Usually, you have only a few days.
Timeshare purchasers usually get the right to rescind the contract within a specific amount of time. Most states and some foreign countries have laws giving timeshare buyers at least a few days to cancel the agreement, usually between 3 and 15 days.
In Colorado, for instance, a purchaser has up to five calendar days after the sale to rescind a timeshare contract. (Colo. Rev. Stat. § 6-1-703). Under Nevada law, timeshare purchasers get the right to cancel a timeshare contract until midnight of the fifth calendar day following the date the contract was executed. (Nev. Rev. Stat. § 119A.410). (Remember that statutes change, so checking them is always a good idea.)
State law also often requires that information about the right to cancel be included in the contract. The right to cancel is typically nonwaivable, meaning the seller can't ask or require you to give up this right.
Most of the time, you must send your cancellation in writing. Even if the law allows you to cancel the contract orally, preparing and sending a timeshare cancellation letter to the seller is a good idea.
A cancellation letter should typically include the following information:
While it’s usually unnecessary to provide a reason for canceling the timeshare contract, you must explicitly state that the letter's purpose is to rescind the contract. A statement like “I am contacting you within the rescission period to cancel this timeshare contract” will usually work. Be aware that state law might provide specific information you have to include in your cancellation notice.
State law usually sets out the method by which you should deliver the cancellation. Or the timeshare contract itself might provide instructions.
Some timeshare companies allow hand-delivery of a cancellation notice. Others accept delivery only via registered or certified mail. Be sure to follow the instructions exactly and make sure the letter is delivered within the applicable rescission period. Otherwise, your cancellation might not count.
If the rescission period has passed and you want to unload your timeshare, you’ll probably have to try to sell it to a new owner rather than get a refund. Be sure to watch out for resale scams. However, under limited circumstances, state law might give you the right to get out of a timeshare contract after the rescission period has expired.
In Arkansas, for instance, a buyer has five days to cancel a timeshare contract after execution of the contract of sale or up until receipt of the public offering statement. (Ark. Code § 18-14-409). But the purchaser may bring a lawsuit in court within four years to rescind the contract if there is a question about the accuracy of the public offering statement or validity of the timeshare contract. (Ark. Code § 18-14-403).
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.
It's critical to understand all of your rights when purchasing a timeshare. If you sign a timeshare contract early in your vacation, the rescission period could very well expire before you even get home.
To avoid missing the window of opportunity for canceling the contract, be sure to read all of the terms of the contract at the time you purchase the timeshare. Most timeshare laws require the seller to include information in the contract about how long you have to cancel the deal and the procedures for delivering a cancellation letter. But a timeshare seller might bury these details in the paperwork, or the instructions might be confusing.
To protect yourself, you should be familiar with timeshare laws before you sign the agreement.
To verify how long you get to cancel a timeshare contract and the specific procedures you need to follow, consider talking to a consumer protection attorney or timeshare attorney in the state where the timeshare is located.
If you buy a timeshare abroad and want to learn about your cancellation rights, consult with an attorney or consumer protection agency in that country.
]]>A "timeshare" is a form of shared property ownership. The main types of timeshare interests are:
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.
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.
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.
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.
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.
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.
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.
Depending on the terms contained in the Declaration, the timeshare owner might be liable for the following:
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.
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.
]]>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.
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.
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:
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, consider talking to a qualified attorney who can advise you about what to do in your circumstances, inform you about applicable timeshare laws, and provide strategies for avoiding a foreclosure.
]]>Before you do this, consider what the foreclosure could do to your credit scores. A timeshare foreclosure, like a residential foreclosure, could potentially cause a hit to your credit.
A "timeshare" is a form of shared property ownership where multiple owners get to use the property for a specified period each year. Timeshares generally come in two basic types: “deeded” and “right to use.” Another type of timeshare arrangement is a "vacation club" or "vacation plan."
This article focuses on deeded timeshares. If you take out a loan to purchase a deeded interest in a timeshare and fail to make your timeshare mortgage payments or fail to keep up with the assessments, you could face a foreclosure.
