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Timeshare Foreclosures for Unpaid Fees or Assessments
When you have disputes over your vacation property, Timeshare Defense Attorneys can help. Learn more about Timeshare Foreclosures for Unpaid Fees or Assessments.
Timeshare Ownership Concerns
You might be one of many timeshare property owners with second thoughts about your timeshare ownership. What seemed idyllic at the time has become a drain on your finances. Your annual timeshare maintenance fees and assessments have increased for five years, and you are now paying annual fees equivalent to your mortgage payments.
To top it all, for various reasons, you have not even had the time to take your annual vacation for the past two years, so the payments have added insult to injury. You may even be in arrears with your timeshare mortgage or your annual assessments, and you are worried.
Do you have questions about what will happen if you stop paying your assessments or your mortgage? Timeshare Defense Attorneys has assisted hundreds of timeshare owners with similar timeshare challenges and can provide legal advice. Call us for a free evaluation today.
In short, if you have stopped paying assessment or maintenance fees or your mortgage loan, you face the risk of foreclosure, damaging your credit score.
Let’s take a closer look at your timeshare obligations and the consequences you may face if you can’t meet them.
What Are Maintenance Fees and Special Assessments?
Every timeshare resort requires money for its everyday operations, repairs, and maintenance. Usually, this is managed by the Home Owner’s Association (HOA) or a timeshare management company or managing entity.
The fees to keep timeshare properties running include daily maintenance, repairs, periodic maintenance, and a yearly maintenance fee. The charge covers landscape maintenance, trash removal, and security. In general, the cost ranges between $550 and $1500 per annum. HOAs have the power to increase annual maintenance fees at their discretion. Although HOAs usually limit fees based on restrictions in the Associations’ governing documents.
A Special Assessment is a one-time fee charged to cover a timeshare expense. The annual assessment amount differs significantly depending on what the HOA plans to do with the money. For instance, an HOA can charge a fee in the hundreds if the gym is upgrading or thousands if it pays for repair to damage caused by a hurricane.
Most timeshare owners pay maintenance fees, specialized taxes, and utility bills. This cost is often referred to collectively as an assessment and may add up quickly.
Maintenance Fees
Timeshare owners must pay annual fees to maintain the property. These fees are used for landscaping, security, and maintenance Maintenance costs vary but can cost from $1000 to the tens of thousands per annum. You are still committed to paying maintenance fees even if you do not use your timeshare. Typically these fees are either escalated annually through the contract or through a resolution passed by the HOAs.
Utilities
Time-share property often costs the owner utilities. Sometimes a company will calculate the energy used during your time at the resort. This can add up when you run your air conditioner 24 hours a day or heat your ski resort room.
Special Assessments
The timeshare association may recoup expenses such as major upgrades and repairs not covered by insurance. For instance, an institution may require specific fees for the construction or replacement of the roof of its clubhouse. Special assessment payments are typically in the timeshare contract, and timeshare owners are liable to contribute.
Taxes
Property taxes can even be collected on your timeshare unit. Occasionally, some locations charge a timeshare fee for every day you spend at your timeshare.
How Do Timeshare Foreclosures work?
Can a Timeshare Be Foreclosed On? The answer is yes. When borrowers apply for a timeshare purchase loan, the mortgage is due monthly for that timeshare pending full payment (generally for 10-15 years). Like any loan, maintaining the schedule of payments for your timeshare is very important.
The timeshare association may foreclose if you own a timeshare and don’t pay maintenance fees, special assessments, utilities, or taxes.
Understanding Timeshare Foreclosure
If you are behind with your timeshare payments or assessment costs, you risk the HOA using the timeshare foreclosure law to foreclose on you. Foreclosure is legal action taken by the timeshare company. You are sued for breach and damages. The foreclosure process varies in different states as timeshare governing laws differ.
You may even face foreclosure if your mortgage is completely paid but you are in arrears with maintenance or assessment fees. The foreclosure process can sometimes be costly and may involve hefty penalties.
What Happens If You Don’t Pay Your Timeshare Fees?
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You will face potential foreclosure, which will be stressful, time-consuming, and expensive. Your credit score will be negatively impacted, and you will suffer financial pain.
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If you are in arrears, the HOA may restrict your access to your timeshare facility and amenities, such as the communal pool.
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The HOA could choose to transfer the debt to a debt collection agency.
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The HOA could report your non-payment to your bank, damaging your credit report ratings and negatively affecting your reputation.
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A court of law may allow the HOA to take the money off your salary until the debt is settled.
Can Timeshares Hurt My Credit?
When a timeshare owner does not pay, the resort developer will attempt to collect the remaining money from the owner. If this fails, foreclosure may be their next step.
Foreclosure is terrible for your credit rating. Your FICO score will be lowered by up to 50 points. FICO is an average standardized credit score that ranges between 300 & 880.
There are two types of foreclosure – non-judicial and judicial foreclosure.
Can Assessment Fees Also Lead to Foreclosure?
The short answer is yes. This is often misunderstood by timeshare owners and is an essential fact you need to be aware of. In the eyes of resort managers, the assessment and the annual maintenance fee are just as critical as mortgage payments.
How Many Missed Monthly Payments Are Required Before Foreclosure Takes Place?
HOAs have different business models and different policies. While some resorts will use a few unpaid assessments as an opportunity for action, some resorts will be more accommodating to their customers. Although rare, it is common practice to find homeowners with money in reserve to support the owners struggling financially with their timeshare costs.
How to Avoid a Timeshare Foreclosure for Unpaid Fees or Assessments?
If you are struggling to make your timeshare maintenance fees or assessment fees and want to avoid foreclosure, you should approach the HOA with your financial situation and ask them what can be done. Sometimes they are understanding and will give you a period over which you can pay the debt off.
Many owners seek to exit their timeshare contracts due to continually rising annual costs. We can provide professional advice if you have a timeshare in California, Florida, or Las Vegas. Simply call our law firm and book a free case evaluation:
