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Home Dave Ramsey Do You Remember? No Way Out! Resorts Creating Problems Timeshare Is Obsolete
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TROPICAL BREEZE RESORT, Panama City Beach, Florida, Specially assessed Owners $6,000 Each!
Timeshare Resorts Creating Money Problems
for Owners
For over 30 years, timeshare resorts have provided luxury vacations for millions of owners. Now ownership could be the straw that breaks the camel’s back.
Timeshare resorts are condominium units where the ownership is divided into time – the condos are sold on a
week-by-week basis. Resorts divide each unit into 52 weeks with week #1 beginning with the first full week of each year. Every week thereafter falls into consecutive order. Developers sold these weeks depending upon the customer’s needs and price. The 4th of July week which is normally week #26 is the most desirable and is the highest priced week at the beach.
Purchasing a week, owners were told they were locking in their vacation cost and securing their families vacations for generations. The problem comes with the rising maintenance fees, special assessments and lack of a viable resale market. Maintenance fees accompany each week that is purchased and are based upon the operating costs of the resort. Generally maintenance fees are low when the developer is selling and then increase at about 5% per year in normal times. Here’s the catch: Hard economic times are hitting owners, prospects and developers alike. Developers overcome with extraordinary marketing cost and no financing have unsold units. Poor resale opportunities have created a glut in the resort market. Owners falling on hard times are not paying the fees that accompany ownership at the resorts.
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Where does that leave the industry? Unfortunately it all falls back on the current owners. Resales are virtually nonexistent; approximately 5% of the owners drop out each year just due to standard attrition. Normally resorts would reabsorb these units and do discounted resales. No more, resorts need and want the fees. The additional burden of lackluster rentals and skyrocketing marketing cost has developers looking to their owners to pay the bills.
Most timeshare owners don’t realize that maintenance fees and special assessments are personal obligations that must be paid or it will wreck their finances. When the purchasers accepted the deed to their week, they also accepted the liability of ownership which means they are legally liable for all expenses. These liabilities also pass to their heirs, because it’s deeded property.
Now with economic hard times, many people are choosing not to pay these fees. If an owner is about to lose his home, he’s not worried about the fees at a resort. You can’t get blood out of a turnip. This poses a problem for remaining owners. Somebody has to pay the power, water, taxes, management, staff and upkeep.
Collection agencies are going after the nonpayers. For those who are struggling this could send them into Bankruptcy! Maintenance fees are doubling and in some cases quadrupling at some resorts. For the homeowner on a fixed income, this could possibly cause them to lose their home.
VISTANA RESORT, Orlando, Florida, just Specially Assessed Owners $2,500 each!
Special assessments are also being used by developers to cover additional expenses. For owners where developers are still marketing, this could be big problems. The owners could be saddled with the developer loans or even worse the bank could take over the Resort, which has happened before. The Bank could then special assess each owner. This is especially scary – One resort in Florida that was devastated by a hurricane was taken over by a bank. Each owner week was assessed $6,000.00.
What’s an owner to do? First you should understand your liability – If you don’t pay, resorts or their Attorneys can collect by garnishing wages, attaching bank accounts or seizing assets. If you don’t own anything, have a bank account or vehicle, don’t worry about it. They can’t get blood from a turnip. But that’s not most people. The average American can not afford $2,000.00 per year as some experts predict.
If you have the money to pay the fees or assessments there is no need to worry. You could be the last man standing and own the resort.
Now is not the time to buy! Even if a resort offers to give you a week or you can’t resist those Dollar Deals on EBAY, Don’t fall for it. If you are already stuck with one, find a way out. Just do it, before it’s too late!
By Jerry Wilkes, Timeshare Expert
Home Dave Ramsey Do You Remember? No Way Out! Resorts Creating Problems Timeshare Is Obsolete
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