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Unpaid Maintenance Fees

GTStone

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Many timeshares are now facing the problem of unpaid maintenance fees. This obviously impacts the owners who do pay, and who must cover the costs of running the property.

If you were a board member, would you favor the voluntary surrender of properties when an owner cannot pay the annual fee ? Here are some thoughts I had on this:
  • The board retains the property and can derive income from renting it
  • The board can replenish funds when the property is resold
  • The owner is given a method to unload the asset without affecting their credit rating
  • Boards can list the properties with quality resellers ( like some who appear here ).
  • Quality properties may actually get a price that exceeds the amount delinquent
  • Lesser properties could be sold for a price that covers the delinquency assuring future income.
  • Other owners will not have higher fees to cover those who do not pay

I'm sure there are lots of things I'm not considering, so I would sure love to hear your input.

ALSO - This is not a quest for solutions for how to dump a property. I am happy with mine, and can afford the fees. I'm just thinking how our board might best handle delinquencies proactively. It is certainly less expensive to allow voluntary quit deeds then to use foreclosure.

I'm looking forward to your ideas.
 

LannyPC

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I'm looking forward to your ideas.
This is not an "idea" but it is a question that, if accurately answered, might help to see the root of the problem (of unpaid MFs) and then the problem could be addressed.

I see three different, basic reasons why people don't/won't pay their MFs. For simplicity's and argument's sake, let's say the MFs are $1000.

1) The owner just simply can not afford $1000 this year. With the economy the way it's been lately, some people are struggling to pay their rent/mortgage (at the home where they actually live). If they pay their MFs, they won't have money to feed their family or run the car.

2) "I'm not using it, therefore, I'm not paying for it. Why should I pay for something I'm not using? Let the owners who are using it pay for it. If they think it's too much because they're absorbing the cost of my MFs, so be it. That's the price they're paying to use it."

3) "$1000 ($143 per night) is too much. The resort raising fees like this is highway robbery. If the fees were about half that, I would probably pay it but not $1000."

Which of these three scenarios would you say best describes the majority of defaulters?
 

timeos2

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Many timeshares are now facing the problem of unpaid maintenance fees. This obviously impacts the owners who do pay, and who must cover the costs of running the property.

If you were a board member, would you favor the voluntary surrender of properties when an owner cannot pay the annual fee ? Here are some thoughts I had on this:
  • The board retains the property and can derive income from renting it
  • The board can replenish funds when the property is resold
  • The owner is given a method to unload the asset without affecting their credit rating
  • Boards can list the properties with quality resellers ( like some who appear here ).
  • Quality properties may actually get a price that exceeds the amount delinquent
  • Lesser properties could be sold for a price that covers the delinquency assuring future income.
  • Other owners will not have higher fees to cover those who do not pay
I'm sure there are lots of things I'm not considering, so I would sure love to hear your input.

ALSO - This is not a quest for solutions for how to dump a property. I am happy with mine, and can afford the fees. I'm just thinking how our board might best handle delinquencies proactively. It is certainly less expensive to allow voluntary quit deeds then to use foreclosure.

I'm looking forward to your ideas.
Variations of this idea are being used by many resorts. The basic problem is the resorts have no way to rent or resell the time they take back any more than the owners do. Most resorts are not in the business of sales. Even if a sales organization is on site it is an independent and usually not interested and or required to sell Association owned weeks.

So taking on the inventory can quickly spiral out of control. There are zero guarantees the Association can rent or sell it within the time the fees have been prepaid (if that is required) or to cover delinquent fees. They already have the right - without taking on the actual ownership - to rent deliquent units to recover the fees and most cannot rent even that inventory completely. Adding ownership means they HAVE committed the paying owners such as you to covering 100% of those fees if they don't rent or sell.

There are plans to consolidate Association owned times into lease backs, rentals, resales and other solutions but none work 100%. That doesn't mean they shouldn't be tried - every possibly should be used by aggressive Associations/Boards to protect the owners - but blindly accepting back ownerships without a guaranteed outlet to sell/rent them is suicide for a resort.

You have the right idea and you should expect your Board and management to be proactive in this type of action. But it usually cannot and should not be a blanket plan to accept ownerships back without limit or you will be buried in those that could have continue to enjoy their ownership and pay the fees, or sell / giveaway their time to a new owner but see an easy, low cost way out and take it. Associations need to guard against that and be extremely careful with any offers to accept dded backs. And remember what they do offer needs to offered to all owners equally so there are many considerations to any programs they may choose to do.

