Q. My aunt Helen left me a timeshare thinking she was doing me a favor. She always said I should travel more often, since I rarely go anywhere. Now, I have this timeshare and I still don’t travel (I’m a homebody, and that will never change.)
So, now I’m stuck with a timeshare, and the annual maintenance fees are astronomical, especially for something I will never use. How can I get rid of it? Thanks for your help!
A. After many memorable vacations, most timeshare owners think they are doing a nice thing in passing down their timeshare to a loved one, so they can enjoy it and make memories of their own when we are no longer around. In many cases, including your own situation, there’s no guarantee your loved ones will want to inherit a timeshare. Lifestyles change over generations, and a timeshare may not fit their way of vacationing.Likewise, many people after purchasing timeshares wind up regretting the purchase because they stop using or exchanging them at some point.
Most people are familiar with the concept of a timeshare, but there is often more than meets the eye. The repercussions of owning a timeshare can vary tremendously depending on many things, including whether it is a real property interest, a mere right to use the property, or some other arrangement. What is common though is that in most cases, a timeshare is a liability rather than an asset, because you have to pay ever-increasing maintenance fees despite the fact that you may never use your timeshare.
Let’s look at Deborah H. and her brother, Carl, for example, who were also left a timeshare, in Orlando, Florida. For nearly a decade their parents enjoyed two weeks there every year, and they admit they have fond memories of their times spent there with family. When their parents bought it, they named them (the children) as the beneficiaries. Now that their parents have passed away, Deborah and Carl are the new owners — and responsible for the $900 fee attached to each week.
“In no way do I want this, nor does my brother,” said Deborah. “It was great for my mom and dad, because they used it every year since they bought it, and they thoroughly enjoyed it. They also had the luxury of time and flexibility to use it. We, however, do not. It’s impossible to sell, and I’m afraid not paying the fees will ruin my credit,” she said.
Deborah’s fears are justified. Earlier this year, she received a delinquency notice in her name from the timeshare company requesting payment of the timeshare fees, with an 18% interest rate tacked on, and other bills and letters from creditors.
How Timeshare Inheritance Works
Often, the decision of timeshare inheritance is made at the time of purchase and written into the contract. Timeshare agreements usually contain a “perpetuity clause,” saying that the timeshare is valid for the lifespan of the original owner. When the owner dies, the timeshare becomes part of the estate. The inheritors of the timeshare become the new owners, and they are expected to take over the timeshare fees.
The four most common types of timeshares are as follows:
Fixed week (Deeded contract): This option buys you a deed to a specific unit at a resort for the same week year after year. You actually own a fraction of the overall property and the deed is officially recorded in County land records.
Floating: Similar to the fixed week, you own a deeded week for a specific unit — but you have the freedom to book your week any time you want. This flexibility poses a risk, however, because others may be competing for the same week.
Right to use (RTU): RTUs don’t provide true ownership of the timeshare; instead, you buy a membership and lease the property from the developer for a period ranging from 20 years to 99 years.
Point based: This option buys you an allotment of points that can be used at a variety of locations, depending on the number of points you’ve accumulated through ownership. As with the floating option, getting a reservation during prime time can be difficult.
If you own real property outside Virginia and die without proper estate planning documents in place (a Will is not enough), then a representative of your estate must appear in every state where such property is located. This means that if you live in Virginia but you own a timeshare for one-week in Florida, if it is considered “real property,” then the Florida courts must determine how and to whom your interest is distributed.
Type of Ownership is Critical
You didn’t mention what type of planning your aunt had in place or what type of timeshare she had (see above for descriptions).
If the timeshare your aunt left you was in the form of a deeded contract, your interest is considered ownership of real property. Similar to a residence, this real property may be sold, rented, gifted, or given to heirs after death. Also similar to a residence, your timeshare interest may be subject to real estate taxes and probate. While taxes are usually included in your timeshare maintenance fee, the disposition of your aunt’s ownership interest after her death is another issue. If your aunt died without a trust to dispose of her assets, then the timeshare will have to go through probate in the state where it is located; often resulting in the nightmare of multi state probate. This is one reason why dying without a trust and with real property can cause major headaches for an executor. Luckily this can all be avoided in your own planning, if your aunt didn’t avoid it in hers.
