One of the difficult issues that comes up regularly in our law office is disposing of unwanted timeshares. A timeshare usually entitles its owner to one or two weeks at a specific resort once a year. Many companies allow the owner to trade a week at one resort for another, which increases the owner’s vacation options.
Typically the clients purchased the timeshare several decades ago and have stopped using the vacation time. However, they are still saddled with maintenance fees of several hundred dollars per year, usually between $500 and $1,200 annually. The value of the timeshare has usually fallen dramatically since purchase, from $20,000 or $30,000, to amounts less than $3,000. Some timeshares are worthless and it’s a struggle to just give them away. The companies that sell the timeshares are usually not interested in taking the unit back.
Attempts to sell a timeshare are filled with traps for the unwary, as the resale market is filled with scam artists. A client contacted me regarding a purported escrow for their “Mayan Palace” timeshare in Mexico. The escrow company and realtor involved in the transaction were both fake companies using a “virtual office space” in Atlanta, Georgia. The calls to the businesses were most likely forwarded to cell phones in Mexico. The hallmarks of the scam were: 1) the client received an unsolicited contact from the agent; 2) the high price offered for the timeshare, over $30,000.00; and 3) once the escrow was opened, there was suddenly a demand for “foreign investment registration fees” of $3,500.00, to be paid in advance to the “Mexican government” through a wire transfer. The actual resale value of the timeshare was less than $3,000.00 and there were no foreign registration fees that had to paid in advance. Any wire transfer would have most likely gone to the scam artists’ bank account. We refused to proceed with the transaction, informed the escrow company that we were contacting the Georgia Attorney General, and never heard from them again!
So what can be done to avoid falling victim to these scams? The first step is to obtain an accurate assessment of what the timeshare is actually worth. There are legitimate websites out there where you can see what timeshares in your resort are actually selling for on the resale market. Four of these are: Redweek.com, Vacatia.com, Sharket.com, and the Timeshare Users Group at Tug2.net. The Sharket.com website has a “saleability score” that ranks the resale market on a scale of 1 to 10 for a particular resort. The Tug2.net website has a good checklist of items to be considered when attempting a timeshare resale.
Once the likely resale price is known, the next step is to list the unit for sale. A realtor can be involved if the unit is a rare high-value property, but most timeshares are of such low value that a realtor will not take the listing. Most resellers list their units as “for sale by owner” on a legitimate website, such as the ones listed above or Ebay.com.
Here are a couple of tips for avoiding scams: 1) Do not pay large fees up front, unless it’s a small listing or membership fee. For example, the Vacatia.com website only collects fees when the timeshare has been sold and that fee is based on the resale price. The minimum amount for sales under $5,000 is a flat fee of $500. 2) Do not work with companies that sent you a postcard or gave you an unsolicited phone call saying they have an eager buyer for your timeshare. Most ask for a large fee to be paid in advance and then disappear.
One final option for timeshares that are difficult to sell is to rent the unit to cover costs. Some companies will manage the rental of your unit for you in exchange for a large percentage, up to one-half of the rent collected, but that is still better than being stuck with annual maintenance fees that will go on forever.