Refusing to pay maintenance fee

[Ralph Sir Edward]

Yes, the resort DEVELOPER will take over those unbooked intervals from people that don't pay their MFs, but for most timeshare systems the profit from the rental does not go back to the HOA. It goes to the timeshare developer. There is a line item on the budget of every timeshare we own. That line item is called "Bad Debt" and it is there because people didn't pay their maintenance fees.

The inventory you see for rent very well could be from people that don't pay their annual fees. It could also be inventory that the developers actually own themselves.

No snark. Doesn't the developer also pay MFs for the timeshares they own? If not, why not? After all, many subsidize the MF's during active sales phase.

If they don't, why doesn't the HOA actively try to get the deed backs for their timeshares? It would cost them no more than what they would be getting from the developer, and the HOA could rent them out to help cover the fees.

 

[haasle]

Mine has been paid off for over 20 years. I was current on maintenance fees and wanted to pay the thousand dollar buy back fee. They told me I didn’t qualify because it was purchased from resale and not from the developers. (Diamond Resorts) If I’m a deadbeat it’s their problem.

 

[dioxide45]

No snark. Doesn't the developer also pay MFs for the timeshares they own? If not, why not? After all, many subsidize the MF's during active sales phase.

If they don't, why doesn't the HOA actively try to get the deed backs for their timeshares? It would cost them no more than what they would be getting from the developer, and the HOA could rent them out to help cover the fees.

Yes, in most cases the developers pay maintenance fees for the weeks that they own. I am not sure what you mean by your statement. The governing documents of the timeshare grant the developer the use of all unreserved weeks at some point prior to checkin. For the resorts we own, that is 75 days. So if a week is unreserved 75 days prior to checkin, the developer takes control and can do whatever they want with it; let it sit empty, rent it, deposit it into exchange companies. Some of those unreserved weeks will be from people that did pay their annual fees and some will be for people that didn't. In either case, if they rent it for cash, the developer is under no obligation to make up for any lost maintenance fees. They wrote the rules early on when they created the timeshare and it is the rules we sign up for when we take on a timeshare deed.

 

[am1]

-Many resorts are not in active sales and don't have a mechanism in-plase to resale defaulted deeds.
-It can be expensive to recover and transfer the defaulted deeds back to resort ownership.
-Some resorts are not desirable enough to resale.

If that’s the case they deserve to go under and I am sure with covid it will speed up the process. Or government should be lobbied so debts can actually be enforced. It’s a problem worldwide that costs trillions.

 

[Ralph Sir Edward]

Yes, in most cases the developers pay maintenance fees for the weeks that they own. I am not sure what you mean by your statement. The governing documents of the timeshare grant the developer the use of all unreserved weeks at some point prior to checkin. For the resorts we own, that is 75 days. So if a week is unreserved 75 days prior to checkin, the developer takes control and can do whatever they want with it; let it sit empty, rent it, deposit it into exchange companies. Some of those unreserved weeks will be from people that did pay their annual fees and some will be for people that didn't. In either case, if they rent it for cash, the developer is under no obligation to make up for any lost maintenance fees. They wrote the rules early on when they created the timeshare and it is the rules we sign up for when we take on a timeshare deed.

What I mean is the following. If some one defaults on their MF's, and the developer gets the week, are they not owners, and subject to the same costs as an owner? I think you are saying that they do, but they "weasel" out of it by waiting to the last minute and claim the week for free. Am I correct?

I merely point out that could not the HOA step in and offer to take back the week instead of letting it default to the developer? Then the HOA would own it. If the developer is dodging the MF's, the HOA would be out no more money than they would already be?

 

[DeniseM]

No - When an owner defaults on their maintenance fees, the difference is charged to all of the other owners, and their maintenance fees go up. You can usually see this cost on your yearly report from your timeshare. The management company does not cover it.

 

[dioxide45]

What I mean is the following. If some one defaults on their MF's, and the developer gets the week, are they not owners, and subject to the same costs as an owner? I think you are saying that they do, but they "weasel" out of it by waiting to the last minute and claim the week for free. Am I correct?

I merely point out that could not the HOA step in and offer to take back the week instead of letting it default to the developer? Then the HOA would own it. If the developer is dodging the MF's, the HOA would be out no more money than they would already be?

The HOA would have to foreclose on the timeshare week to get it back. They have no mechanism to just take it and rent it out. Foreclosing on the week would likely wipe out any income they would get from rent. Also keep in mind that many HOAs for bigger timeshare brands have buyback agreements with the developer that when the HOA forecloses on a week, the developer then buys it back. Some of these buybacks have the developer reimbursing the HOA for past due fees.

 

[tschwa2]

HOA's can rent out non performing weeks. Most HOA's don't have a rental mechanism and if there is a developer in the picture, they have an agreement to let the developer rent out the weeks for the HOA. The developer takes the week, and what ever is rented out they take a 30-40% commission and then any additional housekeeping fees come out of the remaining and if there is anything left over than that goes to the HOA. If the full week is rented out or most of the week and there isn't more than 1 additional cleaning needed over the one covered in the MF's the HOA might get enough to cover the MF's.

 

[halthesweep]

Yes when you don’t pay your dues someone else has to. That’s what you call a dead beat. It’s not nasty, when you are make me pay Your contracted debt. You can give it away on TUG. JUST DO IT!

Wrong and still nasty.

 

[halthesweep]

Maintenance Fees in default generate charges to the other owners that are included in the Bad Debt line-item on the annual budget statements issued by my resorts.

I don't judge the owners who find themselves unable to pay MF's because they've fallen on difficult financial circumstances, but like Jim I do judge the people who just walk away without making any effort to re-home their obligations.

Just stop judging.....

 

[DeniseM]

I think this topic has been exhausted - thread closed.