Have you ever dreamed of being in a condominium overlooking the sparkling blue waters of a perfect beach? Well, Timeshares were created to grant you that wish even for just a fraction of a year.
In a Timeshare, you get the chance to be a co-owner of a premium property, and you get to enjoy staying in it for the amount you have paid for. Everything is fine until you start getting that yearly bill and it starts crashing down on your finances.
So, what do you do when this happens? Read on to know more about Timeshares and how they work. Plus, we’ve included a set of tips to help you get rid of your timeshare legally without ruining your credit.
What is Timeshare and How Does it Work?
Timeshares are vacation property arrangements that let a person share the cost of a property with other people to ensure that he gets an amount of time per year to enjoy the property.
The amount of time that a person gets to spend on a property depends on the initial arrangements made with the other co-owners. The arrangement may be 1/52 or 1/12. If a person chooses 1/52, that means he gets to enjoy the property for a week every year. So for a 1/12 share, a person may enjoy the property for a whole month!
This sounds really good, since you can own a premium condominium for a smaller amount! However, what they don’t tell you is that there’s growing maintenance fees and other incidental costs per year that makes owning a timeshare a huge headache!
In timeshares, there are only two things you need to consider: the contract type and ownership type.
Types of Timeshare Contracts
Shared Deeded Contracts
This type of timeshare contract divides the ownership of the property between the people involved in the timeshare. An owner is often given a specific week or set of weeks every year when they can use the property.
Technically, a timeshare company can sell a property to 52 different owners since a year contains 52 weeks. The good thing about shared deeded contracts is that it doesn’t usually expire and it can be sold, willed, or given to other people.
The bad news for shared deeded contracts is that even if you get an actual deed for the piece of property, you can’t consider it like your normal real estate properties. To oversimplify it, take this example. Suppose your grandfather willed a property to 52 grandchildren. This means that before you can do a major action with the property, the other 51 owners should also agree with your action (good luck with that!).
Shared Leased Contracts
A shared leased contract usually has the same arrangements as a shared deeded contract. The only difference here is that the ownership of the property remains with the resort where the timeshare property is located.
From the name itself, shared leased contracts are… leased. So, you don’t get a deed since you’re only leasing the property. This is the same as renting a specific room, in the same hotel, for the next 20 years or so! Plus, a shared leased contract has a time limit before the lease expires.
One can’t really consider a shared deeded or shared leased timeshare a real estate since you don’t really own the property.
Types of Timeshare Ownership
The type of timeshare ownership determines how you get to use the property on your chosen week or set of weeks. Below, we discuss the types of timeshare properties and how they work.
Fixed Week Option
In fixed week option timeshares, you’ll get the chance to select a specific week of the year for you to use the property. Once you’ve chosen a specific week, it would be really hard to try a different week of the year. You might even have to pay a hefty upgrade fee just to get a new week!
Floating Week Option
A floating week option is more flexible as compared to the fixed week option. In this type of timeshare ownership, an owner is allowed to choose a week within certain limits. An offer from this type of ownership will sound like “You can choose any week between June 1 to September 30.”
Since you are only one of the owners of the timeshare, you’d need to respond to the offer immediately to reserve your vacation week at the resort. Remember, almost all timeshare schedules are first com, first served. So if you miss the window to reserve, you might get stuck with a random week, and this won’t be great if you get scheduled during the dead of winter.
In a points system timeshare (timeshare exchange program), your timeshare is worth a certain number of points, and you can use them to access a timeshare property that exists in the same system. For example, at the beginning of the year, you get 100 points. If you want to enjoy a vacation at a 50-point timeshare property, 50 points will be deducted from your total points.
From here, you can use the other 50 for other vacations. However, you have to be careful, the number of points needed to go on a vacation in a specific property varies. A vacation home in the mountains in a not-so-popular county would cost lower points as compared to a timeshare at Walt Disney World Resort.
There are also instances where a timeshare would be too much compared to the points given to at the beginning of the year. In this case, you’d have to pay extra to avail of that timeshare.
True Cost of Timeshare
Sounds good so far? Weel, you might want to think it over after knowing the true cost of timeshares. And, let’s not forget about the loads of costs involved with these properties.
The average upfront purchase cost for timeshares is over $22,000—quite a high price to pay. Let’s assume that you were sales talked into purchasing your first timeshare, but you don’t have the money saved. Your first instinct would be to look for a loan (which is a big no-no!)
