That resort where you bought a timeshare seemed like a great idea at the time. A beautiful vacation home with great amenities, available just when you need it, with no worries about maintaining it or renting it out the rest of the year. If your resort was part of a network, you might have even been able to trade for a week at a different resort when you wanted a change of pace. Your kids loved the annual vacation, and you loved the memories you made there. The annual maintenance fee was a small price to pay for the good times and convenience.
But times change, and so do your needs. Maybe the kids got older and didn’t have time to come to the timeshare anymore. Perhaps you decided you wanted to retire overseas and travel abroad. If you financed your timeshare purchase, the regular payments might have started to feel more like a burden than an investment. Or maybe the maintenance fee kept going up, even as the resort seemed to get more shabby.
Whatever the reason, you find yourself wanting to get out from under the albatross your timeshare has begun. You hear ads on the radio about companies that will take your timeshare off your hands, or sell it for you. Should you bite? Is there a catch? Proceed with great caution. It’s important to understand your obligations under your timeshare contract, as well as the hidden details involved in any offer to unload your timeshare.
Understanding What You Owe the Timeshare Company
Some people purchase a timeshare with cash, but many decide to finance the purchase. Timeshare companies are wily: they pitch the sale while you’re visiting the resort and enjoying its amenities. They lure you into a “no obligation” presentation with the promise of a meal and a free gift, such as tickets to a local tourist attraction. Then they hit you with the hard sell.
Before you know it, you’re the proud owner of a timeshare week. But what are your options when the arrangement no longer works for you? Even if you paid cash, you’re still on the hook for annual maintenance fees, and perhaps taxes. If you financed, you’re obligated on the loan, as well. You can unload the property. But be prepared that you might have to take a loss in the process.
The first thing to do is to gather and organize all the documents relating to your ownership of the timeshare. You will not be able to transfer the title unless you are current on all financial obligations, including financing repayment, taxes, and maintenance fees.
The first thing to do is to gather and organize all the documents relating to your ownership of the timeshare. You will not be able to transfer the title unless you are current on all financial obligations, including financing repayment, taxes, and maintenance fees. You also want to have documentation of what you own. For instance, do you own your timeshare, or is your interest for a term of a certain number of years? If you are planning on selling the timeshare, have current pictures and details about resort amenities, as well as fees, to present to potential buyers. But how do you go about finding a buyer?
How NOT to Unload Your Timeshare
That question brings us back to the companies advertising, even calling you, to offer to help get rid of your timeshare. Should you trust them? Probably not. Many of these timeshare “resellers” ask for hundreds or even thousands of dollars up front to help broker a sale, but many of these sales never go through. The American Resort Development Association (ARDA) has warned consumers about timeshare exit companies that may try to swindle or take advantage of timeshare owners who are struggling financially, especially during the COVID-19 pandemic.
If you do decide to work with at timeshare exit company or resale service, watch for signs that could indicate a scam. A legitimate reseller should never ask you for payment until after the timeshare is sold. Beware of phone calls or other unsolicited contacts from purported timeshare resellers, especially if they claim to have waiting buyers looking for a timeshare just like yours.
Some companies take a different approach and offer to help you donate your timeshare to a charity in exchange so you can take a tax deduction. That might sound good at first, but you could still end up paying thousands of dollars for various fees. As far as the tax deduction itself is concerned, remember that when you make a charitable donation of property, you can only deduct the “fair market value.” In some cases, especially if the market is saturated, that might be zero.
Safer Timeshare Exit Options
You have other options, however. You can try to sell the timeshare on your own. You may be able to advertise the sale, perhaps even for free, on the website or in the newsletter of a timeshare management company. Another option is to advertise your timeshare on websites devoted to travel and timeshares but fees for such ads are likely to be higher, and could vary widely, so shop around for the best deal, and understand how long your advertisement will run. For lower-cost online sales options, you might turn to eBay or Craigslist.
Once you have found a buyer, the process of completing a sale of your timeshare is similar to any residential real estate sale. You will need a clear contract that explains all parties’ rights and obligations, and may need to go through a closing. To protect your rights, you may want to retain an attorney with experience in timeshare resales. Attorney fees may cut into any proceeds of the sale, but will be worth it to ensure you have no continuing obligations.
If the idea of trying to sell your timeshare on your own sounds daunting, you may be able to enlist the help of the company that manages your property. Many larger companies with a timeshare division, including Hilton, Marriott, and Holiday Inn, are willing to help out with brokering a resale—but it’s likely you will have to pay a hefty commission, and there may be transfer fees or restrictions connected with reselling your property.
If your resort management company or developer won’t help you resell the property, or you don’t want to involve them, you may be able to work with a licensed real estate broker. However, these companies also charge significant commissions: as much as 10%-30% of the final sale price.
The bottom line is that if you really need to get out of your timeshare, you can probably do so. Just don’t expect it to be easy or lucrative, and beware of scammers who promise that you’ll make a profit off the deal; in today’s climate, that is unlikely.
If you have questions, we invite you to contact our law office.