It isn't easy but I'm convinced that a well run Association can and will figure out ways to hold delinquencies to a minimum, offer owners reasonable ways to move their ownership if needed and not burden the remaining owners with unnecessarily rising fees. It is a real balancing act and it doesn't happen by accident. It takes an active and informed Board and progressive management looking out for the owners to do it well.
 

Ridewithme38

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This is not an "idea" but it is a question that, if accurately answered, might help to see the root of the problem (of unpaid MFs) and then the problem could be addressed.

I see three different, basic reasons why people don't/won't pay their MFs. For simplicity's and argument's sake, let's say the MFs are $1000.

1) The owner just simply can not afford $1000 this year. With the economy the way it's been lately, some people are struggling to pay their rent/mortgage (at the home where they actually live). If they pay their MFs, they won't have money to feed their family or run the car.

2) "I'm not using it, therefore, I'm not paying for it. Why should I pay for something I'm not using? Let the owners who are using it pay for it. If they think it's too much because they're absorbing the cost of my MFs, so be it. That's the price they're paying to use it."

3) "$1000 ($143 per night) is too much. The resort raising fees like this is highway robbery. If the fees were about half that, I would probably pay it but not $1000."

Which of these three scenarios would you say best describes the majority of defaulters?
This brings up a great point, Scenario's Number 2 AND Number 3 are things that can be eliminated 90% by proactive steps within the Nameless corrupt Association, by their inaction to make the resort someplace people WANT to go and give it the value people are paying for it...THEY are responsible for the defaults...I think if someone defaults based on Scenarios 3 or 2, a member of the Nameless Corrupt Association should have to shoulder that MF themselves NOT spread it to the REAL owners
 
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AwayWeGo

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Blanket Condemnation ?

This brings up a great point, Scenario's Number 2 AND Number 3 are things that can be eliminated 90% by proactive steps within the Nameless corrupt Association, by their inaction to make the resort someplace people WANT to go and give it the value people are paying for it...THEY are responsible for the defaults...I think if someone defaults based on Scenarios 3 or 2, a member of the Nameless Corrupt Association should have to shoulder that MF themselves NOT spread it to the REAL owners
I can't tell whether you condemn all timeshare HOAs as nameless & corrupt, or just certain ones.

( Just wondering. )

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

GTStone

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Observations

My thoughts were on people who have problems due to the economy, job loss, etc., and who want to voluntarily restructure.

The timeshares I own are at a property that is very well run, and very popular. It does have a rental program that is always in need of additional weeks, and they pay owners who wish to deposit their weeks. In fact demand has been so good that they often provide a payment guarantee that exceeds the MFs. This provides a good option for the person who doesn't want to use, or exchange, in a given year. They also have the ability to resell properties, which is what they must do if they foreclose.

Of course, the poorly maintained/managed facilities are a different story. In this market, you obviously will have difficulty renting something that is undesirable.

$ 1,000 MF's? I thought the average for most places is about $ 500. I understand higher rates for coastal property. As any homeowner at the ocean knows, the saltwater requires regular, and expensive, maintenance. It is very corrosive to wood and metal, and not too kind to concrete.

I'll be watching for more thoughts. Thanks to those who already contributed.
 

ace2000

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Variations of this idea are being used by many resorts. The basic problem is the resorts have no way to rent or resell the time they take back any more than the owners do.
If the resort (or the owner) cannot rent for more than the MF fees, then it's time to close the doors. It's probably going to happen anyway.
 

Ridewithme38

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I can't tell whether you condemn all timeshare HOAs as nameless & corrupt, or just certain ones.

( Just wondering. )

-- Alan Cole, McLean (Fairfax County), Virginia, USA.​
It's hard to generalize since different people are powerless figureheads on different HOA boards overspending not just from being strongarmed but also due to inept management...But if i took an average across all HOA, POA, Etc., i'd say the majority would lean towards nameless corrupt and inept
 

Ridewithme38

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If the resort (or the owner) cannot rent for more than the MF fees, then it's time to close the doors. It's probably going to happen anyway.
You know this would mean the closing of thousands of Timeshares right? Not that i'm against the idea....I think it would be more effective to close down Sections of a resort or whole buildings if rates are too high....But i can think of a few TS's that shouldn't be open anymore and are only being held open because of these grey area Contracts that hold people for generations and generations
 

timeos2

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If the resort (or the owner) cannot rent for more than the MF fees, then it's time to close the doors. It's probably going to happen anyway.
Those who own non-prime weeks (80% of ALL time at all but the most in demand & usually nearly non-seasonal areas) that also pay the same rates as the prime owners have nearly ZERO chance of renting for the annual fees -forget any possible profit.