However, banks don’t usually give out loans to applicants who plan on purchasing a timeshare. The main reason is that if you default on their loan, they won’t be able to repossess a week of vacation time or a fraction of a deed!
You shouldn’t worry though. Your new friend, the timeshare company, will surely offer a “convenient” way of paying your latest purchase! Since they know that you’re probably into the idea of owning a premium vacation home and you don’t have a lot of options for financing, they’ll probably be charging you outrageous interest rates—typically 15% to 20%.
You won’t have much of a choice since they’re the only ones who’re willing to finance you.
Oh, so you think you’re on the clear now? Not so fast. Once you’ve made the first purchase, you’ll now have to think of the extra fees associated with your purchase. On the average, maintenance fees run at around $980 annually and can increase up to around 4% per year!
You’d also have to throw in HOA dues, exchange fees (these are the extra fees you need to pay to avail a vacation home outside of your points), and the fee for “special assessments” done on your unit.
How to Get Out of a Timeshare
We know that timeshares can provide you and your loved ones with buckets of great memories, and act as a home away from home. Understandably, timeshares are usually purchases with the intention of owning them for a lifetime. However, if it is already taking a toll on you financially, it is time for you to let it go.
Looking for answers on how to let it go can sometimes be a challenging task. Most of them require a little bit of effort on your part, like calling your developer and finding a legitimate resale company or talking to timeshare exit companies like timeshatter, lonestar transfer, or timeshare compliance.
So what should you do if you want to get out of your timeshare without ruining your credit? Here are a couple of options you can take to ensure that you don’t get the shorter end of the stick.
Talk to your developer about buying back your property
Before looking for potential buyers or talking to timeshare exit companies, it is a good idea to talk to the developers and resorts your timeshare is located in. Some developers and resorts are willing to buy back your ownership.
This isn’t a guarantee, but it is worth the effort of calling your home resort to verify if they give out such offers.
Gift your timeshare to a family member or friend
If you know someone who is willing to take over your timeshare ownership, you can pass it to them. The person you can transfer to can be a family member or a friend. Once they take over the ownership, they take over the payments too.
If this isn’t an option for you, there are still other options.
You may be able to cancel your ownership
There are companies out there that will work with you and the developer to cancel your timeshare. Timeshare exit companies will often give out promises to help you and it can be tricky to know which companies to avoid.
There are even companies that will tell you that they’ll take over the payments of your timeshare and this might not be true. So if you’re going to talk to a cancellation company, keep these things in mind to prevent getting in trouble.
Post your timeshare for sale
Since people are still interested in timeshare vacation ownership, selling your timeshare might be a good idea. If you plan on doing this, you can rent your timeshare while waiting for someone to buy it.
So now, do you still think timeshares are not that expensive?
Additional Tips on Getting Out of a Timeshare
Work with a Pro: If you really want to get out of a timeshare with ease, linking up with an industry expert should be your top priority. This will help you save a lot of headaches and keep your score intact.
A pro will always assist you in checking out with your resort, because there are cases where you may be able to sell your init back to them. ARDA has given out a list that have offered buyback programs for owners.
You can also work with verified resale marketplace. Since sorting through all the fine print is one of the challenging tasks when exiting a timeshare, working with a timeshare exit professional can help you stay organized and updated with your exit.
Be Aware of Fraud: When selling your timeshare property, the last place you’d want to find yourself is shelling out an extra couple thousand of dollars. As you begin the sale process of your timeshare, expect a couple of calls coming in. When this happens, you’d need to have a solid checklist to determine whether the caller is really a legit buyer or a scammer. Scammers may claim that they’re from a timeshare exit company, an interested buyer, or even a company you know and trust.
Get Support During Your Sales Process: Selling your timeshare can take a while, and the length will be based on its type, location, or selling price. During this time, you’d need all the support you need from the people around you since it will be both financially draining and mentally exhausting.
FAQs About How to Get Out of Timeshares
If you’ll be writing a timeshare cancellation letter, you should include your name and contact information, the name of your timeshare company, the contract number, the names on the timeshare contract, the date of purchase, a statement of cancellation, and the amount you paid, including a request that this amount be returned to you.
You don’t have to worry if the cancellation time has lapsed and you haven’t submitted your cancellation letter yet. You can still pursue the cancellation by working with a trusted cancellation attorney. Plus, working with one ensures that you won’t make mistakes that can get you in trouble.
Once you’ve sent the timeshare cancellation letter, you should ensure that they have received the letter. Document this so that they won’t be able to invalidate your case by saying that they didn’t receive the letter you sent or that it came in past the due date.