Q: We bought a timeshare through a company in Minnesota. After buying it, my husband had a neck injury and is now disabled. He was unable to work and we got behind on our maintenance payments.
I made arrangements to get the fees caught up but just found out through the paper that the timeshare company filed bankruptcy. They notified us that this transpired but they are closed for business.
Are we obligated to continue making these payments? If we don’t make the payments, what would happen to our timeshare? We’d like to sell but have not been successful in doing because of the bankruptcy.
A: The turbulent real estate market doesn’t just affect home buyers and sellers. As you, and many others, have discovered, it can affect ancillary businesses as well — like your timeshare management company.
Nonetheless, you own an interest in a timeshare development. With that ownership interest comes certain responsibilities. One of those responsibilities is to pay your monthly maintenance expenses, real estate taxes and other fees associated with the timeshare.
While the timeshare developer or the timeshare operator might have filed for bankruptcy protection, your financial obligations will continue. If the timeshare developer is in financial trouble, you may experience problems with the overall experience of owning your timeshare. If you purchased your unit early on, and there are many units left to be sold, you may be in a precarious position.
If the building is not completed and there are units left to be finished and sold, the timeshare developer may never be able to finish the development. That would be terrible for you, unless some other timeshare developer comes in to finish the project.
But if during bankruptcy, a new developer comes in and sells out the remaining units at a fraction of what you paid, you may never get your money out of this purchase.
If the development is substantially finished, the impact of the timeshare developer’s filing for bankruptcy protection may be limited. There could be a cloud hanging over your development but that may not last long as people use the development and see that it is a good place to go and stay.
If your timeshare management company has filed for bankruptcy protection, you want to make sure that the building and its amenities are maintained and the upkeep of the building is good. You and other owners need to make sure you follow up with the management company and the bankruptcy court to insure that the standards for your building are being kept. If they’re not, you might have to band together to hire another time share management company to come in and take over the management of your building.
The trustee in the bankruptcy proceedings may try to have a replacement company buy the assets of the company now in bankruptcy and find a company willing to manage your building.
You will need to obtain more information about the bankruptcy proceedings and make sure that money owners paid for the operations and maintenance of the building will be applied to the needs of the building. You should also make sure someone is representing the interests of the owners in court.
Finally, unless there are quite unusual circumstances, the bankruptcy court should not end your ownership interest in the timeshare but you will have to continue to pay the monthly or annual expenses that you owe.
If, for some reason, your purchase of the time share interest was not papered properly or your interest is junior to other creditors, you could lose your interest in the timeshare.
Please talk to an attorney for more details.
Great article, but it fails to mention that timeshares, by and large, are a really, really bad idea.
Just the way they are sold (at “seminars”) tells you that. You go to these “free” come-on vacations and then have to sit through a 90-minute presentation (or longer) where planted “shills” in the audience say “Gee, this is a great idea!”
That is about the worst way to go about buying anything. If you really wanted a timeshare, you should shop around, look at several, and then buy the best value. You’d do this buying shoes. You’d do this buying a car. You’d do this buying a house. Why not with timeshares?
And if you did, you’d realize that you can buy a resale timeshare for a dollar in many cases. People are begging to GIVE THESE THINGS AWAY as the weekly “maintenance fee” is often higher than the cost of staying at a hotel.
In other words, they are worthless. But the folks who went to the seminar paid $22,000 for them – and are now locked into a contract for life, paying this maintenance fee for a “vacation” they no longer go to.
Timeshares don’t save you money. They are not a bargain. If they were, people would be lining up to buy them, and they would not need to use “sales seminars” to sell them.
And they would be selling for a lot more than a dollar on eBay.