A timeshare foreclosure is like a residential foreclosure: It will be either judicial or nonjudicial, and eventually, the property will be sold at a foreclosure sale to the highest bidder. And, like a residential foreclosure, a timeshare foreclosure could potentially show up on your credit history and have an impact on your credit scores.
While not every timeshare developer reports payments, including missed payments, or foreclosures to the credit reporting bureaus, foreclosures are part of the public record, and the credit reporting bureaus often search public records for information such as foreclosures. If the bureaus learn about a timeshare foreclosure, the foreclosure usually goes in your credit files.
In some cases, defaulting on your timeshare mortgage and going through a foreclosure could be damaging to your credit scores, much like defaulting on your home mortgage and going through a foreclosure.
FICO credit scores, the most common type of credit scores, have a 300–850 range. In general, a foreclosure will drop your FICO credit scores at least 100 points, probably more. Past-due reports for missing your payments can also drop your scores, assuming the timeshare lender or developer tells the credit bureaus about them.
The actual drop in credit scores can vary from one borrower to the next. The hit is more severe if you had very high credit scores before the foreclosure action. If you already have low credit scores, you'll see less of an impact.
A timeshare foreclosure won't ruin your credit scores forever, but it could possibly have an impact on your ability to obtain another mortgage for, perhaps, up to seven years.
You might also face future loan denials or higher interest rates if you apply for other forms of credit, like a car loan or credit card. Lenders don’t like to give loans to people who haven’t paid off their debts in the past.
So, a timeshare foreclosure might result in a higher rate of interest than the prevailing market rates or could result in you being denied credit in some circumstances. In some cases, if your credit is bad enough, a credit card company might cut your credit line or close your existing account.
A foreclosure entry appears on a credit report for seven years, but its impact on your FICO score will decrease as time passes. If your timeshare gets foreclosed, be sure to stay up-to-date on your other debts. By remaining current on other debts, your FICO scores can start to recover more quickly.
If you find a company that claims it can repair your credit following a timeshare foreclosure (or home foreclosure), it very likely is a scam. You can't legally remove accurate information from your credit report until it becomes outdated.
Even if the information is outdated, companies that claim they can do this aren't telling you the full story. In many instances, credit repair companies simply write a letter to credit report agencies disputing any errors and outdated information, which is something you can easily do yourself.
You might be able to get rid of a timeshare without going through foreclosure. A few of the various options to avoid a timeshare foreclosure include:
However, be aware that once you own a timeshare, you'll probably have trouble disposing of it. Several of these alternatives, like selling or donating the timeshare or completing a deedback, are very difficult to complete or are at the option of the developer.
You'll probably have better luck working out a settlement, possibly with help from an attorney.
If you're facing foreclosure of your timeshare property, consider talking to a qualified attorney who can advise you about what to do in your circumstances and inform you about applicable timeshare laws.
]]>But if you don't cancel the purchase by the deadline and eventually stop making payments on your timeshare, you could lose the timeshare to a foreclosure or repossession, depending on what kind of timeshare you own. (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.)
Also, should you decide to try to sell your timeshare, Florida law protects you against resale scams.
If you buy a Florida timeshare, you can cancel the timeshare contract up until midnight on the 10th calendar day after the later of:
Under Florida law, this right of cancellation can't be waived. If a purchaser waives, knowingly or unknowingly, their right of cancellation and a closing occurs, the closing is voidable at the purchaser's option for up to one year after the date when the cancellation period would have expired. (Fla. Stat. § 721.10(2)).
Also, a closing can't happen until the purchaser's cancellation period has expired, and if a closing occurs before the cancellation period's expiration, the closing is voidable at the purchaser's option for up to five years after the closing. (Fla. Stat. § 721.10(2)).
To cancel the purchase contract, you must notify the seller in writing. Then, the timeshare company must refund you the total amount of payments, reduced by the value of any benefits received, within:
In Florida, the developer must furnish each timeshare purchaser with a copy of the public offering statement. (Fla. Stat. § 721.07(6)(a)).
