I have owned a timeshare for years but now need to move on. I have talked to my timeshare company, but they want to charge $2,000 for a contract buyout. We think that's a rip-off. So my question is, what else can I do? I know I could hire a lawyer, work with an exit company, or donate to a charity, but I don't know if those are good ideas. I have already complained to state regulators, too, but they are not doing anything to help me get out of my timeshare obligation.
RedWeek contacted numerous industry officials to get good answers to these questions, which were posed to us by timeshare owner David Barron. Here are some options we encountered after researching Barron's questions. The overall consensus — from developers, attorneys, resale realtors and owner advocates — was, take your time, do your research and, most of all, don't fall for a sales pitch from a company that "guarantees" to get you out of your contract.
Contact Your Timeshare Company
While there is no automatic formula for owners to get out of their timeshare contracts, there is one unanimous recommended starting point: contact your home resort owner services. Find out if the developer or HOA has a resale program or a "deed-back/surrender" option for owners who need to get out of their timeshares and have no outstanding mortgages. Most major brands have below-radar (unpublicized) programs to help owners with hardships, and some have outright surrender programs where owners are allowed to walk away from their timeshares after paying some upfront fee (usually equivalent to two-years' maintenance fees).
Only one major timeshare company, Wyndham, has created a public comprehensive exit program, called Ovation, that enables owners to terminate their timeshares. Companies that don't have in-house programs to recycle timeshares will typically refer owners to a licensed resale broker who specializes in timeshare resales.
Do Your Homework to Find out Your Timeshare's Realistic Value on the Resale Market
Many timeshare owners assume their timeshares have an inherent value, like real estate, that can be sold on the resale market (like a used car). Unfortunately, that is not always true, especially for older legacy timeshares or others where the supply exceeds demand. RedWeek's own panel of experts recommends that owners do as much research as possible to determine the realistic resale value of their intervals. There are several ways to do that, beyond just searching blindly on the internet (where you will run into companies that guarantee high prices for timeshares that may never sell). One generally reliable method is to contact a member of the Licensed Timeshare Resale Brokers Association (LTRBA), a group of about 64 brokers who specialize in selling and renting timeshares — they will typically give you a free estimate. RedWeek offers a free tool called What's My Timeshare Worth, which will give you active and historic resale (and rental) prices for any resort, so you can do your own poking around and estimating. RedWeek also offers a full-service resale program, which includes a professional valuation and pricing guidance.
Regardless of which service you use, owners who want to cancel their contract, for whatever reason, will benefit by seeking out professional advice about the value of their timeshare. That information will influence your decision to sell, rent, or (maybe) abandon your interval. Also, be prepared to swallow the pain that your timeshare is not worth what you paid for it.
List Your Timeshare for Sale or Rent
After doing your homework on your timeshare's resale value, consider posting your timeshare for sale or rent it out to recover some of your expenses. RedWeek provides these services to its 2.3 million subscribers — with both DIY and full-service options available. Many licensed timeshare brokers will provide this service as well.
LTRBA brokers tend to handle only high-value, brand-name timeshares that can be resold on the resale market (such as Disney, Marriott, Vistana, Hyatt, Wyndham and Hilton), usually for a fraction of their original price. These brokers typically charge $1,000 or more to handle a transaction, but they also take care of all the paperwork. RedWeek's full-service resale program, in comparison, is available to all owners, regardless of where they own, uses LTRBA licensed brokers, and provides the same professional services as a brokerage (it currently costs $125 for a 12-month posting, plus $399 or 3% commission when it sells). RedWeek also offers a DIY resale option for owners who want to save some money, and are comfortable coordinating their own closing.
Most timeshares don't sell quickly, so be prepared to wait many months for a sale. At the same time, high-value, high-season timeshares do tend to rent fairly quickly. So, bottom line, renting your timeshare is a good way to buy yourself time while figuring out your exit plan.
Consult an Attorney who Specializes in Timeshare Contracts
There is a considerable cottage industry of lawyers who assist owners trying to get out of their contracts. They have experience dealing with timeshare developers and HOAs, and have a broad perspective on what's possible because they interact with many owners. Legitimate timeshare attorneys will advise you whether you may have legitimate legal claims to cancel a contract (or even attempt to get your money back). They know how to contact your resort with demand letters and handle the negotiations on your behalf. One additional advantage of hiring an attorney is that, once your lawyer has contacted your resort, the HOA can no longer communicate directly with an owner. From there on out, all resort-to-owner and creditor communications go to your lawyer. Timeshare attorneys we've contacted tend to charge an upfront fee ($3,000 or more) to handle an owner's contract cancellation. In 95 percent or more of all cases, the lawyers try to arrange a simple settlement with the timeshare company to terminate your contract. However, when the facts support it, the lawyers actually file lawsuits to litigate contract issues. The threat of litigation triggers settlement talks.
