Wall St. Journal article on Timeshares and resales

[TUGBrian]

http://online.wsj.com/article/SB10001424052748703407304576154851966464240.html?mod=googlenews_wsj

Started as an article specifically about Marriott spinning off its timeshare division, after a few hours on the phone with the reporter...it took on more of a spin towards the horrible resale market!

Hope he does more articles, he seemed genuinely interested in timeshares...and visits mexico regularly.

 

[alicep12]

Defunct Timeshare Market

I also read the article. Mention was made of "increasing default rates".
What are the consequences of simply defaulting on the contract, ie: simply stopping MF payments? AP12

 

[TUGBrian]

same consequenses you would face if you defaulted on any other loan or mortgage payment etc.

 

[ronparise]

consequences

As Brian suggested; not paying maintenance fees will subject you to certain consequences.

Chances are there will be many here that will rail against the thought that anyone would just walk away from their contractual obligation. But of course thats not your question. You seem to realize that there will be consequences and your un-stated question is...What are they?

My answer is ...It depends.

It depends on the resort and their policy,

First understand that you are in debt to the POA at your particular resort. They might start the collection process with few nice phone calls. they might employ a collection company and they could foreclose. On the otherhand, they might just accept a deed in lieu of foreclosure and hold the time to rent or resell.

Possible consequences of not paying are bad credit, garnishment of wages and or other assets, foreclosure. Of course the debt continues to mount up, until you are off the deed


If you cant or just wont pay, I suggest trying to sell it first, If you cant sell it contact the POA and tell them your problem and offer it back to them. If none of that works you are stuck with no good choices

 

[e.bram]

I say, bring back the debtors prison.

 

[ronparise]

e

While a debtors prison is an interesting option to consider. And it might be enough incentive to make sure those than can pay; do pay. The fact is, if the debtor truly cant pay; the debt dosent get paid. And in the case of a timeshare resort the maintenance fees will be increased for everyone else. The better solution in my mind is a meaningful collections policy, carried to its logical end...foreclosure. The resort can then either resell the time or rent it.

Although I dont know the details, I spoke with a small resort that is offering for sale (at rates more than the dollar sales on ebay, but less than replacement cost or retail) the weeks that they have taken back. It seems that the goal is to get these weeks in the hands of someone willing and able to pay, and away from those that dont pay as quickly as possible//// This is a policy that makes sense to me.

 

[e.bram]

Why foreclose. I assume the majority of the owners who want to quit paying MFs would happily deed back their TSes. What makes you surmise that the TS could sell TSes that don't bring any bids at $1.00.

 

[ronparise]

e

my thoughts exactly, as I suggested in my post:

for the debtor...If you cant pay for it, and you cant sell it; give it back

and the poa needs to get it cash-flowing again, which to me, means, either sell it or if that cant be done rent it


You bring up an interesting question...what if there is really no market for this week, If thats the case and there are lots of these worthless weeks, then its time for some creative action and a restructure of the resort ownership and operations...which could be to close the resort in the off season..to save the operating cost, or perhaps end the timeshare and resell the units as condos...or in the extreme...do a Friar Tuck...declare bankruptcy

 

[dmorea]

What makes you surmise that the TS could sell TSes that don't bring any bids at $1.00.[/QUOTE]

With all due respect , I thinks its very possible.

The same reasoning that people buy from the sponsors at retail rather than buy resale.. thousands do... you decide to stay at a resort and like it... theres one available for not so much extra nothing like developer costs.. I can see the appeal. Marketing a few at a time with the resorts backing rather than by individual owners and having a rental pool might be cost efficient too and lend a certain feeling of security of knowing who you are dealing with as opposed to a private owner...

 

[TUGBrian]

there are a few better solutions than the current one at many resorts for sure (just pursuing foreclosure)...

one would assume that things certainly cannot keep heading the way they are heading without some sort of change.

youll find arguments on all sides for what may or may not work unfortunately...and change is a very difficult thing for many resorts (and owners for that matter) to deal with.

no matter what decision is made, there are some people that wont agree with it.