A "public offering statement" is a very detailed history of the project that contains important matters to consider when buying a timeshare interest, including, among other things:
If you take out a loan to purchase an interest in a deeded timeshare and fail to make your timeshare mortgage payments or keep up with the assessments, you might face a foreclosure.
In Florida, residential foreclosures are judicial, but state law provides for the nonjudicial foreclosure of mortgages and assessment liens for timeshare properties. (Fla. Stat. § 721.855 and § 721.856).
In a foreclosure, the borrower's total debt sometimes exceeds the foreclosure sale price. The difference between the sale price and the total debt is called a "deficiency."
For example, say you take out a mortgage loan to buy a timeshare in Orlando, Florida. The total amount you owe on the timeshare loan is $15,000, but the timeshare sells for $10,000 at a foreclosure sale after you stop making the required mortgage payments. The deficiency is $5,000.
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.
In Florida, if you don't object to the foreclosure process, the lender can't get a deficiency judgment against you after a nonjudicial timeshare foreclosure. (Fla. Stat. § 721.81(7) and § 721.855(5)).
A few of the various options to avoid a timeshare foreclosure include:
However, be aware that once you own a timeshare, you'll probably have trouble disposing of it. Many of these alternatives, like selling or donating the timeshare or completing a deedback, are very difficult to complete or are at the option of the developer. You'll probably have better luck working out a settlement with the timeshare developer.
Owners often find it extremely difficult to sell their timeshares. So, scammers sometimes mislead timeshare owners into thinking that their company has someone waiting in the wings to buy the timeshare. But there’s a catch—the timeshare owner must pay hundreds or thousands of dollars in upfront fees.
Once the fees are paid, the scam artists claim that they were simply offering advertising services for the upfront money paid, and no buyer ever materializes. Or the scammers disappear with the money.
In another common scam, the supposed reseller might not ask for an upfront fee, but you'll have to pay various fees, like a "federal tax," "state tax," "insurance premiums," "gains taxes," "customs fees," or something similar—but bogus—before the deal can happen. You keep paying the fees, but the sale doesn't happen.
Florida law provides the following protections to shield consumers from this type of resale scam.
If you want more information about timeshare laws in your state or need assistance canceling a timeshare, consider talking to a real estate attorney.
Contact a foreclosure attorney if you're facing a timeshare foreclosure and have questions about the process or your options.
]]>If you take out a loan to purchase an interest in a timeshare and fail to make your timeshare mortgage payments (or you don't keep up with the assessments), you'll likely face a timeshare foreclosure. Much like a residential foreclosure, a timeshare foreclosure could result in serious consequences, like lower credit scores, a deficiency judgment, or tax ramifications.
When you apply for a loan or other form of credit, one of the first things a potential lender considers when deciding whether to lend to you is your credit score. A timeshare foreclosure might be damaging to your credit scores. However, not all timeshare lenders and companies report late or missed payments—or even a foreclosure—to credit agencies on time, if ever.
But this doesn't mean the timeshare foreclosure will never get reported or appear on your credit reports. Foreclosures are part of the public record, and credit reporting bureaus can access this information.
Generally, if you go through a foreclosure, your credit scores will drop 100 points or more, though the actual drop in scores can vary from one borrower to the next. The past-due entries for missing your payments, assuming that the lender who loaned you money to buy the timeshare reports them, will also drop your scores.
The hit is more severe if you had very high credit scores before the foreclosure action. But if you already have low credit scores, a foreclosure has less of an impact.
A timeshare foreclosure might create problems for you when it comes to getting credit in the future.
Following a timeshare foreclosure, you could face a deficiency judgment, though most timeshare lenders only go after the property. Still, your case might be the exception.
In a foreclosure, the borrower's total debt sometimes exceeds the foreclosure sale price. The difference between the sale price and the total debt is called a "deficiency."
For example, say the total debt owed for a timeshare is $15,000, but the foreclosure sale brings only $10,000. The deficiency is $5,000.