Since that means all but less than 10 weeks per year at a vast majority of resorts will tend to rent for less than the fees what would you do? Close the doors of them all? Or be creative and get the Association to create a reasonable demand for the resort for far more periods of the year (you'll seldom get 100% no mater what is done) and perhaps try to find some ways to make the fees more fairly reflect the rental/resale/trade value? I vote for number 2 & 3. It can and has been done. But it takes an interested and proactive owner base or you may as well close the doors or turn it over to the truly uncaring "names" in it only to make sure the fees feed their bottom line. Your choice.
 
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ace2000

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Those who own non-prime weeks (80% of ALL time at all but the most in demand & usually nearly non-seasonal areas) that also pay the same rates as the prime owners have nearly ZERO chance of renting for the annual fees -forget any possible profit.

Since that means all but less than 10 weeks per year at a vast majority of resorts will tend to rent for less than the fees what would you do? Close the doors of them all? Or be creative and get the Association to create a reasonable demand for the resort for far more periods of the year (you'll seldom get 100% no mater what is done) and perhaps try to find some ways to make the fees more fairly reflect the rental/resale/trade value? I vote for number 2 & 3. It can and has been done. But it takes an interested and proactive owner base or you may as well close the doors or turn it over to the truly uncaring "names" in it only to make sure the fees feed their bottom line. Your choice.
I should clarify. I was referring to prime weeks or floating red weeks. If a resort cannot collect enough rent to cover the MFs on those then it's time to shut down the operation. Resorts should also be forced to accept deedbacks. Then you have the checks and balances necessary. Anyone disagree?
 

bogey21

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Resorts should also be forced to accept deedbacks. Then you have the checks and balances necessary. Anyone disagree?
I have been successful getting 3 Resorts (all small independents) to accept deed backs of my Weeks. But I think "forcing" all Resorts to accept deed backs is asking for trouble.

George
 

timeos2

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I have been successful getting 3 Resorts (all small independents) to accept deed backs of my Weeks. But I think "forcing" all Resorts to accept deed backs is asking for trouble.

George
Correct. Resorts have no way to sell the time that isn't also available to the individual owners in most cases. If they accept the weeks back they are committing the other owners to those fees effectively raising the fees & thus increasing the amount that will be "returned". It is a death spiral and not a real option at most resorts. They need to help owners find takers but not take the time back (unless the other owners agree that is OK and they are willing to pay more to cover those costs. Unlikely that most would agree to that.)
 

Ridewithme38

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Correct. Resorts have no way to sell the time that isn't also available to the individual owners in most cases. If they accept the weeks back they are committing the other owners to those fees effectively raising the fees & thus increasing the amount that will be "returned". It is a death spiral and not a real option at most resorts. They need to help owners find takers but not take the time back (unless the other owners agree that is OK and they are willing to pay more to cover those costs. Unlikely that most would agree to that.)
If the resorts are unable to sell the weeks, how can the owners be expected to be able to? I would think any place that can't be sold by the owners or the resort is in a death spiral anyway
 

1950bing

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You bought it , you pay for it ! Man /woman up ! You knew this when you purchased it.Don't expect me to cover you as I wouldn't expect you to cover me. What's wrong with some people in the USA ?
 

Ridewithme38

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You bought it , you pay for it ! Man /woman up ! You knew this when you purchased it.Don't expect me to cover you as I wouldn't expect you to cover me. What's wrong with some people in the USA ?
The thing is with Timeshares its a bit more then just a product that has no resale value...Its basically indentured servitude...You sign a document that requires you, your children, your childrens children to pay any amount demanded by the TS, forever, with no way out

When you buy a home it is alot different, there are a multitude of ways out beyond just selling the deed, i don't really understand how the types of contracts we sign with TS's aren't illegal
 

AwayWeGo

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Looking Before Leaping.

The thing is with Timeshares its a bit more then just a product that has no resale value...Its basically indentured servitude...You sign a document that requires you, your children, your childrens children to pay any amount demanded by the TS, forever, with no way out

When you buy a home it is alot different, there are a multitude of ways out beyond just selling the deed, i don't really understand how the types of contracts we sign with TS's aren't illegal
The weenie is that there is no requirement to understand how it works & know what the commitment is before taking on the timeshare ownership obligation -- & of course the full-freight timeshare sellers just fuzz right over all that with their high-pressure razzle-dazzle & ballyhoo.