If the deed to the timeshare is a “leasehold deed,” then it means ownership only lasts for a specified period of time. A “right to use” contract means what it sounds like – the purchaser acquires a right to use and enjoy the rights of the property owner (usually a resort). However, the pitfall of a “right to use” contract is that some benefits you may not care about, like a club membership, may be included. The “right to use” form of timeshare acquisition is used heavily overseas and in Mexico, because the ownership of foreign real property interests opens a door to many more legal complexities.
Why People Want Out
The average sales price for a timeshare in the United States today is $20,940, and experts say many timeshare owners desperately want out. This may be because they are unable to afford the rising maintenance fees, frustrated with the inability to book during prime weeks, unhappy with their outdated properties or simply losing interest after the kids have grown. Those who inherit time shares may not want them for those reasons, as well. The problem is that they are almost always impossible to sell. And The older the timeshare project is, the more maintenance is required, so the annual maintenance fees typically continue to escalate.
What to Do if You’ve Inherited a Timeshare
There are lots of companies that advertise to help people get rid of timeshares, and many of them are useless and/or outright scams. To get rid of timeshares, I advise people to start by stop paying the maintenance fee. This will result in two possibilities. The first option is that the timeshare company, after sending several letters, will eventually take the timeshare back under a reverter statute such as this one in Virginia. The second option is that the timeshare company, after sending several letters, will sue the owners of the timeshare. The client will know which way they are headed by the language in the letters.
In your situation, you inherited the timeshare, but it’s likely that the timeshare company is unaware that the original owner died and won’t try to make a claim against his estate or the new owner. And even if they do, the law is unclear whether new owners who inherit timeshares are liable for maintenance fees, as they never signed an agreement to pay maintenance fees.
If the person inheriting were to actually exercise dominion and control over the timeshare and start using the week or trading it or paying the maintenance fee, then the timeshare company would certainly have an argument that the new owner is liable for all maintenance fees.
In Virginia, according to https://law.lis.virginia.gov/vacode/title55.1/chapter22/section55.1-2211/:
“the board of directors of the association shall have the authority to adopt regular annual assessments and to levy periodic special assessments against each of the time-share estate unit owners and to collect the same from such owners according to law.”
This would appear to give them a right to go after an owner who inherits, but not necessarily if the inheritor didn’t exercise ownership or control in any way. Ultimately, if you stop paying the maintenance fee and get threatened with litigation, I would recommend you hire an attorney who specializes in timeshare litigation (as opposed to one of the many non-attorney companies that offer to help you get rid of a timeshare). Here are a few:
DC, MD, VA:
Florida:
https://www.finnlawgroup.com/get-out-of-my-timeshare-lawyer/
Florida, Arizona, and South Carolina:
https://www.timeshareattorney.com/
Estate Planning: Get Your Affairs in Order to Make Things Easier for Loved Ones
Estate planning is all about what you leave behind to your children, grandchildren, or other intended beneficiaries upon your death. It includes what is left in your retirement accounts, savings, your real estate, and your life insurance policies, as well and tangible items of value and importance. If you do have a timeshare, make sure the person who inherits it actually wants it. Make them aware of fees and other things they should know ahead of time.
If you die without proper estate planning, it could create unnecessary headache for those left behind and needlessly waste a significant portion of your assets on taxes, attorney’s fees, and probate expenses. This is why it is important to have an experienced estate planning attorney, such as those here at the Farr Law Firm, create your estate plan — your will, trust, account titlings, and beneficiary designations — to make sure everything is up-to-date and appropriate for your stage in life.
Once completed, it is wise to review your estate plan at least every 3-5 years and make necessary updates accordingly, or to join our Lifetime Protection Program to ensure that your documents are up-to-date each year.
We here at the Farr Law Firm have strategies in place to help our clients plan for themselves and their loved ones. If you have not done your Estate Planning or Retirement Planning or had your planning documents reviewed this year, please call us as soon as possible for an initial consultation:
Estate Planning Fairfax: 703-691-1888
Estate Planning Fredericksburg: 540-479-1435
Estate Planning Rockville: 301-519-8041
Estate Planning DC: 202-587-2797
About Evan H Farr, CELA, CAP
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