A "timeshare" is a form of shared property ownership where several owners have the right to use the property (which might be a condominium, hotel room, cabin, RV, houseboat, etc.) for a specified period each year. The main types of timeshare interests are:
Sometimes people pay the total purchase price of the timeshare when they buy it. In other cases, people take out a loan to purchase their timeshare. When you take out a mortgage loan to buy a timeshare, you have to make payments—just like with a home mortgage—until the debt is paid off. If you fall behind in payments, your deeded interest in the timeshare property can be foreclosed. If you have a right-to-use timeshare and fail to make the required payments for the purchase or for maintenance, pursuant to provisions contained in the timeshare membership documents, the right-to-use can be repossessed.
Also, if you buy a timeshare, you'll ordinarily be responsible for maintenance fees, special assessments, utilities, and taxes pertaining to the property. If you become delinquent in paying those fees and assessments, the timeshare association will probably be able to get a lien on your timeshare that could lead to a foreclosure.
Usually, in addition to the purchase price, timeshare owners are responsible for paying maintenance fees, special assessments, utilities, and taxes. These costs, which are sometimes collectively referred to as “assessments,” can add up very quickly.
Timeshare owners are required to pay an annual maintenance fee to cover maintaining the property. For example, the timeshare association, which is similar to a homeowners' association, will use fees to pay for things like landscaping, security, pest control, repairs, and maintenance of amenities (such as pools, golf courses, workout rooms, and clubhouses).
Timeshare maintenance fees vary from place to place, but they're often as much as several hundred dollars per year. You'll have to pay maintenance fees even if you choose not to use your timeshare, and the fees will most likely go up over time.
At times, the timeshare association may levy special assessments for one-time expenses such as a major improvement or a repair not covered by insurance. For example, a resort might levy a special assessment to pay for a new roof for the community clubhouse or pay for new tennis courts. You'll have to pay the assessment whether you choose to use those facilities or not.
Timeshare properties also often charge owners for utilities. Some places will add up how much electricity you use and bill you for it at the end of the week. This cost can get expensive in tropical beach locations where you'll run the air conditioning all week or in cold locations, like at a ski condo in winter, where you'll have to turn the heat up.
Property taxes might also be assessed against the time you occupy the timeshare. Additionally, some places impose a timeshare tax on each night you stay in the timeshare.
What people often don't realize is that even if you're current in your deeded timeshare mortgage payments or the timeshare purchase price has been paid off, you could still face a foreclosure if you don't keep up with the assessments. Or you could also be sued for the amount of the indebtedness.
The rules of the timeshare are usually set forth in what is called the Declaration of Covenants, Conditions, and Restrictions (Declaration). The Declaration usually provides that if a timeshare owner defaults in the payment of fees, costs, and assessments, the entire unpaid assessed sum with accrued interest and other charges become a lien against the timeshare interest of the non-paying owner.
In most cases, once an owner becomes delinquent on the assessments, the lien automatically attaches to the timeshare. In some cases, the timeshare association will record a lien with the county recorder to provide public notice that the lien exists, regardless of whether recordation is required by state law.
Depending on the terms contained in the Declaration, the timeshare owner might be liable for:
Once a timeshare association or other managing entity has a lien on a timeshare, it may foreclose on that lien as permitted by the Declaration and state law. The resort will foreclose either judicially or nonjudicially, depending on state law and the terms in the Declaration.
To judicially foreclose an assessment lien, the association must file a lawsuit against the homeowner and obtain a judgment from the court granting permission to sell the timeshare to satisfy the lien. To nonjudicially foreclose, the association doesn't have to go through state court but instead follows specific procedures as dictated by state law, as well as by the Declaration.
State laws often place particular due process requirements on how and when assessments liens can be foreclosed. Arizona, for example, permits a timeshare association to hold a nonjudicial trustee's sale of the timeshare estate if the owner has been delinquent in the payment of assessments for one year. (Ariz. Rev. Stat. Ann. § 33-2211(A)).
To learn about the laws governing timeshare foreclosures in your state or in the state where your timeshare is located (if different from where you live), review the state's statutes. To find out how to do your own legal research, see Nolo's Laws and Legal Research section. Or talk to a local real estate attorney or foreclosure attorney.