The saving grace is that, done right, (resale) timeshare ownership can work out to luxury vacation accommodations at Motel 6 & Super 8 rates.

Is this a great country or what ?

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

 

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[QUOTE[/QUOTE]

You are right, I can book the followinig this morning if I wanted to (a Snowbird or Winter Resort person's delight).

Shawnee Villiage

02/07/2012 2 nights 2 Bedroom 12,000 points $36.60 dollars per night @ $5.5 per thousand points. VIP Discount used.

I do not think Motel 6 or Super 8 can compete very well with this.

Or

Seawatch Plantation, Myrtle Beach:

03/11/2012 5 nights 2 Bedroom Deluxe 26,250 points $28.87 per night @ $5.5 per thousand points. VIP Discount used.

Or


03/12/2012 5 nights 2 Bedroom Deluxe 25,250 points $21.05 per night @ $4.17 per thousand points. Vip Discount used (Smokey Mountain program/maintance fees used)

Bonnett Creek

02/27/2012 5 nights 2 Bedroom Deluxe 56,500 points $47.12 per night @ $4.17 per thousand points. Vip Discount used (Smokey Mountain program/maintance fees used)
 
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timeos2

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The thing is with Timeshares its a bit more then just a product that has no resale value...Its basically indentured servitude...You sign a document that requires you, your children, your childrens children to pay any amount demanded by the TS, forever, with no way out

When you buy a home it is alot different, there are a multitude of ways out beyond just selling the deed, i don't really understand how the types of contracts we sign with TS's aren't illegal
That doesn't matter. An agreement to buy was willfully made & the obligations came with it. It is unreaonable no matter how you look at it to expect others to pay for the buyer error in judgement. If it had no value the other owners that ARE paying - and are threatened with the buyers fees as well if they default - pay because there is a value and because they agreed, as did the disgruntled buyer, to pay until they sold/gave away the rights to another payee.

There are plenty of other things that are marketed with serious misrepresentations yet others do not pay for the unfortunate buyer's mistake. Just because this is a bigger error than most the problem remains with the buyer/owner NOT the Association or the other owners. As was said - man/woman up to your mistake and deal with it properly (as in find someone to properly take over the ownership not a fake, planned abandonment as the buyer will remain ultimately liable if that occurs).
 

chickenfoot

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The thing is with Timeshares its a bit more then just a product that has no resale value...Its basically indentured servitude...You sign a document that requires you, your children, your childrens children to pay any amount demanded by the TS, forever, with no way out

When you buy a home it is alot different, there are a multitude of ways out beyond just selling the deed, i don't really understand how the types of contracts we sign with TS's aren't illegal
This is incorrect information, heirs to an estate can refuse an "asset"

Look at it from another perspective, my parents cannot obligate me to any contract to which they agreed to.
 
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Ridewithme38

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This is incorrect information, heirs to an estate can refuse an "asset"

Look at it from another perspective, my parents cannot obligate me to any contract to which they agreed to.
IF you are the executor of their will(Which most likely you will be) then you are absolutely obligated to that contract and the MF's

If the heir refused it, It still remains in the estate and the Executor(Usually the spouse or children) have to find SOMEONE to take it, until then, the spouse or children(executor) is still responsible for it

So, No its not incorrect, its just a matter of playing word games...You call it an executor, i call it the children, which in most cases it will either be the spouse or the children
 
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timeos2

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IF you are the executor of their will(Which most likely you will be) then you are absolutely obligated to that contract and the MF's

If the heir refused it, It still remains in the estate and the Executor(Usually the spouse or children) have to find SOMEONE to take it, until then, the spouse or children(executor) is still responsible for it

So, No its not incorrect, its just a matter of playing word games...You call it an executor, i call it the children, which in most cases it will either be the spouse or the children
But the money will come from the estate NOT the children/executor - until it runs out then the estate will be foreclosed on by the resort and the ownership would end. Of course that money could have gone to the heirs but cannot until the timeshare ownership is resolved. As long as it isn't any money must go toward that not the heirs. That would "bother" most people and is the reason an estate should take action ASAP to find a legitimate taker before they spend all the assets.
 

