc.)---where there is a limted season and other other 8-9 months are pretty worthless. The HOA gets hundreds of deadbeats--but still has to maintain the property---so, unless a lot of padding, other owners have to pick up the slack in terms of special assessments or high maint. fees.

 

[JLB]

Hey, we have lovely winters!!!

Empty resorts, but lovely winters!

since nobody really wants to spend a week in the Ozarks in the middle of winter. .

 

[e.bram]

Can the HOA file a lein against another asset besides the week or any other weeks you own at that resort.

 

[JLB]

I agree with the others here who know what they are talking about and disagree with those who are repeating unreliable information others have told them.

I have never heard of a resort cooperating or assisting in taking back a timeshare that someone did not want.

They do take them back, but that is after an involved legal process during which they do not become any friendlier with the person who stopped paying their obligations.

Every now and then the local Branson paper has those list of timeshare foreclosures.

All three of the weeks we now own came from a resort association or from foreclosure.

I don't want to lessen my caution, but I do wonder just how much of a ding in your credit a default on a timeshare would be. I have never said anyone say, I couldn't but a new car/house/anything because of that timeshare problem I had.

It would be nice to hear from someone whose life got screwed up because they walked out on a timeshare obligation, just so we'd know that our warnings are meaningful. Even just to hear from someone who had it put on their credit report would be nice.

 

[rickandcindy23]

Twin Rivers will take the weeks back if you really, really don't want them.

But that leaves our resort with the burden of that 1/50th share.

We have "silent auctions" whereby our HOA-owned weeks are basically given away. The closing costs are $75.00 for the deed transfer. The resort will do it for you. You would be surprised how many people jump at an opportunity to own free off-season weeks. They WILL get you to Disneyworld during the pink off-season, so if that is where you want to travel and when you want to go, those weeks will absolutely get you there. Our maintenance fees are going to go DOWN, not up, because our fees include our assessments. It is a bargain and people are crazy to give those weeks up, if you ask me. But I am a Disney fanatic, so maybe I see things differently.

 

[mamiecarter]

Choose carefully so you don't get stuck

I have been able to give a timeshare I no longer used back to the resort. Some will take them back some will not. You can also give away a timeshare by listing in the free section on craigs list in the area nearest the resort. Donating to charity only works if they can sell it. You can sell it yourself on EBay.

However much better to buy something you will use during a high demand time that has a good value as a rental. Exchange company policies can change in a moment. But if your week is during a school vacation at a nice resort you know you can rent it. Make sure the maintenance fees aren't to high. If you need flexability buy into a points system.

If making a comitment to pay mainenance is too much for you join TUG and rent someone elses timeshare.

 

[JLB]

Then I stand corrected.

How did that work when you gave your timeshare back? Did they forgive any debt you owed? What resort?

When we donated a week to charity, the charity took ownership and liability for the maintenance fee. Timeshare Transfer handled the deal and we deeded it to the charity first.

I have been able to give a timeshare I no longer used back to the resort. Some will take them back some will not.

Donating to charity only works if they can sell it.
.

 

[mamiecarter]

It was easy

The maintenance was paid up. They just sent me a form to sighn and that was that.

 

[timeos2]

Paid weeks usually can be accepted

The maintenance was paid up. They just sent me a form to sighn and that was that.

Thats the way our resorts work too. If it's paid up and you want to give it back we'll take it. It's different if it isn't paid up to date and the process may or may not end up in an acceptance. Our lawyers tell us we have to be very careful about what liabilities we expose the owners to. With a paid week we have up to a year to get it resold for the cost of closing (at worst) and then continue to have a paying owner. If we accept it back with fees due then we are effectively telling the other owners they have to pay the fees until we can get it sold. No one wants that so we don't do it. We do turn it over to collections and credit reports - we've had people pay thousands when the original bill was hundreds as they settled things a year or two later. Do things right as the wrong way will cost you far more in the long run.

 

[rickandcindy23]

J>B, our former treasurer gave two of his weeks back.

His fees were paid, he had used the weeks for the year, so when he resigned his position as treasurer, the weeks were put back into our HOA's inventory. I will miss him as treasurer, but he was getting older and his priorities changed.

It really is better to allow owners to give weeks back, but you cannot publicize that you will do it because then you will have hundreds of owners giving their weeks back. Our resort does this on a case by case basis. But we will not deny anyone who requests it.

One good thing about Colorado is there really is not much of a blue/green season. We have skiing right up until the end of April, our son-in-law's favorite skiing time because the skiing is faster, but those weeks are considered blue/green.

 

[cherokee_villager]

Don't Mess With The Ozarks O.C.

Hey, we have lovely winters!!!

Empty resorts, but lovely winters!

You tell'em JLB :ignore:

 

[ctyatty]

take title in a corporation or trust

You can form a corporation, limited liability company or a trust for around $100 DIY, then if you can tell the resort to sue away!

 

[Hoc]

You tell'em JLB :ignore:

I spent a couple of weeks during the winter in a warehouse in Springfield, MO. I have a few choice words for it, but lovely isn't one of them.

Of course, consider the source. I grew up in Hawaii and have to wear a ski jacket when the weather drops below 65 in California.

 

[JLB]

Where you from in Iowa?

You can form a corporation, limited liability company or a trust for around $100 DIY, then if you can tell the resort to sue away!