Will Covid-19 Pandemic Bankrupt Some Florida Timeshares

[theo]

Theo, I don't think it's as simple as some people not paying their fees, but here is how it might unfold. First, there would have to be so many that the timeshare HOA would realize very early in 2021 that they couldn't cover the operating budget, pay taxes, etc. At that point the remaining owners would vote on a one time special assessment to stay open. If it didn't pass, the only real option would be to cease operation and either try to sell the vacated weeks outright or sell them to a vacation broker or advertise on a travel agent site (Travelocity, Expedia, etc.) while determining other options with the owners. Assuming the property was reasonably nice to begin with, I'm sure there will be buyers if the HOA wanted to dissolve and sell the real estate.

I've always thought that at some point the smaller timeshares would be an ideal investment by a municipality for affordable senior housing.

To the best of my knowledge and belief, no "approval vote" is ever required for a BOD to impose a special assessment on all owners, when warranted. Once so imposed, the issue would then obviously become one of how many owners would accept and pay that special assessment. At very small resorts, if not enough owners pony up, a downward spiral begins.

 

[montygz]

The threat to the timeshare industry is more defaults by existing owners, and less travel bringing in fewer fish for the sales staff and a slide in rental income for the resort itself.

I think all these will happen, but to what extent depends on how fast we rebound after this crisis fades.

The timeshare industry made it through the Great Recession and they can weather this. People will want to get back out and travel.

 

[Bwolf]

For the small, independent resorts, especially in Florida where there are streamlined foreclosure procedures, I think it will run something like this: Owners who don't pay their 2021 MFs will be charged penalty fees and denied use of their unit until all fees are paid. By a certain date, foreclosure proceedings begin. If the owners pay up, they are restored to good standing and may use their unit and exercise all the rights of ownership. If they don't, foreclosure transfers ownership of the unit to the BOD, as representatives of all owners, and the unit goes up for sale.

Some independent resorts in Florida are popular, have good management and active resale programs, and will survive. Then again there are resorts like those that Theo mentioned...

 

[Sugarcubesea]

I own at Pinestead Reef in Traverse City and this is a true independent owner owned resort. During Covid-19 some summer weeks have come on the market and it’s a bidding war to get them. So for this resort I feel we will be fine. I also own at Quarter House in NOLA, due to how hard hit Covid-19 hit this area I’m concerned for this independent resort but I hope this resort will be ok

 

[b2bailey]

Theo, I don't think it's as simple as some people not paying their fees, but here is how it might unfold. First, there would have to be so many that the timeshare HOA would realize very early in 2021 that they couldn't cover the operating budget, pay taxes, etc. At that point the remaining owners would vote on a one time special assessment to stay open. If it didn't pass, the only real option would be to cease operation and either try to sell the vacated weeks outright or sell them to a vacation broker or advertise on a travel agent site (Travelocity, Expedia, etc.) while determining other options with the owners. Assuming the property was reasonably nice to begin with, I'm sure there will be buyers if the HOA wanted to dissolve and sell the real estate.

I've always thought that at some point the smaller timeshares would be an ideal investment by a municipality for affordable senior housing.

I'm not familiar with any process that allows owners to vote for /against a one time assessment. More likely a Board action.

 

[silentg]

We have owned independent timeshares and for various reasons have had special assessments. Snow damage in Vermont. Changes in management companies. One timeshare in Florida was assessing very high fee so we opted out and it was a good thing, because they are no longer a timeshare.
Our timeshare in Virginia asked for a minimal extra fee to fix old structures, balconies and railings.
We have paid our maintence fees for all our weeks( 3) and have banked points in RCI and IHG and HIVC. Re arranged all travel plans for next year. We do have a river cruise scheduled for November, but we probably will postpone it to 2021 or 2022.
If we do go anywhere will probably be just in Florida drivable vacation. Maybe day tripping this summer.
Stay safe and Healthy

 

[Big Matt]

I'm not familiar with any process that allows owners to vote for /against a one time assessment. More likely a Board action.

I agree, that the board would vote. I was lazy in my answer. I assumed that the folks who were voted onto the board would vote.

 

[wkl471]

Apologies for reviving this older thread, but this was the first place I thought to ask. Exit company B just called me, saying most resorts were going to be charging "Special Assessments" and it was imperative that I contact them immediately. I am not stupid, I deleted the voicemail, but I'd be lying if I said it didn't concern me. We own at HGV in Orlando (Parc Soleil) and if they really do levy this "special assessment" I will have no choice but to bug out. I'd rather not do that, and there is absolutely zero so far on searching for any information out there on TS companies considering this option. Has anyone here heard anything yet about this?

 

[Bwolf]

I wonder if the special assessments that Exit company B claims "most resorts" will charge will be less than the fees the company charges for its services?

I don't know about HGV, but I doubt that "most resorts" will charge a special assessment. A brand new scare tactic, using the pandemic.