Some states allow the foreclosing bank to seek a personal judgment, which is called a "deficiency judgment," against the borrower for this amount.
Whether you'll face a deficiency judgment after a timeshare foreclosure depends on state law and whether the lender decides to go after you for one.
In Florida, for instance, the borrower isn't subject to a deficiency judgment after a timeshare foreclosure, even if the proceeds from the sale are insufficient to cover the debt. (Fla. Stat. Ann. §721.81(7)).
If the lender decides to write off the deficiency balance instead and sends you a 1099-C "Cancellation of Debt" form, you might have to include this amount in your taxable income unless you qualify for an exception or exclusion.
Employers sometimes run a credit check on potential employees. However, some states (and cities) restrict the use of credit reports in employment decisions. To find out whether your state is among them, talk to an employment lawyer.
Because a foreclosure might appear on your credit report, you could have difficulty getting certain jobs. This, of course, depends on the employer and, to some extent, the reason for the foreclosure. For example, if you're applying for a job in the financial services or banking industry, a bad credit report might affect your ability to get the job. A potential employer might think that you're not able to handle finances competently.
Companies claiming they can repair your credit following a foreclosure are almost always a scam. You can't legally remove accurate information from your credit report, and companies that claim they can do this are dishonest.
In many instances, credit repair companies simply write a letter to credit report agencies disputing errors and outdated information, which is something you can easily do yourself.
If you’ve bought a timeshare and have second thoughts, you might be able to get out of the deal, but you’ll have to act quickly.
Learn about ways to avoid a timeshare foreclosure.
Find out more about how a timeshare foreclosure affects your credit.
If you're facing a timeshare foreclosure, consider talking to a local foreclosure lawyer to learn about your rights and different options. A lawyer can advise you about ways to potentially keep or dispose of the timeshare or ways to improve your credit after a foreclosure.
Consider talking to a tax attorney if you have questions about possible tax consequences following a timeshare
]]>Also, Tennessee law provides consumers with several protections regarding timeshare transactions. For instance, state law prohibits the timeshare developer from using false or misleading advertisements to entice you to buy a timeshare, regulates prize and gift promotions when used to sell timeshares, and provides protections if you want to resell a timeshare.
Even though Tennessee law provides several 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.
In addition, 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. (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.)
In Tennessee, a timeshare contract can be canceled within:
Under Tennessee law, the right to cancel can’t be waived. (Tenn. Code Ann. § 66-32-114(c).)
A public offering statement contains general information about the timeshare development. In a Tennessee timeshare sale, the timeshare developer must provide the purchaser with a copy of the public offering statement before transferring the timeshare and no later than the sales contract date. A timeshare contract is also voidable until you receive the public offering statement. (Tenn. Code Ann. § 66-32-114(a).)
The public offering statement must disclose important information about the timeshare, including the developer's name and principal address, a general description of the timeshare units, any financing the developer offers, and information about canceling the contract. (Tenn. Code Ann. § 66-32-112.)
To cancel the timeshare purchase, you may:
If you cancel, the seller (usually the developer) can’t charge a penalty and has to refund the money you paid within 30 days of receiving your cancellation notice. (Tenn. Code Ann. § 66-32-114(a).)
Timeshare salespeople are known for using hard-sell tactics and misrepresentations to get you to make a snap decision about buying a timeshare. Tennessee law protects timeshare buyers by:
In Tennessee, when you purchase a timeshare, the developer must put any money you pay in connection with the purchase into an escrow account. (Tenn. Code Ann. § 66-32-113.)
The funds will be released:
The point of the escrow requirement is to protect your right to a refund if you cancel the sales agreement during the cancellation period.
Tennessee law prohibits timeshare salespersons from using false or misleading statements when advertising timeshare sales. (Tenn. Code Ann. § 66-32-131.)
So, for instance, a timeshare seller can’t advertise the profit potential of the timeshare (unless the statement isn’t false or misleading), make a prediction that the timeshare will increase in value, or misrepresent the characteristics of the timeshare, among other things. (Tenn. Code Ann. § 66-32-132.)
