Many of our clients’ top frustration is not knowing what they were getting into when they bought their timeshare. It’s a frustration we understand; a lot of timeshare sales presentations are notoriously vague. Finding unexpected details hiding in the shadows of your contract is, unfortunately, far more common than you’d think.
So, if you’re thinking about purchasing a timeshare, here are a few important things to consider.
Does the Contract Expire?
A small number of timeshare contracts do have an expiration date, but many timeshare companies are working to do away with this model. Instead, most timeshare owners have signed a contract that includes a perpetuity clause—meaning there is no end to the contract between the owner and the resort. The contract is written with the purpose of you permanently owning the timeshare. Make sure you know what kind of contract you’re signing.
What if You Stop Paying Maintenance Fees?
Many people mistakenly think that if they stop paying maintenance fees, the resort will take back the timeshare. They hope this will solve the problem of no longer wanting the timeshare. Unfortunately, this is not the case. Instead, they’re likely to face collection efforts, interest fees, and third-party collection companies.
Can You Sell it Back?
Over the years, we have found that it is highly unlikely that you will be able to resell your timeshare or sell it back to the resort. In most sales presentations, a resort will tell you that a timeshare is a solid financial investment. That’s why most people are shocked to learn that there really is no inherent resale value in a timeshare. A quick search on an online marketplace site will reveal pages and pages of timeshares for sale for $1.00 or less! These owners are just desperate to unload the financial burden that is their timeshare. In all likelihood, your attempts to sell the timeshare back to the timeshare company will be denied and you’ll be stuck with it even if you’d rather be free from it.
Is it Tax Deductible?
Unless you’re renting out your timeshare, the answer is no. Timeshares aren’t tax-deductible, because you don’t actually own the property. You own a small portion of it. Technically, you own one week’s worth of time at the place.
Can You Foreclose?
Yes, if you don’t make payments on your timeshare, you can go into foreclosure, which will remain on your financial record just like any other foreclosure would. Even though you only own a small portion of the property, you are legally responsible for the timeshare in such a way that leaves you vulnerable to foreclosure proceedings if you don’t stay current on your payments.
The complexities of timeshare ownership are vast and often vary from company to company. Unfortunately, it’s very difficult to know exactly what you’re up against unless you come prepared with a list of specific questions to the presentation. Even then, you can’t guarantee that the salesperson is giving you wholly true answers. Our biggest recommendation is to take everything they say with a grain of salt and to do your research before you step into that presentation.