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 Wisconsin, the cooling-off period is five business days after you sign the contract or receive the timeshare disclosure statement, whichever is later. Also, Wisconsin law protects potential timeshare purchasers when it comes to timeshare contracts, allowing courts to cancel unconscionable deals.
Even though Wisconsin law provides quite a few protections for timeshare purchasers, 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. Also, timeshare owners typically have to 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. (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.)
Again, in Wisconsin, you can cancel a timeshare contract until midnight of the fifth business day after whichever of the following is later:
You can cancel a Wisconsin timeshare contract by:
If you mail the cancellation, notice is considered given on the postmark date. (Wis. Stat. § 707.47(5)).
A timeshare purchaser can't waive the right to cancel. (Wis. Stat. § 707.47(4).) If a timeshare seller asks you to waive this right, that's illegal.
If you cancel the deal, the timeshare developer must refund all payments you made by the later of:
If you have used or occupied the timeshare property for more than 12 hours before cancellation, the developer may reduce the refund by a reasonable amount to cover your length of stay plus any cost for damages that are directly attributable to your use of the timeshare property. (Wis. Stat. § 707.47(6).)
If a court finds that any aspect of a contract relating to the use or ownership of a timeshare, any conduct directed against you, or any result of the contract is unconscionable, the court can choose not to enforce the contract. It can also choose to strike the unreasonable clauses out of the contract or limit the application of any unconscionable aspect or conduct as to avoid any unconscionable result. (Wis. Stat. § 707.06.)
The following are examples of unconscionable conduct in timeshare sales under Wisconsin law.
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 (or a lawsuit for a money judgment) if you fall behind in the timeshare assessments.
Residential foreclosures in Wisconsin are judicial. But state law provides for the nonjudicial foreclosure of mortgages and assessment liens for timeshare properties. (Wis. Stat. § 707.28.) If the foreclosing entity pursues a nonjudicial foreclosure, it must provide written notice by certified mail, with return receipt requested, and first-class mail, which informs you of:
The notice also has to include a separate form that you can use to object to a nonjudicial foreclosure (see "Objecting to a Nonjudicial Timeshare Foreclosure in Wisconsin" below). The foreclosing party also must publish notice in a newspaper or post a notice on the internet and publish information in the newspaper about the internet posting. (Wis. Stat. § 707.28.)
The foreclosure sale is a public auction. Upon the sale, the timeshare owner's right to redeem the timeshare is extinguished. (Wis. Stat. § 707.28.)
The buyer at the foreclosure sale takes title to the timeshare estate free and clear of any outstanding assessments owed by the previous timeshare owner. No later than ten days after the foreclosure sale date, the foreclosing party must give the successful bidder a foreclosure deed transferring title to that new owner. Within 30 days after delivering the foreclosure deed, the new owner records the deed in the county record. (Wis. Stat. § 707.28.)
If, within the 30-day cure period, the timeshare owner returns the objection form. or otherwise objects in writing to the use of nonjudicial foreclosure, the foreclosing entity must use a judicial procedure to foreclose the mortgage or lien. (Wis. Stat. § 707.28.)
A judicial foreclosure begins when the lender files a lawsuit asking a court for an order allowing a foreclosure sale. The lender gives notice of the suit by serving you a summons and complaint. Most people get 20 days to file an answer to the complaint. If you don't respond to the suit, the lender will ask the court for, and probably receive, a default judgment, which will allow it to hold a foreclosure sale. But if you choose to defend the foreclosure lawsuit, the case will go through the litigation process. The lender might then ask the court to grant summary judgment. A summary judgment motion asks that the court grant judgment in favor of the lender because there's no dispute about the critical aspects of the case. If the court grants summary judgment for the lender—or you lose at trial—the judge will enter a judgment and order your timeshare sold at auction.
If you don't object within the 30-day period, you waive the right to a judicial foreclosure. (Wis. Stat. § 707.28.) Generally, if you have a defense to the foreclosure, you might want to avoid a nonjudicial foreclosure and, instead, go through a judicial one. Before invoking this right, talk to a lawyer to find out the process for objecting to a nonjudicial foreclosure and the consequences of doing so.
Sometimes, a foreclosure sale doesn't bring in enough money to pay off the total debt. The difference between the total debt and the sale price is called a "deficiency." Many states allow a foreclosing entity to get a personal judgment, called a "deficiency judgment," against a liable person, like a mortgage borrower, for the amount of the deficiency.
Under Wisconsin law, the foreclosing party can't get a deficiency judgment if it uses a nonjudicial foreclosure process. (Wis. Stat. § 707.28(4).)
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.