If you buy a timeshare and regret it, most states have "cooling-off" laws. These laws let you get out of a timeshare contract if you act quickly, usually within three to ten days. In Arizona, you get until midnight on the tenth calendar day following the day you signed a purchase agreement to cancel the deal.
But you still need to be cautious when buying a timeshare. And you should understand that if you take out a mortgage loan to buy a deeded timeshare and stop making the payments, the lender, usually the resort developer, will probably foreclose. (With a right-to-use timeshare, people generally sign a contract and agree to make monthly payments. While a developer may foreclose a deeded timeshare, a right-to-use timeshare is typically repossessed, which is a different legal process than a foreclosure.) Arizona law, however, doesn't permit deficiency judgments after most timeshare foreclosures.
Also, timeshare owners typically must pay annual maintenance fees and special assessments. If, as an owner, you don't pay the fees and assessments, you might face a lawsuit for a money judgment or a foreclosure of your timeshare.
Again, in Arizona, you may rescind a timeshare purchase agreement by sending or delivering a written notice of rescission by midnight of the tenth calendar day following the day on which you executed the agreement. The agreement has to be in writing, and the developer must give you a copy of the agreement when you sign it. The developer can provide a longer rescission period if it so chooses. The purchase agreement must include a statement of the right to cancel. (Ariz. Rev. Stat. § 32-2197.03(A), (B).)
To cancel the contract, you must provide written notice of your intent to cancel to the seller. Send the notice to the seller's address, which must be included in the purchase agreement. The cancellation is effective on the date you send it. (Ariz. Rev. Stat. § 32-2197.03 (B)).
In Arizona, if you take out a loan to purchase an interest in a deeded timeshare and fail to make your mortgage payments, the lender (again, typically, the developer) might foreclose.
In addition to monthly mortgage payments, timeshare owners are ordinarily responsible for maintenance fees, special assessments, utilities, and taxes, collectively referred to as "assessments." You might also face a foreclosure in Arizona if you fall behind in the timeshare assessments.
In Arizona, timeshare foreclosures due to delinquent mortgage payments are typically nonjudicial. So, the foreclosure takes place without court supervision and is handled by a trustee.
In Arizona, a timeshare owners' association may conduct a nonjudicial foreclosure for nonpayment of assessments if the timeshare owner has been delinquent in paying the assessments for a period of one year. (Ariz. Rev. Stat. § 33-2211(A).)
But a nonjudicial foreclosure isn't allowed if the association's declaration expressly requires a judicial foreclosure. (Ariz. Rev. Stat. § 33-2211(K).)
In a foreclosure, the total debt that the borrower owes sometimes exceeds the price that the property brings in at a foreclosure sale. The difference between the total debt and the sale price is called a "deficiency."
In some states, the lender may get a deficiency judgment (a personal judgment) against the borrower for the deficiency amount. Whether you'll face a deficiency judgment after a timeshare foreclosure depends on state law. Arizona law doesn't permit a deficiency judgment after a nonjudicial timeshare foreclosure. (See Independent Mortgage v. Alaburda and Warner, 281 P.3d 1049 (2012).)
A few of the various options to avoid a timeshare foreclosure include:
If you want more information about timeshare laws in your state or need assistance canceling a timeshare, consider talking to a real estate attorney. If you're facing a timeshare foreclosure and have questions about the process or your options, contact a foreclosure attorney.
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