Sometimes, timeshare sellers offer gifts or prizes to potential buyers to get them to attend a sales presentation. Tennessee law regulates promotional offers in several ways. For instance, timeshare sellers can’t:
Timeshare owners can find it extremely difficult to sell their timeshares. So, scam artists sometimes falsely tell a timeshare owner that the company has a ready and willing buyer.
But the timeshare owner must pay hundreds or thousands of dollars in upfront fees to process the transaction. After the timeshare owner pays the fees, the scammer often disappears, or the buyer never materializes.
Tennessee law protects consumers from this type of resale scam in different ways. For example, state law requires a timeshare resale agreement to be in writing and prohibits the reseller from accepting an advance fee before actually selling the timeshare. Resellers must also disclose that there’s no guarantee that a timeshare can be sold at any particular price or within any particular amount of time. (Tenn. Code Ann. § 66-32-137.)
In Tennessee, 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 called "assessments." In Tennessee, you might also face a foreclosure if you fall behind in the timeshare assessments.
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. Contact a foreclosure attorney if you're facing a timeshare foreclosure and have questions about the process or your options.
]]>Also, Texas law provides consumers with several protections regarding timeshare transactions. For instance, state law prohibits timeshare developers or salespeople from engaging in deceptive trade practices.
Even though Texas law provides several 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.
In addition, 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. (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 Texas, you have the right to cancel a timeshare contract so long as you do it before the sixth day after the latter of:
The right to cancel can't be waived. The contract is voidable if it contains a waiver of this right. (Tex. Prop. Code Ann. § 221.041.)
To cancel a timeshare purchase contract in Texas, you may:
If you decide to cancel the contract, the developer must refund all payments you made before the cancellation:
Timeshare salespeople are known for using hard-sell tactics and misrepresentations to get you to make a snap decision about buying a timeshare. Texas law protects timeshare buyers by prohibiting certain deceptive acts in practices in timeshare sales, including:
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 called "assessments." You might also face a foreclosure if you fall behind in the timeshare assessments.
In Texas, a foreclosure can be either judicial or nonjudicial.
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. Contact a foreclosure attorney if you're facing a timeshare foreclosure and have questions about the process or your options.
]]>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.
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. (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 California, you have the right to rescind a timeshare contract within seven calendar days, or a longer period as provided in the agreement, after the latter of:
The purchase contract must give notice of the cancellation period, along with the name and mailing address to which any notice of cancellation must be delivered. Notice of cancellation is considered timely if given not later than midnight of the seventh calendar day. (Cal. Bus. & Prof. Code § 11238.)
To exercise your right of cancellation, you have to give a written notice to cancel to the developer at their place of business, which must be included in the purchase contract. (Cal. Bus. & Prof. Code § 11238
Canceling by mail. If you send your notice of cancellation by U.S. mail, a rebuttable presumption exists that notice was given on the date that it is postmarked. (Cal. Bus. & Prof. Code § 11238.) (A “rebuttable presumption means that a court will assume something is true unless someone proves otherwise.) So, you should send your cancellation notice by some method that shows when you sent it, like certified mail, return receipt requested.
Canceling by another method. If you give notice by means of a writing sent other than by U.S. mail, like by hand-delivery, the notice is considered as given at the time of delivery at the place of business that the developer designates. (Cal. Bus. & Prof. Code § 11238.) If a question later arises about when you gave your cancellation notice, you'll need to be able to prove when and how you delivered it.
In California, 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 California if you fall behind in the timeshare assessments.
The foreclosure can be either judicial or nonjudicial. Judicial foreclosures are administered through the state court system, while nonjudicial foreclosures have no court supervision and are handled by a trustee.
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.
According to the California Department of Real Estate (DRE), California’s anti-deficiency judgment provisions of the state’s Code of Civil Procedure (specifically, Cal. Code Civ. Proc. § 580b) apply to sales of timeshare interests. The DRE further states, “Each such contract or financing instrument should contain a statement where the subdivider declares he will not seek a deficiency judgment in the event of a default by a purchaser.”
