Ask Liz Weston

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timeshare

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: What if my heirs don’t want my timeshare?

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Dear Liz: You recently answered a question about the consequences of giving up a timeshare. What are the possible consequences if a timeshare is held until the owner’s death? What is the effect if it is included in a will or trust? If none of the potential heirs want it, what is the effect of not mentioning it in the will or trust? Can the company sue the prospective inheritors even if it were to go into default? What I’m struggling to get at is what are the best options for handling it, depending on the desire of the prospective inheritors?

Answer: Timeshares typically have “in perpetuity” clauses that require owners to pay maintenance fees for life, and the requirement passes to anyone who inherits the timeshare.

Fortunately, no one is forced to accept such an inheritance. Potential heirs can “disclaim” or refuse to accept the timeshare after your death.

How your heirs go about this depends on the type of timeshare. If the timeshare includes a real estate deed, or if it’s specifically mentioned in your will or trust, then your heirs may need to file a written disclaimer with the probate court. If the timeshare was sold as a “right to use” contract, which is more common these days, the heirs can have the executor contact the resort to tell them the owner has died, so the resort can start the process of taking the timeshare back.

This all assumes that you haven’t already added the heirs’ names to the timeshare deed, if one exists. Sometimes, timeshare salespeople promote this option as a “convenience,” which it is — to the timeshare company, because it can hold the heirs responsible for the fees, whether they want the timeshare or not. To fix this, you can ask the resort developer to remove the additional names from the deed. If the developer balks, consider contacting an attorney.

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: Unloading a timeshare

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Dear Liz: How can a timeshare owner get rid of the timeshare and claim the loss on taxes?

Answer: Timeshares typically are considered a personal asset, like a boat or a car, so the losses aren’t deductible. The best way out of a timeshare is often to give it back to the developer, if the developer will take it. You also could try to sell it on sites such as RedWeek and Timeshare Users Group. Unless your timeshare is at a high-end property, you are unlikely to recoup much and may have to pay the buyer’s maintenance fees for a year or two as an incentive.

Q&A: Here’s why timeshares are a bad investment

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Dear Liz: About two years ago, I lost my timeshare because of financial hardship. I paid off the mortgage but after my divorce I missed paying the annual fees. Is there any way I can regain it, or can the company just take it like they did? Also, is it worth it to try to get it back? I think so because it is the only thing I own.

Answer: Please consider investing your money in an asset that can gain value over time. Timeshares don’t.

Timeshares give you the right to use a vacation property for one week each year. They aren’t an investment. In most cases, timeshare owners are lucky to get 10 cents on the dollar when they try to sell their interests.

Sites such as Timeshare Users Group and RedWeek are filled with ads from people trying to sell their timeshares for $1, and some will even pay others to take timeshares off their hands, perhaps by prepaying a year or two of maintenance fees. Those fees average about $900 a year but can top $3,000 on high-end properties. Resorts damaged by natural disasters or older properties that are being improved also may charge “special assessments” that can be hundreds or thousands of dollars more.

As you discovered, timeshare resorts can take back your interest if you don’t keep up with those fees. You also could have lost your timeshare if you hadn’t been able to pay the mortgage. (In general, it’s not a good idea to borrow money to pay for vacations or other luxuries, and that includes timeshares. The high interest rates charged by most timeshare resort developers make borrowing an even worse idea.)

In addition to taking your timeshare, the developers may have sold your delinquent account to a collection agency that reports to the credit bureaus. Those collections could damage your credit scores.

You could ask the resort developer if you can get the timeshare back, but you could just face the same problem again down the road. One of the biggest problems with timeshares is that there typically is no easy exit. Those annual fees and special assessments are due as long as you own the timeshare. You may not be able to find a buyer if money is tight or you’re no longer able to use it.

If you really loved vacationing at that particular resort, you probably still can. Owners who can’t use or trade their timeshare weeks often rent them out on the sites mentioned above, sometimes for less than the annual maintenance fee. Renting could be a much better deal than tying yourself to a timeshare that could become unaffordable.