BocaBum99

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Variations of this idea are being used by many resorts. The basic problem is the resorts have no way to rent or resell the time they take back any more than the owners do. Most resorts are not in the business of sales. Even if a sales organization is on site it is an independent and usually not interested and or required to sell Association owned weeks.

So taking on the inventory can quickly spiral out of control. There are zero guarantees the Association can rent or sell it within the time the fees have been prepaid (if that is required) or to cover delinquent fees. They already have the right - without taking on the actual ownership - to rent deliquent units to recover the fees and most cannot rent even that inventory completely. Adding ownership means they HAVE committed the paying owners such as you to covering 100% of those fees if they don't rent or sell.

There are plans to consolidate Association owned times into lease backs, rentals, resales and other solutions but none work 100%. That doesn't mean they shouldn't be tried - every possibly should be used by aggressive Associations/Boards to protect the owners - but blindly accepting back ownerships without a guaranteed outlet to sell/rent them is suicide for a resort.

You have the right idea and you should expect your Board and management to be proactive in this type of action. But it usually cannot and should not be a blanket plan to accept ownerships back without limit or you will be buried in those that could have continue to enjoy their ownership and pay the fees, or sell / giveaway their time to a new owner but see an easy, low cost way out and take it. Associations need to guard against that and be extremely careful with any offers to accept dded backs. And remember what they do offer needs to offered to all owners equally so there are many considerations to any programs they may choose to do.

It isn't easy but I'm convinced that a well run Association can and will figure out ways to hold delinquencies to a minimum, offer owners reasonable ways to move their ownership if needed and not burden the remaining owners with unnecessarily rising fees. It is a real balancing act and it doesn't happen by accident. It takes an active and informed Board and progressive management looking out for the owners to do it well.
The board should simply cut the budget until the units can be rented for a profit. It's that simple. If that means no electricity, then so be it. If that means no habitable units, then that will encourage owners to sign the termination of timeshare plan offered by the board of directors.

The property can be sold off to another developer that can make highest and best use of the property. For many timeshares, death spiral is the single best outcome for all owners. They are likely to get more money doing that than anything else.

Hundreds, if not thousands, of timeshare properties need to be terminated. Until boards and owners wise up to this fact, any rise in maintenance fees due to delinquencies, etc, is all on them.
 

Ridewithme38

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But the money will come from the estate NOT the children/executor - until it runs out then the estate will be foreclosed on by the resort and the ownership would end. Of course that money could have gone to the heirs but cannot until the timeshare ownership is resolved. As long as it isn't any money must go toward that not the heirs. That would "bother" most people and is the reason an estate should take action ASAP to find a legitimate taker before they spend all the assets.
Lets be realistic, for MOST Timeshares there are NO legitimate takers...

So my fathers life insurance is 5,000,000 and after expenses, he has 2.4million in his estate...Including two house and one timeshare that cost $1,200 a year in MF's....We can't touch a cent of that Estate for...2,000 years?? Simply because of the TS....That sounds like the kid that would normally have gotten that 2.4millon and two houses, is now responsible for the timeshare and his kids and his kids...How many generations for 2,000 years?
 

timeos2

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The board should simply cut the budget until the units can be rented for a profit. It's that simple. If that means no electricity, then so be it. If that means no habitable units, then that will encourage owners to sign the termination of timeshare plan offered by the board of directors.

The property can be sold off to another developer that can make highest and best use of the property. For many timeshares, death spiral is the single best outcome for all owners. They are likely to get more money doing that than anything else.

Hundreds, if not thousands, of timeshare properties need to be terminated. Until boards and owners wise up to this fact, any rise in maintenance fees due to delinquencies, etc, is all on them.
So what if there is, as many resorts now have, a "club" owner that controls say a 35% - 40% block of time. Add in just a handful of other owners to vote with them & any possible shutdown/sale is blocked. So then the remaining owners either default - suffering the credit hits & eventual foreclosure on their records - or they figure out a way to make the resort work.

The rental rate has no real standing. If you applied that same idea to many homes or whole owned condos you'd find they too can't reliably rent for what they cost to own/operate. Pegging fees/operational budgets to that is a false guideline. It should play a part but it is not the infallable bottom line number. There are too many intangleables - especially in a timeshare operation - that may not be properly reflected in a rental rate.

Let us know when you find any resort anywhere that rents for more than the annual fee for at least 40 weeks a year. I seriously doubt you can name even one. But even if one or two exist they are clearly in the minute minority of resorts. So the answer is close ALL the rest? Somehow I doubt that idea will fly.
 
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