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. Contact a foreclosure attorney if you're facing a timeshare foreclosure and have questions about the process or your options.
]]>Also, Nevada law provides consumers with several protections when it comes to timeshare transactions. For instance, the timeshare developer can’t deceive you when making the sale and must disclose specific information to you by providing a copy of its public offering statement.
Even though Nevada 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.
In addition, 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. (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.)
In Nevada, you may cancel, by written notice, a contract of sale for a timeshare purchase up until midnight of the fifth calendar day following the date you signed the contract. The contract of sale must include a statement about your right to cancel the deal. (Nev. Rev. Stat. § 119A.410(1)).
The written notice of cancellation may be:
You may cancel the purchase of a timeshare without penalty or obligation and are legally entitled to the return of all money and other considerations that you’ve given toward the purchase. If you cancel, the developer must return all payments within 20 days after receipt of the notice of cancellation. (Nev. Rev. Stat. § 119A.410(4)).
If the developer attempts to get you to waive your cancellation rights, you may void the contract. (Nev. Rev. Stat. § 119A.410(2)).
Timeshare salespeople are known for using hard-sell tactics and misrepresentations to get you to make a snap decision about buying a timeshare. Nevada law protects you in timeshare sale transactions, like by prohibiting deceptive practices, requiring the developer to give you a copy of the public offering statement, and setting certain requirements for timeshare resellers.
Nevada law prohibits timeshare developers or salespeople from engaging in unfair or deceptive acts in a timeshare transaction, including:
The timeshare developer must provide each prospective purchaser with a copy of the developer’s public offering statement, which must contain a copy of the developer’s permit to sell timeshares. (Nev. Rev. Stat. § 119A.400(1)).
The timeshare broker or sales agent must:
Timeshare owners often find it extremely difficult to sell their timeshares; there’s virtually no after-market for them. So, some scam artists falsely tell timeshare owners that they have ready and willing buyers for timeshares—but the timeshare owner must pay hundreds or thousands of dollars in upfront fees to process the transaction.
After the timeshare owner pays the fees, the scammer often disappears, or the buyer never materializes. Nevada law provides some protection to shield consumers from this type of resale scam.
In Nevada, a person who, on behalf of an owner (other than a developer), wishes to list, advertise or promote for resale, or solicit prospective purchasers of timeshares that were previously sold (if they are selling more than 12 units) must:
A timeshare resale broker who charges or collects an advance fee must place 80% of the fee into a trust account. If the broker closes escrow on the timeshare resale, the broker is deemed to have earned the advance fee. But if the listing of the timeshare expires before the broker closes escrow on the timeshare resale, the broker must return the money held in the trust account to the owner of the timeshare within ten days after the listing’s expiration date. (Nev. Rev. Stat. § 119A.4779).
A timeshare resale agreement must be in writing and contain the following disclosures:
If you take out a loan to purchase an interest in a deeded timeshare and fail to make your timeshare mortgage payments or keep up with the assessments, you could face foreclosure. (In addition to monthly mortgage payments, timeshare owners are ordinarily responsible for maintenance fees, special assessments, utilities, and taxes, collectively referred to as “assessments.”)
In Nevada, timeshare foreclosures are typically nonjudicial, which means the foreclosure takes place without court supervision.
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. Contact a foreclosure attorney if you're facing a timeshare foreclosure and have questions about the process or your options.
]]>But if you don't cancel the purchase by the deadline and eventually stop making payments on your timeshare, you could lose the place to a foreclosure or repossession, depending on what kind of timeshare you own.
In South Carolina, if you buy a timeshare, you can cancel the contract within five days from the later of:
South Carolina law also provides the right to cancel a timeshare contract if at any time the timeshare or facilities as described in the contract are no longer available and the resort is unable to provide you with comparable accommodations or facilities. (S.C. Code Ann. § 27-32-40).
The right of cancellation can't be waived.
If you want to cancel the purchase contract, you must notify the seller in writing by sending notice via certified mail, return receipt requested, or another verifiable means. The notice of cancellation is considered given on the date postmarked so long as the notice is actually received by the seller. (S.C. Code Ann. § 27-32-40).
If you give notice in writing and transmit it other than by mail, the notice is considered given at the time of delivery at the seller's address as identified on the contract. (S.C. Code Ann. § 27-32-40).
If you cancel and have not received benefits pursuant to the contract, the seller of the timeshare must refund your payment within 20 days after it receives your notice of cancellation. If you received benefits pursuant to the contract, the seller must refund your money, less the benefits received, within 30 days. (S.C. Code Ann. § 27-32-60).
A timeshare seller must provide to the prospective purchaser a written public offering statement regarding the purchaser's rights and obligations associated with the purchase of an interest in that vacation timesharing plan. The purchaser must receive the statement before signing a purchase contract, and the statement must include, among other things:
Timeshare salespeople are known for using hard-sell tactics and misrepresentations to get you to make a snap decision about buying a timeshare. South Carolina law also protects you in timeshare sale transactions.
For example, South Carolina law makes it illegal for a timeshare seller to use fraud, misrepresentation, or to fail to disclose material facts to induce a timeshare sale. (S.C. Code Ann. § 27-32-110). South Carolina timeshare law also prohibits a developer or salesperson from using false or misleading advertisements to sell timeshares. (S.C. Code Ann. § 27-32-190).
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.)
Also, timeshare owners typically pay annual maintenance fees and special assessments to their homeowners' association (HOA.) If, as an owner, you don't pay the fees and assessments, the HOA might sue you for money or foreclose your timeshare.
In South Carolina, residential foreclosures are judicial, but state law provides for the nonjudicial foreclosure of mortgages and assessment liens when it comes to timeshare properties. (S.C. Code Ann. § 27-32-325).
When a lender forecloses a mortgage, like a mortgage taken out to buy a timeshare, the borrower's total debt sometimes exceeds the foreclosure sale price. The difference between the sale price and the total debt is called a "deficiency."
For example, say you take out a mortgage loan to buy a timeshare. The total amount you owe on the timeshare loan is $15,000, but the timeshare sells for $10,000 at a foreclosure sale after you stop making the required mortgage payments. The deficiency is $5,000.
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.
In South Carolina, the borrower is not subject to a deficiency judgment after a nonjudicial timeshare foreclosure, even if the proceeds from the sale of the timeshare are insufficient to cover the debt. (S.C. Code Ann. § 27-32-320).
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. Contact a foreclosure attorney if you're facing a timeshare foreclosure and have questions about the process or your options.
]]>By contrast, if you want out of the monthly payments, you can surrender your timeshare and let it go back to the lender, but you’ll likely remain responsible for maintenance fees until the bank forecloses and transfers title out of your name. In this article, you’ll learn more about what happens to timeshares in bankruptcy and how to spot common problems so that you can avoid them before you file.
What Will Happen to a Timeshare in Bankruptcy?
When you purchase a timeshare, you share ownership of a piece of property with several other people. Most people pay a timeshare mortgage and monthly or annual maintenance fees to cover the costs of keeping up the property (similar to HOA dues). (Learn more about how timeshares work.)
Bankruptcy law considers a timeshare real estate and treats it in much the same way as your house. Here’s how you’ll list it when you fill out your bankruptcy forms:
If you still own the timeshare. If you are still in possession of the timeshare when you file for bankruptcy, you’ll list it with your other property on official bankruptcy form Schedule A/B: Property. Because the lender can foreclose on the timeshare if you default on the loan, the timeshare secures the timeshare mortgage, and you’ll list the debt on Schedule D: Creditors Who Hold Claims Secured By Property. You’ll also indicate whether you intend to keep it or surrender it back to the bank.
If the lender foreclosed on the timeshare. In this situation, you won’t list it on Schedule A/B (because you no longer possess it) and any remaining timeshare-related debt will be listed on official form Schedule E/F: Creditors Who Have Unsecured Claims.
