I own a timeshare I can't afford

One of my favorite features of MoneyManagement.org is the ability for consumers to submit questions and receive a personal answer via email. Our Ask the Experts column has been running for many years and in that time we have answered thousands of questions related to credit, debt, and money management. Recently, I received an interesting question regarding a timeshare property.

Question: I own a timeshare that I cannot afford. The maintenance fee is $735 yearly. I have not paid it for this year, and they will not help me resell it. I will retire soon and flat out can't afford it then. Can you suggest how to get out of it, and or deal with them. I have contacted timeshare resell company's, but they want $300 to $400 up front to sell it. (I don't have the money to do this either.) I have asked everyone I know to purchase it, but no buyers. What happens next?

Answer: I’m sorry to read of your situation. I am not an attorney, but I will try to explain how the process works.

Even if your timeshare is paid off, I understand that not paying maintenance fees is treated the same way as not making a mortgage payment. If the developer won’t take the property back, the best options I know of are to sell the timeshare or pay it off and donate it to charity. If these options are not feasible, the timeshare company may be willing to establish a repayment plan—even letting you stop payments for some period of time. If a repayment plan isn't negotiated, the timeshare company might go the route of taking you to court for breach of contract to get a judgment against you and place a lien against the property. Ultimately, they will foreclose on the property.

In general, regardless of whether a consumer has a timeshare that is a right-to-use or deeded timeshare, they are both treated as real property.  However, timeshares are governed by state law, so the timeshare foreclosure process varies from state to state. There may be differences in foreclosure processes depending upon whether the state is a judicial or non-judicial state. Florida, for example, just passed a timeshare foreclosure law (HB 1411) that streamlines foreclosures in that state to less than 90 days to help those who cannot pay on their timeshares from incurring fees during a protracted foreclosure process. Florida is a judicial state, but they are allowing timeshare and condominium foreclosures to bypass the judicial process and complete a trustee foreclosure (non-judicial) reducing the foreclosure timeframe from 18 months to 90 days.

If it gets to the point of foreclosure, you could try pursuing a quitclaim deed or a deed-in-lieu of foreclosure. It is possible to do these with timeshares, but not all timeshare companies will agree to them. It will depend upon state law and the timeshare company’s willingness to accept a quitclaim deed or deed-in-lieu of foreclosure. Also, some states require mediation prior to foreclosure so you should check in to that option as well.

To better understand your rights and responsibilities, I recommend you talk to an attorney or legal aid in the state where the timeshare is located. Also, you might wish to speak with an accountant or tax preparer to discuss any tax implications of a deed-in-lieu of foreclosure or quit claim deed.  You can learn more about your state's foreclosure laws by contacting your local consumer protection office. For a list of state and county consumer protection offices, please visit the Federal Citizen Information Center's website.

Best of luck to you.

If you have a question, check out our entire list of commonly asked questions and answers. If you cannot find an answer to your question, I encourage you to Ask The Experts.

This post was included in the Carnival of Personal Finance hosted by Fiscal Fizzle .

Kim McGrigg is the former Manager of Community and Media Relations for MMI.