The Price of Timeshare Foreclosures – Having All Owners Pay

During this time of financial difficulty, timeshare foreclosures have increased dramatically.  Like foreclosures on homes, the result is very damaging to one’s credit for future large purchases.  It’s simply another reason why many people should never purchase a timeshare ever.

But there is also a more hidden cost of timeshare foreclosures and non-payment of maintenance fees.  The timeshare property management companies rely on having a certain level of revenue in order to maintain & manage the property properly.  With a decrease in operating funds, they need to find it from other sources — namely those timeshare owners that CAN pay their maintenance fees.  So, there are a number of reports of owners receiving special assessment bills due to the fact that the annual maintenance fees are not able to cover the operational cost of their timeshare resort.

It’s very similar to what is happening with local and state governments.  Because of decreased tax revenue, they have to tax those that CAN pay to cover shortfalls.  There’s very little use in taxing those that cannot pay, except perhaps penalties that may or may not be collected in the future.

All timeshare owners who paid their special assessments should ask if they can receive some of the profits when the economy improves and resorts are awash in maintenance fees.  Think they’ll do it?

Timeshare Transfer – Documents Required

Transactions involving timeshares require the proper documentation for a legally binding agreement.  Even though an owner may only have a rights-to-use type agreement with the timeshare resort, any transaction to transfer the rights-to-use must be processed properly.  Failure to do so may end up with the original “owner” required to pay for the timeshare maintenance & special assessment fees once again.

At Timeshare Relief, we take care of all the documents necessary to guarantee our clients a proper exit strategy from their timeshares.  All the costs associated with the creation, administration, filing and recording of the documents are paid for every client.  We want the experience to be as stress-free as possible.

Major Hotel Chain Forsees Steep Drop in Timeshare Revenue

As reported on CNNMoney.com and Dow Jones Newswires, Marriott followed much of the hospitality industry with a fourth-quarter loss.  The surprise in its weakness was its timeshare business.

“”Timeshare guidance was significantly worse than what people expected,” said Patrick Scholes, a lodging analyst at FBR Capital Markets. He noted that Marriott cut its projection for timeshare income for 2009 to $45 million from between $215 million to $265 million forecasted in October.

That is a drop of around 80%.  The company had been earning significant profits by financing timeshare sales.  With credit markets evaporating and defaults on the rise, the decrease in revenue was expected, yet surprisingly steep.

In our opinion, timeshare companies everywhere will be forced to rely on maintenance fees of owners who will not be travelling this year due to the economy.  Timeshare owners may also see special assessments issued by the resorts, in a similar fashion as many local governments are increasing taxes in order to stem falling into debt.

Pricing will decrease, as supply and inventory in the resale market will escalate.  Yet, the number of buyers most likely will decrease with improved knowledge of the financial burden associated with owning a timeshare.  The total overall percentage of successful resales will most likely fall.

Timeshare Default Rates – Impact on Owners

Here on the Timeshare Relief 360 Blog, we’ve written about how the poor economy has negatively affected the timeshare industry (Part 1 / Part 2).  In addition to some incredible special assessment fees timeshare owners have received, they should also be set to see a significant jump in maintenance fees.

Because some current owners are now unable to pay their maintenance fees, timeshare resorts must raise fees for all owners to cover the difference.  This certainly covers the resorts, but who takes care of the owners who are contractually obligated to pay?  Not the timeshare.  Do the owners get a benefit when the economy improves?  It won’t happen.  Will the owners be able to recoup some of the cost when equity grows in the resort?  Most likely not.  Do you think maintenance fees will decrease after the economic crisis is over?

Friends don’t let friends buy timeshares…

Timeshare Owners Unknowingly Supporting Political Campaign

This is a reminder to timeshare owners that they should question every line item on their maintenance fee bills or any bills from their timeshare company…

Please read this article by Dan Christensen of the Miami Herald:

http://www.miamiherald.com/business/story/786132.html

It turns out that tens of thousands of timeshare owners received small $3-$5 line item charges on their maintenance and tax bills.  These fees were forwarded to a political action committee as contributions.  Since many timeshare owners were unaware of the purpose of the fees, an audit of the billing system found that the billing scheme was an ”improper solicitation of contributions.”

Always question your timeshare bill!

What are your thoughts?