By M. Beddingfield
Back when the kids were little, you let a high pressure salesperson talk you into buying a timeshare. You used it a few times through the years for family vacations and made the payments on time. Now the kids are grown and the maintenance fees have doubled or even tripled. What’s worse is that the maintenance fees continue to increase, as does the cost of day to day living. You paid off the mortgage on your timeshare but the maintenance fees are killing you. For the past few years you’ve been unable to pay them.
Like so many other people, you might have tried to give back the timeshare, only to be told that wasn’t possible. You tried a Quit Claim deed but the Home Owner’s Association wouldn’t accept it. You might have tried to sell the timeshare, but unless it’s a highly desirable resort and time slot, it has been a waste of your time and money. You’ve tried to give it away, but like the eternal Christmas fruitcake, no one wants it.
Now the timeshare company is sending you notice that they are going to foreclose. How can they do that when you paid off the mortgage in full? In the eyes of the law, a timeshare is real estate and as such, is subject to all the same rules and regulations. You have to understand that not paying your maintenance fees is the same as not making mortgage payments and if you stop making payments the lender will eventually foreclose.
The timeshare company doesn’t really want to go through all the expense and time hassle that it takes to foreclose on your property. They don’t want your timeshare back. They will offer you all kinds of deals and bargains to prevent this from happening. They might tell you that you can pay the maintenance fees every two years or that they will forgive the delinquency if you will just pay from now on. They might even offer you some extra perks in the form of prime time, bonus points or extra discounts. Remember, the timeshare company is a master at high-pressure sales tactics. Don’t make the mistake of taking them at their word. If you decide to bargain, get it in writing.
Many people are forced to stay in a timeshare that they don’t want or need and can’t afford, simply because they don’t want the negative impact of a foreclosure on their credit score. A foreclosure will wreak havoc with your credit score. It can lower your score by as much as 300 points and will remain on your record for 7 years from the date of filing.
If your timeshare company is threatening foreclosure or has all ready initiated the foreclosure process, you should consider a deed-in-lieu of foreclosure. A deed-in-lieu is a two-fold process and won’t have the same negative impact on your credit rating as a foreclosure. You will need to attain an attorney to help you. First, you will have to sign a document called an Agreement in Lieu of Foreclosure which is a document that reveals the terms and conditions of the deed-in-lieu. This will be signed by both the lender and the borrower. Then you will have to sign a deed that conveys legal ownership of your timeshare back to the timeshare company. The timeshare company will then have to consider your debt “paid” and cannot come after you for any unpaid balances. The timeshare company cannot file a deficiency judgment against you once the deed-in-lieu of foreclosure has been signed.
It is important to note that it’s possible that you will owe taxes on the forgiven debt. You should check with your tax adviser to find out how this will affect your tax obligations.