Two caveats about timeshare lawyers: First, they cannot offer guarantees, so it is possible an owner could pay an upfront fee and still not get out of his or her contract. Second, it is not easy for the average timeshare owner to determine legitimate lawyers from those who just take advantage of unsophisticated owners. Major timeshare companies, moreover, are highly suspicious if not outright hostile to timeshare exit attorneys. So before you hire an attorney, do your research and demand references. Consult more than one firm. Walk away from outfits that guarantee outcomes. A good way to review an attorney's credibility is to check out actual lawsuits that they have handled. Legitimate law firms will post their cases on their own websites.
Hang Up on Unsolicited Callers Offering a Guaranteed Exit
There is also a group of unscrupulous and unreliable so-called "exit" or "transfer" companies that call timeshare owners out of the blue, offering to get them out of their timeshares. Most of these companies are scammers who promise to advertise and sell your timeshare — usually guaranteeing a sale at a good price, saying they already have a buyer waiting. These companies nearly always aim to secure an upfront nonrefundable fee of several thousand dollars. Down the road, nothing happens, and the timeshare owner is right back where they started, but poorer. So when you are contacted by a company you've never heard of or didn't solicit, hang up. (And even if it's a company you HAVE heard of, hang up, research and contact them directly — scammers will even pose as reputable companies like RedWeek to get your money.)
Don't Bother Giving Your Timeshare to a Charity
Some of the clever, but criminal, companies that prey on timeshare owners with transfer schemes also offer "donate to charity" scams. Donating a timeshare may sound like a reasonable solution for a longtime owner, but it generally does not work, because legitimate charities don't want to accept the obligation of having to pay your maintenance fee year after year. In effect, they won't accept a contract that puts a financial burden, instead of a benefit, on the charity. So the warning is: don't deal with a third party that says it will negotiate your charitable donation (again, for a multi-thousand-dollar upfront fee). If you are in direct contact with a charitable organization, they may agree to take your timeshare, but you may still have to pay them for the privilege of taking it off your hands.
File Complaints with Regulators and Law Enforcement
Many state and federal agencies investigate consumer scams and frauds affecting timeshare owners and they encourage consumers to file complaints. Usually, these agencies focus on criminal schemes, such as the timeshare transfer companies or charity scammers that defraud timeshare owners who want to get out of their contracts (by demanding upfront fees for services never rendered). None of these law enforcement agencies, however, actually help owners terminate their contracts. They do not negotiate on owners' behalf with timeshare companies or HOAs. Rarely, a major regulatory agency will launch a civil or criminal case against a timeshare company on behalf of thousands of owners who may have been bilked. The most recent example involves the Manhattan Club, which is under investigation by the New York Attorney General's Office. Now in its third year, the case is nowhere near concluding — and worse, for owners, there is no certainty that a resolution of the case will result in restitution or cancelled contracts. In the meantime, their maintenance fees continue to climb.
Stop Making Payments and Just Walk Away
RedWeek does not recommend this course of action, but for owners who just want out, and cannot find any other solution, your last resort to getting out of a timeshare contract is the obvious one: just stop making payments on your timeshare. Let it go into default and foreclosure, if necessary. Lawyers rightly advise that this is a risky strategy, since you cannot control how the company will respond to your default. Some go after owners aggressively with collection efforts. Others, particularly legacy resorts with tight budgets, will just take back the defaulted unit and try to resell it to a new owner who will pay the maintenance fees.
Many timeshare owners don't like the walk-away option because they fear it will wreck their credit. This is a realistic issue for younger owners who still expect to buy new mortgages or cars in the near future. But it is not a realistic threat for older timeshare owners, in their 80s, whose only major expenses may be birthday presents for grandchildren. The default option also is not pretty. Depending on the policies of the developer or HOA, owners who abandon their contracts may be subjected to creditor harassment, threatening letters, and foreclosure proceedings (which could cost money). But at the end of this draconian, but perhaps practical option, the owner is done. The developer or HOA will take back the timeshare and attempt to recycle and resell it, at high retail prices, to a brand new buyer.
Have you used one of these, or other methods to get rid of your timeshare? Let us know by commenting below.RedWeek would like to thank all of the people who contributed research to this story, but several chose to remain anonymous. Those we can thank by name include Dave Cortese, owner of Magical Realty in Florida and vice president of the Licensed Timeshare Resale Brokers Assn.; Adam Schwartz, vice president of Wyndham Resorts; Peter Roth, vice president of the American Resort Development Association (ARDA); Jake Bercu, treasurer of the Tahoe Beach and Ski Club HOA; Greg Crist, CEO of the National Timeshare Owners Association (NTOA); and timeshare owner David Barron.