Filing for Bankruptcy After Foreclosure
If the bank forecloses on your timeshare before you file for bankruptcy, you can discharge (get rid of) all of the remaining timeshare-related debt in either a Chapter 7 or Chapter 13 bankruptcy. The debt you can discharge includes a deficiency balance (the difference between the foreclosure proceeds and the amount you owe) and unpaid maintenance fees.
Filing for Bankruptcy When You Still Own the Timeshare
Filing for bankruptcy before the lender forecloses can be more complicated than if the foreclosure has already taken place, but you’ll have more options. Your choices will depend on whether you want to keep or surrender the timeshare, the type of bankruptcy you file, the amount of equity in the timeshare, and the exemption laws of your state (the laws that tell you what property you can keep in bankruptcy).
Keeping the Timeshare in Chapter 7 Bankruptcy
In Chapter 7 bankruptcy, if the value of the timeshare is equal to or less than the amount that you owe (there is no equity), selling it won’t financially benefit your creditors. You can keep it as long as you can continue making the payments.
If there is equity, however, the bankruptcy trustee—the person responsible for overseeing your case—will want to sell it for the benefit of your creditors. You’ll be able to keep it only if one of the following applies:
Your state’s exemption law (the law that lists the property you can keep) allows you to protect your timeshare equity. Because a timeshare is a luxury, it’s unlikely that your state will have a specific exemption that covers a timeshare. Instead, you’ll likely need to live in a state with a “wildcard exemption” that allows you to exempt a certain amount of property of your choosing.
You borrow money to purchase the equity from the trustee. The trustee will often let you buy the property at a discount as long as you prove that you borrowed the funds from a friend or relative.
The trustee can’t sell the timeshare and abandons it.
If you can’t protect the timeshare in one of these ways, the trustee will sell it and distribute the proceeds to your creditors.
Keeping the Timeshare in Chapter 13 Bankruptcy
One of the benefits of Chapter 13 bankruptcy is that you’re allowed to keep all of your property. The trick, however, is demonstrating that you have enough income to pay the monthly mortgage payment and maintenance fees in addition to your required monthly repayment plan payment. If you can’t cover everything, you’ll need to surrender the timeshare or let something else go. (Learn about how Chapter 13 repayment plans work.)
Surrendering the Timeshare in Chapter 7 and Chapter 13 Bankruptcy
You can surrender the timeshare in both Chapter 7 and Chapter 13 bankruptcy. If you do so, your bankruptcy discharge will eliminate your liability for:
the remaining timeshare mortgage balance, and
any unpaid maintenance fees assessed before your filing date.
In most states, you’ll continue to be responsible for the maintenance fees that accrue after you file bankruptcy and until the foreclosure takes place. Bankruptcy wipes out only the bills you incur before your bankruptcy filing date, not afterward. As well, you’ll remain the legal owner of the timeshare until the lender forecloses on the property and transfers the title out of your name.
To avoid paying for ongoing maintenance fees, it might be a good idea to file for bankruptcy after the foreclosure. However, you’ll want to talk with an accountant before you use this strategy to ensure that you won’t incur a tax liability. (Learn about the consequences of a timeshare foreclosure.)
It’s important to note that any remaining balance won’t be wiped out in a Chapter 13 discharge until after you complete your three- to five-year repayment plan.
Surrendering a Timeshare With Equity
If you surrender a timeshare with equity, the Chapter 7 trustee will sell it and distribute the funds to your creditors. If you have “priority” debts that you’ll still have to pay after bankruptcy, such as child support or spousal support debt and unpaid income taxes, this can be a great thing because the trustee must pay your priority debts before nonpriority debts, such as credit card balances and medical bills. Therefore, if you have a priority debt, giving up the equity in your timeshare might not sting as much.
If you file for Chapter 13 bankruptcy, however, the trustee will not sell the property for you. So if you have equity in the timeshare, you’ll want to make arrangements to sell it yourself and use the funds in your repayment plan.
Consulting With a Bankruptcy Lawyer
For help determining how to handle a timeshare when filing for bankruptcy, consider meeting with a knowledgeable bankruptcy attorney.
]]>