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timeshares

Q&A: Unwanted timeshares granted back to developers

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Dear Liz: I successfully granted back seven timeshare properties in different locations that my father had bought over the years. In several cases, the companies were very unhelpful over the phone, but responded once I wrote a letter explaining my father’s age and inability to travel and requested to grant back the deed. It seems all of the companies have a process for doing this, but won’t reveal it over the phone. I had to pay administrative fees and some other costs ($500 to $1,000 per timeshare), but it was worth it to eliminate the yearly maintenance fees.

Answer: Thank you for sharing your experience. Far too many older people continue to pay maintenance fees long past the point where they can enjoy their timeshares because they don’t see a way out. The timeshare companies usually insist the fees must be paid “in perpetuity.” Failing to pay can lead to collection action and damage to your credit score. Desperate timeshare owners are often targeted by scam artists and unethical companies that fail to deliver on promises to get them out of their contracts.

In reality, many developers will take timeshares back under the circumstances you describe. Owners may be able to sell or give away their timeshares using sites such as Timeshare Owners Group and RedWeek. Or they can simply stop paying the fees and let the developer foreclose. Although the damage to their credit scores may be significant, the effect typically wanes over time and disappears once the collection drops off their credit reports in seven years.

Q&A: How do I get out of my timeshare?

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Dear Liz: We want to get rid of our timeshare after having it for more than 20 years.

We gave the exit company $5,000 to help us, but all they did was tell us what to do, and it was going to cost more money. Renting it would probably be a nightmare, and we don’t want to leave it to our kids, as they couldn’t afford the maintenance fees.

We are 76 now, and having to come up with those fees every year is hard. Would it be wise to just stop paying the fees and let them take it back by default? We paid off the timeshare years ago. Can they hurt our credit rating?

Answer: Probably, but that may be the best of bad options.

You’ve already discovered that there are plenty of scamsters and unethical companies willing to take advantage of people desperate to get out of their timeshares.

The information you got for $5,000 was probably available for free on sites such as the consumer advocacy site Timeshare Users Group and RedWeek, an online marketplace for timeshares.

If renting isn’t an option, consider selling your timeshare. Both TUG and RedWeek allow owners to advertise their timeshares for sale or rent. Just don’t expect to get back more than a few cents on the dollar of what you paid, if that. In fact, some sellers offer to pay the maintenance fees for a year or two as an incentive to get rid of low-value timeshares.

The reality is that most timeshares will be hard to sell. If you’re contacted by anyone promising to connect you with a buyer for a fee, that’s another scam. Carefully read the information on Timeshare Users Group about selling timeshares before you begin.

You can also try contacting the developer to see if it will take your timeshare back. Few developers have formal programs that allow owners to give up their shares, but some will do so on a case-by-case basis. If age or illness prevents you from using the timeshare, be sure to mention that.

As a last resort, you can stop paying the fees and be subject to foreclosure. Your scores may indeed plummet if the developer turns you over to a collection company, and you could be subject to a lawsuit, although timeshare expert Brian Rogers of Timeshare Users Group says few developers want to sue older people who can no longer use their timeshares.

Stay vigilant throughout this process. Criminals maintain databases of people who have fallen for scams so they can be targeted again and again.

Q&A: Watch out for scams when trying to dump a timeshare

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Dear Liz: How do I get out of a timeshare contract? A few years back, we signed up for one that’s associated with a major hotel chain. Promises were implied but not kept. Since then, I continually receive notices from legal groups that say all laws favor the timeshare developer and that my kids will take over my debt unless I pay the attorney thousands of dollars to get out of the contract.

Do you know of legitimate ways to sever the ties? I know I will lose my investment but would rather be out of the contract “for eternity.”

Answer: Timeshares typically include “in perpetuity” clauses meant to keep owners on the hook indefinitely for annual maintenance fees and other charges.

That doesn’t mean their heirs have to be on the hook, however. Your kids can “disclaim” — essentially, refuse to inherit — the timeshare on your death, as long as you haven’t put their names on the deed.

If you’re not happy with your timeshare, though, consider getting rid of it before your death. Check to see if the developer will take it back or if you can sell it on a site such as RedWeek or Timeshare Users Group. Don’t expect to get much, if any, money out of the deal. In fact, you may have to pay a year or two of maintenance fees in advance as a sweetener. That could be a relatively small price to get out of what otherwise might be a lifetime obligation.

It’s unfortunate that most timeshares don’t offer a simpler way out for owners. The difficulty in getting rid of timeshares opens the door for all kinds of scams and shady behavior, with companies charging thousands of dollars and often not delivering the exit they promise.

Thursday’s need-to-know money news

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Today’s top story: How not to inherit Mom’s timeshare. Also in the news: Why bundling insurance doesn’t automatically mean savings, why your financial advisor has a financial advisor, and 12 documents to prepare now for your heirs.

How Not to Inherit Mom’s Timeshare
Limiting liability.

Will You Save Money Bundling Insurance? Not Always
When bundling isn’t saving.

Why Your Financial Advisor Has a Financial Advisor
Even experts need experts.

12 Documents to Prepare Now for Your Heirs
Making a difficult time easier.

How not to inherit mom’s timeshare

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Timeshare owners James and Barbara Ruh enjoy their annual vacations in Hawaii, but they don’t want their daughters to be obligated to take over the contracts when they die. So the Ruhs, who are attorneys with offices in Santa Barbara, California, and Edwards, Colorado, created a trust to hold their timeshare interests.

The daughters, who are co-trustees with their parents, can keep the timeshares, sell them or abandon them after the parents’ deaths, Barbara Ruh says. The trust is designed to prevent the timeshare resort developer from going after their daughters for any unpaid or ongoing costs.

“If our daughters do not want the timeshares, they will not be liable individually for any fees,” Ruh says.

In my latest for the Associated Press, a variety of options to assure nobody’s getting an obligation they don’t want.

How to get rid of a timeshare

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Some timeshare buyers know almost instantly that they’ve made a mistake. Other owners struggle for years with loan payments and ever-escalating annual fees before they’re ready to throw in the towel. Even the happiest timeshare owners may decide they want out of their contracts, perhaps when they are no longer able to travel.

In my latest for the Associated Press, how to get rid of a timeshare.