You’re on vacation, or maybe even your honeymoon, at a wonderful resort. You are offered a free night of your stay if you sit through a two hour presentation. You could actually buy a piece of the resort in one week increment timeshares so that you always have a place to go on your annual vacations. You may be able to swap this timeshare for other resorts across the country or around the world.
The cost is only $15,000 for a one week timeshare and they will finance it with no money down. That’s only $145 per month for 10 years. You are told that you are free to sell the timeshare anytime you want, so you do not have to keep it when you no longer want it. You are also told that there are some ongoing maintenance fees and association dues, but not exactly how much. It’s such a deal. And you are making an investment in real estate. How can you pass it up? So you buy it.
You go home happy knowing that you have a vacation spot locked in. Then the bills start coming. The monthly payments balloon to $300 or more per month when your maintenance fees are $150 or more per month. Your cost has more than doubled. Then you realize that it might not be such a deal after all. For the first ten years, you end up paying over $3,600 per year, which is more than $500 per night of use. After the first ten years, your costs are still more than $1,800 per year, which is in excess of $250 per night of use, and that is if your maintenance fees do not go up.
Flash forward fifteen or twenty years You haven’t used your timeshare in over 10 ten years, but you are still shelling out $150 or more per month in maintenance fees for each timeshare you own. You ended up buying two more timeshare weeks because it was such a great deal. You try to sell them, but no one is buying. What happened to this great investment deal? How do you get rid of your timeshares and the corresponding monthly bills.
Do not abandon. I have had numerous clients over the years who have tried to dispose of their timeshares. The first inclination is to abandon them. You may think that the resort operator or management company may not come after you because the timeshare is in another state, or even another country. This is usually a bad move. It’s no different than attempting to walk away from your mortgage. You are still on the hook for the debt. The collection agencies then start calling you. There other options.
Review your timeshare agreement. The first thing you need to do is to review your timeshare agreement. The ones that I have reviewed are usually set up in one of three ways, 1) by deed, 2) with a non-expiring lease or other contract or 3) through a lease for a term of years.
If it is by deed, you are record owner of part of the property and upon your death, your timeshare will have to be probated in the state or country where it is located. With a non-expiring lease or other contract, or a lease for a term of years, you have a right to use the property. That right may or may not need to be probated upon your death. With a lease for a term of years that doesn’t renew automatically, you usually can just walk away after the lease is up. Depending upon your contract, you may be able to transfer your timeshare to get out from under the payments.
Selling. Obviously, the first option is to try to sell your timeshare. Unfortunately, the secondary market for timeshares has been very soft for a number of years. There are a number of outfits that will tell you that they can sell your timeshare. Be wary of any that charge upfront fees. I have had a number of clients try this to no avail. The timeshare was not sold and they were out hundreds or more than a thousand dollars.
If using websites, to try to sell your timeshare using reputable sites such as ebay, Craigslist or Timeshare Users Group. Check out Timeshare Users Group or TUG at www.tug2.net/. You not only can post your Timeshare on TUG, but there is lots of helpful information for timeshare owners and buyers.
Giving away. One way of getting out from under your timeshare payments is to give your timeshare away. I have seen a number of my clients give away their timeshares to children, other relatives or friends. This can be a win-win for both parties. You are out from under the payments and the new owner now has a vacation spot.
There are also outfits that will help you donate your timeshare to charity, in order for you to get a charitable deduction on your income tax return. Before engaging one of these outfits, investigate them to make sure they are reputable. Also check with your tax advisor. You may need a valuation or appraisal.
Renting. You could try renting your timeshare out to other vacationers who are just looking for this year’s vacation spot. You may be able to cover the maintenance fees for which you are still on the hook.
Returning. Check with your timeshare resort operator or management company to see if it has a program for turning your timeshare back in to the company. I have had number of my clients do this. Often times, you can just deed or assign your timeshare back to the company. You are then out from under the maintenance fees. You may not get your “investment” back, but you may get a nominal amount. For example, I have seen several of these situations with Wyndham Resorts, who paid the timeshare owner $500 for a timeshare week.
Be wary of continued liability. No matter which way you decide to dispose of your timeshare, make sure that the company accepts the transfer and releases you from your contract. You do not want to have a situation in which you have transferred away your timeshare, but must continue paying the maintenance fees. Good luck.
By: Matthew M. Wallace, CPA, JD
Published edited August 18, 2013 in The Times Herald newspaper, Port Huron, Michigan as: Getting rid of your timeshare