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Westgate foreclosure

jmasjs

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Having written and spoken to Westgate about not using the week and returning it to Westgate 2 years ago, they have now sent me letter with 3 options:

- pay their inflated delinquent amount and stay an owner
- record of lien and a non-judicial foreclosure
- execute the Warranty Deed in Lieu of Foreclosure.

As I have no intention of remaining an owner, I would appreciate advice on which of Options 2 or 3 would have minimum impact on me.
 

Talent312

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A non-judicial foreclosure means they won't come after you, personally, for the debt, but if reported to credit agencies, would adversely affect your credit score. A "deed in lieu of" is preferred as it may have no or significantly less effect. Both could have tax implications as they may be deemed a sale, for which you may want to consult a tax advisor.
 

jmasjs

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A non-judicial foreclosure means they won't come after you, personally, for the debt, but if reported to credit agencies, would adversely affect your credit score. A "deed in lieu of" is preferred as it may have no or significantly less effect. Both could have tax implications as they may be deemed a sale, for which you may want to consult a tax advisor.
Thanks for your speedy response.
 

dioxide45

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What state is the property in?
 

altiste1

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You haven’t stated what state your timeshare is located in, although because you’re posting in the Florida forum, I’ll assume it’s in Florida. That being the case, the above post with respect to a non-judicial foreclosure is correct, insofar as the end result is concerned if the foreclosure is strictly for the maintenance fees. If you don’t contest the foreclosure, the developer can’t come after you for a deficiency. If you still have a loan, the answer could change if the loan is recourse (likely) and the lender decides to pursue you for the deficiency (less likely). As to tax implications, by all means consult a tax adviser. But the answer there also depends on whether you have a loan or not. If you don’t, there will almost certainly not be a tax consequence, given that you are realizing nothing in the transaction so there will be no gain to be taxed. If you have a loan, the outstanding balance could be considered income to you if forgiven in the foreclosure or deed in lieu. There is also the question of whether there will be a credit impact as a result of either transaction. @Grammarhero keeps a running tally of timeshare foreclosures and whether they resulted in negative reports to the credit agencies. Bottom line: if the foreclosure is for maintenance fees, the likelihood of a report to credit is less likely (but not zero). Finally, both a foreclosure and a deed in lieu have impacts for future loan applications, primarily mortgage loans. The current 1004 loan application has questions about whether, in the last 7 years, you have deeded property (and the question does not specify what kind of property, so timeshares are included) in lieu of foreclosure or had any property foreclosed. If you choose option 2 or 3 and will be applying for a mortgage loan in the next 7 years, to answer these questions truthfully you will need to disclose what happened here.
 

dioxide45

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As far as I am aware, very good condition
By state, I mean US state; Florida, Tennessee, somewhere else? If it is Florida, then it seems the non-judicial foreclosure process might be the best option. The only thing they can do is take the timeshare back through foreclosure. They can't come after you for any outstanding debts after the timeshare is sold at foreclosure sale.
 

dioxide45

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You haven’t stated what state your timeshare is located in, although because you’re posting in the Florida forum, I’ll assume it’s in Florida. That being the case, the above post with respect to a non-judicial foreclosure is correct, insofar as the end result is concerned if the foreclosure is strictly for the maintenance fees. If you don’t contest the foreclosure, the developer can’t come after you for a deficiency. If you still have a loan, the answer could change if the loan is recourse (likely) and the lender decides to pursue you for the deficiency (less likely). As to tax implications, by all means consult a tax adviser. But the answer there also depends on whether you have a loan or not. If you don’t, there will almost certainly not be a tax consequence, given that you are realizing nothing in the transaction so there will be no gain to be taxed. If you have a loan, the outstanding balance could be considered income to you if forgiven in the foreclosure or deed in lieu. There is also the question of whether there will be a credit impact as a result of either transaction. @Grammarhero keeps a running tally of timeshare foreclosures and whether they resulted in negative reports to the credit agencies. Bottom line: if the foreclosure is for maintenance fees, the likelihood of a report to credit is less likely (but not zero). Finally, both a foreclosure and a deed in lieu have impacts for future loan applications, primarily mortgage loans. The current 1004 loan application has questions about whether, in the last 7 years, you have deeded property (and the question does not specify what kind of property, so timeshares are included) in lieu of foreclosure or had any property foreclosed. If you choose option 2 or 3 and will be applying for a mortgage loan in the next 7 years, to answer these questions truthfully you will need to disclose what happened here.
I beleive that even in anti deficiency, they can't seek deficiency on the timeshare loan. So it doesn't matter if it is a timeshare loan or only maintenance fees they are foreclosing on.

Florida – FL, inaction or non-objection results in estate, anti-deficiency foreclosure, but objection leads to judicial, deficiency action: http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&URL=0700-0799/0721/0721.html
https://www.flrules.org/gateway/ChapterHome.asp?Chapter=61B-37
 

jmasjs

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I beleive that even in anti deficiency, they can't seek deficiency on the timeshare loan. So it doesn't matter if it is a timeshare loan or only maintenance fees they are foreclosing on.

Florida – FL, inaction or non-objection results in estate, anti-deficiency foreclosure, but objection leads to judicial, deficiency action: http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&URL=0700-0799/0721/0721.html
https://www.flrules.org/gateway/ChapterHome.asp?Chapter=61B-37
Yes, Florida State.
I note that you suggest, since we will never be seeking mortgage loans in the future, that our best bet would be 'non-judicial disclosure'. In that case we do not have to do anything such as fill out forms for them. Are we correct in assuming this?
Thank you once again.
 

Olive2Travel

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A non-judicial foreclosure means they won't come after you, personally, for the debt, but if reported to credit agencies, would adversely affect your credit score. A "deed in lieu of" is preferred as it may have no or significantly less effect. Both could have tax implications as they may be deemed a sale, for which you may want to consult a tax advisor.
Tax Advisor here. Also in FL.
I know it's been a while on this thread
If they cancel the debt of maintenance fees, then you usually receive Form 1099C
The value of debt forgiven is considered taxable income. Weird, right?
It's added as other income
How it all works out for you
 

dioxide45

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Tax Advisor here. Also in FL.
I know it's been a while on this thread
If they cancel the debt of maintenance fees, then you usually receive Form 1099C
The value of debt forgiven is considered taxable income. Weird, right?
It's added as other income
How it all works out for you
I believe the 1099c only applies if they have recourse on the debt. For a non judicial foreclosure in Florida it would be anti deficiency so I don’t think recourse applies.
 

pablo216

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So? How did the story end? What did you end up doing?
 
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