Friday, July 2, 2021

Timeshare Exit: Getting Out of a Timeshare Contract

 Like most senior citizens, my husband and I have attended a number of timeshare high-pressure sales events over the years. These are often held at beautiful, ocean front or golf course resorts.  After a few days enjoying the resort's amenities, it is tempting to think we would love to spend many future vacations in the same place, and owning a timeshare would be the perfect way to make it affordable.  They sound good, don't they?

We never purchased a timeshare, but we have a number of friends and relatives who currently own between one and four timeshare weeks a year at a variety of vacation resorts.  To be honest, most of our friends seem to have enjoyed the benefits their timeshares offered. Basically, they have a prepaid vacation location, and they often trade the time at their timeshare for an equal number of days in other places.  Some companies even allow them to trade a week at their resort for a cruise, instead.

Unfortunately, owning a timeshare is also an ongoing expense which can become a burden as people age, especially if their income drops.  In addition, if they develop a chronic illness, their ability to travel may become more limited.  The 2020-2021 Covid-19 pandemic also made it difficult, if not impossible, for many senior citizens to use their timeshares, although they were still expected to pay their share of the fees and property taxes each month.  

Once owners decide that having a timeshare is no longer convenient or affordable, many of them have discovered that it can be extremely difficult to get out of their timeshare contract.  Timeshare exit companies advertise that they can get you out of your contract, but some of them charge between $4,500 and $10,000 to handle this for you.  Many of them have a bad reputation and should only be used as a last resort. What should you do?

How to Get Out of a Timeshare Contract

So, how can you get rid of your timeshare?  Below are a list of suggestions from AARP, in the order you should try them.

Talk to the resort. - The first thing you should do is contact the company that owns the resort and ask to speak to the person who handles "deed-backs" or "surrenders."  If they are willing to take it back, you may be able to simply return the property to them so they can resell it. If they are resistant to taking it back, make sure you write a letter, letting them know that you are no longer able to use the timeshare, or pay for you timeshare.  Be clear and firm about your situation.

If they agree to let you return the deed to them, expect to pay a fee of several hundred dollars to take back the property.  In order to surrender the property ownership, you generally cannot be behind in your dues, or still be making payments on the loan.  Beware of sales people who try to talk you into keeping your property, suggest you upgrade to a more expensive form of ownership, or ask you to make any similar new commitments.

You may want to get help figuring out what to say in your letter by reading the inexpensive book  "Write A Letter: Cancel Your Timeshare and Get a Refund! A Step-by-Step Guide to Writing a Cancellation Letter that Works!".  I have to emphasize that you CANNOT get your purchase price refunded on a timeshare, and I cannot guarantee that writing a letter will work at helping you get out of your contract, despite the enthusiastic title. However, following the author's letter writing advice is probably a good place to start, and the least expensive option for you to try.

Stop paying the annual timeshare fees - If you do not have a loan and you stop paying the annual fees, this could "encourage" the resort to let you surrender the property so they can resell it to someone else.  Taking the property back voluntarily is likely to cost the resort less than foreclosing on it.  They may be reluctant to take it back, so you may have to convince them that you really cannot afford to keep it.  Once again, the best way to do that is by writing them a letter and explaining the situation to them.

Stop paying the loan  - Do not choose this option until you have first approached the resort and tried to return the property to them directly. If you stop paying the loan, the lender is going to try to collect on it, your credit report will take a hit, and you are still going to own the property, so the fees will continue to pile up.  You will also still be liable for the loan, but with additional penalties and fees.  You could just end up with more problems. You should only choose this option if you really cannot continue to pay because of your financial situation, such as if you have lost your income, or if you are in the process of bankruptcy.

Before you try the next two suggestions, you may want to read the Kindle book "Getting Out of a Timeshare: A Comprehensive and Precautionary Guide."It may offer some other approaches to getting the company to allow you to surrender your deed.  

Unfortunately, although AARP made the following two suggestions in the January 2021 issue of their magazine, everyone I know personally who has tried them has been disappointed because of their lack of success.  I am presenting these ideas here simply so you are aware of them.

Resell the timeshare - If the resort simply will not allow you to surrender the deed to them, and you cannot get out of the contract easily any other way, you may try reselling it. It is important to know that you probably will not get much money for it, unless it is a timeshare with a top-tier company such as Marriott, Hilton or Disney.  However, if you still owe only a small amount of money on it, you may be able to pay off all or most of the loan with the price you get for the resale, and then you can move on with your life, free of this obligation (as long as you fully pay off anything you still owe on it).  In the January, 2021 issue of AARP Magazine, the author suggested two websites where people sometimes have success selling their preowned timeshares ... tug2.com and redweek.com.  However, a friend of mine tried selling her timeshare on these sites and discovered, much to her dismay, that she had trouble even getting someone to buy her vacation time, let alone the timeshare itself.

Use a timeshare exit company only as a last resort - These companies charge high fees, often up-front, and frequently put a lot of pressure on the seller to sign up with them. They may use hard sales tactics, such as telling you that your children will have to keep paying the fees, even after you die.  According to the Better Business Bureau, this is NOT true and they recommend that people AVOID using a timeshare exit company because they get so many complaints about them.  Not only will you be losing control of the sale, and lose your ability to enjoy the benefits of owning the timeshare, but you could be required to pay the exit company between $4500 and $10,000 to handle the transfer for you, and the resort might have been willing to do it for just a few hundred dollars.  Only use a timeshare exit company as a last resort.

Finally, give a lot of thought to the future before you decide to purchase a timeshare.  Do not let a salesman at a fun resort pressure you into buying a timeshare while you are there on vacation. Will the cost of the monthly loan payments and the annual fees really save you money on vacations, or would you be better off just putting the money into a savings account and using that savings for your annual vacation?  You could go anywhere you wanted, and not be limited to the places where a timeshare has an affiliate location.  Consider the cost and complexity of eventually getting out of the timeshare.  Do you really want to deal with that if you become seriously ill or lose your job in the future?  Think it all through, and do not let yourself be pressured.

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Photo credits: Photo of Laguna Beach taken by author

1 comment:

  1. This is a very valuable post. My friend's husband bought at least 6 different timeshares. Although they enjoyed some fun vacations, he died unexpectedly and she was suddenly in a different financial position. She had a horrible time getting rid of them. The fees for annual upkeep was more than she could afford. There are some excellent tips here on how to unload a timeshare and how to think about buying one in the first place.

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