An Inheritance No One Wants
Do you own a timeshare? My condolences. You have the equivalent of a sticky bomb in your portfolio.
A timeshare is typically a condominium located in a vacation area that is subject to an agreement between the owner and a management company. Some timeshare arrangements allow a buyer to “own” the right to use a various condominiums in several areas at different times of the year.
Texas has a law about timeshares. It is creatively called the “Texas Timeshare Act,” and contains a lot of very helpful provisions for timeshare owners. The Act applies to any timeshare property in existence on or after August 26, 1985, and portions of the Act even apply to timeshare properties located outside of Texas.
This next part does not apply to a timeshare owner who purchased his interest from a developer for his own personal use: It is a wrongful act to transfer a timeshare interest to someone who does not have the ability, means or intent to pay all of the assessments and taxes for a timeshare interest.
That is really the crux of the matter, isn’t it? Every timeshare owner has to pay money annually to maintain the timeshare interest, regardless of use. And timeshares are a notorious example of an easy- in/ difficult- out contract.
That is one reason that executors and trustees hate dealing with timeshares. They are difficult to cash-flow and even more difficult to distribute outright. It is a rare beneficiary who agrees to take a timeshare interest with its ongoing burden of maintenance fees. Since an executor has a duty to timely distribute estate assets, and a trustee has a duty to properly manage assets and investments, the two fiduciaries often find themselves trying to dispose of a timeshare interest without incurring additional liability.
So how do you unload a timeshare interest? Very carefully.
You can’t just walk away. If you stop paying the timeshare fees, then you are in default of your contract. Be prepared for a bad credit rating and a barrage of collection calls.
A better place to start is to contact the resort and ask if they have a timeshare exit program for which you qualify.
If that does not work, you can try to find a buyer for the timeshare through a realtor or advertising.
You can try renting out your timeshare to friends and family, or even on the open market, to cover your maintenance fee.
You may be able to give the timeshare away, if you can find a taker.
Some larger charities are willing to accept a deeded timeshare donation. This would have the added benefit of a tax deduction for you.
You could read through your contract and sales documents for a loophole, or retain an attorney to fight it.
One thing you should not do: pay a reseller an upfront fee to find a purchaser or renter for your timeshare. The Federal Trade Commission has some excellent materials on its website about resale tips and reseller scams.
Virginia, a 1982 SMU law school graduate, has advised clients for over 35 years. For more information, visit hammerle.com, and for newsletter sign-up, email firstname.lastname@example.org. This column does not constitute legal advice.