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More questions come to mind here... (by Dr. K.):

I read in your questions an opinion that somehow corporations are less acceptable than individuals. I've been in business for almost half a century and have never found this to be an attitude I've seen or felt.

Corporations can do anything individuals can do. In fact, my understanding of the law is that corporations are considered legal individuals. The difference is there may be more than one person behind the corporate image, and in some cases the results of legal action stops at the corporation. While in others it proceeds to the individual owners.

Here's an illustration. There is a difference between a Use Contract without a deed and a deeded timeshare. The first is governed by contract law that can allow pursuit of other assets. However, as a contract it can not be "forever". It must have a stated end.

Different laws dictate that when real estate has liens against it, the only recourse is foreclosure which stops at returned title. Another aspect of real estate law is that it can be passed to heirs "forever". This is how ALL timeshare owners need to understand their dilemma of non payment. The only recourse living beyond the foreclosure is reporting a negative entry on credit bureaus.

Now, if you look at it from the resorts point of view, they have far more individuals than corporations opting to stop paying. Based on this it would seem counter to your concern. In addition, corporations are subject to the same legal actions and consequences. Like individuals, some corporations find negative reports on their credit history is of little concern. Thus, again, they have the same options as individuals. We choose to not be concerned about our credit history.

Now, why do resorts not foreclose? I would think for the same reasons thousands of banks don't foreclose on homes right now. We hear about all that have, but it is estimated that approximately twice as many homes are subject to foreclosure as are actually facing court action.

The reason is accounting principles. Real estate holding liens is carried on the positive side of a ledger and considered an asset so long as it held there (whether paid or not). The action of foreclosure removes this positive ledger entry and results in a reduction of net value to the bank. At the same time, it is moved to an accounting entry called "Non-Performing Asset" which means it is owned, but has no value. In other words, the foreclosure process reduces the net value of the bank and reduces their ability to conduct financial business. The only way to gain value is to resell this NPA. If done at a lower price than the original liens, it ends up in a net loss period, end of story.

So, resorts don't usually pursue actual foreclosure for the same reason. Doing so reduces their net value and restricts their financial activity. If they send it to a collection agency, it's out of their hair and they can continue to increase their net value by adding more and more due bills to their ledger. Although they don't have the actual cash from payment, their bottom line net value continues to increase.

Thus, only 1 resort has foreclosed on all we have.