If you fall behind in your deeded timeshare mortgage payments or stop paying the assessments, your timeshare could be foreclosed.
You might, in certain circumstances, be able to get rid of the timeshare without going through foreclosure or work out an arrangement to keep your timeshare. A few of the various options to avoid a timeshare foreclosure include:
If you purchase a deeded timeshare and become delinquent in mortgage payments or fall behind in paying the assessments, you might lose the timeshare to foreclosure. State law governs timeshare foreclosures, and the process will be judicial or nonjudicial, depending on the particular state's laws.
After you go through a timeshare foreclosure, your credit score will likely drop—perhaps by as many as 100 points or so—depending on a few factors, like whether and when the lender or developer reports late timeshare payments. While not every foreclosure gets reported to the credit reporting bureaus, foreclosures are part of the public record, and the bureaus often search public records for information. If the bureaus learn about a timeshare foreclosure, the foreclosure goes into the credit history.
You might also be subject to a deficiency judgment, but deficiency judgments aren't common after a timeshare foreclosure.
Timeshare resorts generally make it very difficult to get out of your obligations. Still, here are some options to try.
If your timeshare is in a very desirable location or at an extremely popular resort, you might be able to sell the timeshare and maybe, in rare cases, even make a profit. Unfortunately, though, most timeshares have very little resale value.
If you own the timeshare outright but are just behind on assessments, you might be able to donate the timeshare to a charity and take a tax deduction. To donate the timeshare, you must bring the assessments up-to-date before donating it. Even though you'll have to get caught up on the assessments to make the donation, you won't be responsible for future assessments and can avoid foreclosure.
However, while it used to be popular for charities to take timeshares as a donation, now, most charities won't accept them. Still, you might be able to find a charity willing to take your timeshare off your hands.
If you're behind on payments or assessments and want to keep the timeshare, you could potentially be able to negotiate with the lender or resort to reduce the amount you owe or come up with a payment plan.
Foreclosure is an unappealing option for both sides—it hurts your credit, and it costs the lender or resort time and money—so you might be able to work out an agreement in which the lender or resort:
A "deed in lieu of foreclosure" occurs when the lender or resort agrees to accept a deed to the property instead of foreclosing. In the world of timeshares, voluntarily giving a deeded timeshare's title to the resort is typically called a "deedback."
On the downside, most timeshare resorts are reluctant to accept a deedback, especially if you're delinquent on your assessments or behind in payments. But you might be able to convince the resort that accepting a deed back is a better option than a foreclosure. Or you could be able to bring the account current and then complete a deedback, releasing you from future liability and avoiding a foreclosure. Even if you bring the account current, the timeshare resort might require an additional fee to do a deedback.
If your timeshare is of the right-to-use variety, you might be able to relinquish (give up) your right to use the timeshare. This type of transaction is similar to a deedback. Although, timeshare companies tend to reject relinquishment requests.
Timeshare rescue scams are common. Unscrupulous companies target timeshare owners who are desperate to unload their timeshares. If you're thinking of using a timeshare company to help you dispose of your timeshare, contact your state Attorney General and local consumer protection agencies in the state where the company is located to ask if any complaints are on file. There probably are. You should also search online for complaints. In addition, check the Better Business Bureau.
Be sure not to pay upfront fees or mystery fees, and if the deal sounds too good to be true (for example, the company says it will be easy to unload your timeshare or you'll get a lot of money for it), you're most likely getting scammed.
The vast majority of timeshare exit companies that claim they can get you out of your timeshare are scammers. They'll take an upfront fee from you and then either stall while not resolving your timeshare problem or simply disappear with your money.
If you're facing foreclosure of your timeshare property, it's recommended that you speak to a qualified attorney who can advise you about what to do in your circumstances and inform you about applicable timeshare laws.