Timeshare Foreclosures for Unpaid Fees or Assessments

By Amy Loftsgordon, Attorney
If you own a timeshare and don’t pay the HOA fees or assessments, you could lose the property to a foreclosure.

Timeshare owners typically have to pay annual maintenance fees and special assessments to their homeowners’ association (HOA.) If, as an owner, you don’t pay the fees and assessments, the HOA may sue you for money or foreclose your timeshare.

Read on to learn the basics about timeshare fees and assessments, including what typically happens if you don’t pay these costs.

Annual Maintenance Fees and Special Assessments

Just about every timeshare development has an HOA, which is a nonprofit association that handles the day-to-day operation of the resort. The HOA collects annual maintenance fees and occasional special assessments from timeshare owners to cover the costs of running the place.

Annual Maintenance Fee

An annual maintenance fee (sometimes referred to as an “annual assessment”) covers everyday maintenance, repairs, and improvements for a timeshare development. The fee typically goes toward paying for services like landscaping, trash clean up, and security. Normally, the fee ranges from around $500 to $1,500.

An HOA can increase the amount of the annual maintenance fee every year as it sees fit. Though, HOAs generally limit increases on fees due to restrictions in the associations’ governing documents, or because it’s difficult to sell timeshares to new buyers when the yearly fee is astronomically high.

Special Assessments

A special assessment is a one-time charge for a timeshare good or service that annual maintenance fees won’t cover because there isn’t enough money available. The amount of a special assessment varies widely—depending, of course, on what the HOA plans to do with the money. For example, an HOA might charge a special assessment of $100 to upgrade the Internet at the resort or several thousand dollars to pay for repairs after a tropical storm.

If You Don’t Pay

If you don’t pay your timeshare fees or assessments, the HOA will probably report you as delinquent to the credit reporting bureaus, which will hurt your credit score. The HOA might also sue you in court for money. Once a court issues a money judgment in favor of the HOA, the HOA might be able to take money out of your bank account or garnish your wages to collect the amount you owe. Or, more likely, instead of suing you for a money judgment, the HOA might foreclose your timeshare.

If your timeshare is “deeded” and you don’t pay the assessments, the HOA will also probably also have the right to get a lien on the property. A timeshare lien on one owner’s interest does not affect the interests of the other timeshare owners. Once the HOA has a lien, it can then foreclose.

The two main types of timeshares are “deeded” and “right to use.” When you buy a deeded timeshare, you get an ownership interest in the timeshare unit. If you buy a right-to-use timeshare interest, though, you don’t own any part of the property. (See our article discussing the difference between deeded and right-to-use timeshares.)

In most cases, this kind of lien automatically attaches to the timeshare once the owner is late in paying assessments or fees. To provide public notice about the lien, the HOA usually prepares a “claim of lien” (or similarly titled document) and records it in the county land records. The HOA can then foreclose the lien. Normally, though, HOAs don’t start a foreclosure immediately after you fall behind.

Depending on state law, the HOA might foreclose by filing a suit in court (a judicial foreclosure) or by using an out-of-court process (a nonjudicial foreclosure). When the HOA finishes all foreclosure steps, you lose ownership of the timeshare.

How to Avoid a Foreclosure

If you can’t pay the assessments in full, you might be able to work out a payment planwith the HOA. For example, if the HOA charges $500 for a special assessment, you might be able to pay $100 each month over five months.

Getting Help

Timeshare laws vary from state to state. If you can’t negotiate a payment plan and the HOA starts a foreclosure, consider talking to a foreclosure lawyer in the state where your timeshare is located to learn about your options.
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