Can a Timeshare Be Foreclosed for Nonpayment of Fees or Assessments?

After you buy a timeshare, you'll ordinarily have to pay maintenance fees, special assessments, utilities, and taxes for 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, which could lead to a foreclosure.

How Do Timeshares Work?

A "timeshare" is a form of shared property ownership. The main types of timeshare interests are:

• a "deeded" interest (fee simple) where you have an actual share of ownership in the property, or
• a "right-to-use" interest, which is more like a lease interest and is typically considered personal property (you get to use the property, but you have no ownership in the property).

Sometimes people pay the total price of the timeshare when buying 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 must make payments—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 maintenance, under provisions in the timeshare membership documents, the right-to-use can be repossessed.

Timeshare Costs, Fees, and Assessments

Usually, in addition to the purchase price, timeshare owners are responsible for paying maintenance fees, special assessments, utilities, and taxes. These costs, sometimes collectively called "assessments," can add up very quickly.

Maintenance Fees

Timeshare owners must usually pay an annual maintenance fee to maintain 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.

Special Assessments

Sometimes, the timeshare association may levy special assessments for one-time expenses such as a major improvement or a repair that insurance doesn't cover. For example, a resort might levy a special assessment to pay for a new roof for the community clubhouse or new tennis courts. You'll have to pay the assessment whether or not you use those facilities.

Utilities

Timeshare properties also often charge owners for utilities. Some places will add up how much electricity you use and bill you. 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.

Taxes

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.

Can a Timeshare Company Put a Lien on the Property?

People often don't realize 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 outlined in the Declaration of Covenants, Conditions, and Restrictions (Declaration). The Declaration usually provides that if a timeshare owner defaults in paying fees, costs, and assessments, the entire unpaid assessed sum with accrued interest and other charges becomes a lien against the timeshare interest of the non-paying owner.

Usually, 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.

How Much Can a Timeshare Company Charge?

Depending on the terms contained in the Declaration, the timeshare owner might be liable for the following:

• the unpaid assessments
• late charges
• reasonable costs of collecting (for example, attorneys' fees)
• fines (in some cases), and
• interest.

Can a Timeshare Go Into Foreclosure?

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 and the Declaration.

How Long Before a Timeshare Company Forecloses?

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)).

Finding the Timeshare Foreclosure Law in Your State

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.