First, pick up the phone, then consider these escape strategies
The Challenge
“More than three decades ago, my parents bought a timeshare,” opened the message from Lisa Evans, a retiree from Oregon. Over the years, this situation echoed countless others, and I knew what was next. Lisa wanted to help her widowed mother offload the timeshare and the $1,200 annual fees attached to it. The family hadn’t enjoyed the timeshare, outside of Lake Tahoe, in years.
Lisa had done her homework. She explored selling it on eBay and even thought about donating it to charity, but nothing worked. The next step seemed to be a timeshare exit company, but the costs were steep. “I’m not comfortable spending $10,000 to end this,” she confessed.
This is a common story. Almost 10 million households own timeshares, according to the American Resort Development Association. Nearly 850,000 of these would like to sell soon, based on pre-pandemic estimates. Some, like Lisa’s mother, Carol Evans, 85, are no longer able to travel. Others can’t afford the ongoing maintenance fees, regardless of usage. Still, others are frustrated by the broken promises of property swaps. That’s why there are so many ads for timeshare exit companies — businesses claiming to free you from your contract.
The Strategy
Experts agree that the first step is to contact the resort directly. When on the call, don’t settle for just anyone. Request to speak with the person in charge of “deed-backs” or “surrenders” — a process where you return the property to the company, sometimes for a few hundred dollars. Explain your situation thoroughly and explore possible solutions. Few resorts openly advertise this service, but according to Brian Rogers, who heads Timeshare Users Group, “most major programs have a deed-back option.” To qualify, you generally must be current on your dues and have no remaining loan balance. Some places might only accept deeds if you’re in financial distress. Less formal resorts might still negotiate. “Sometimes, a loud voice is necessary,” Rogers advises. Just be cautious of any resort company trying to pressure you into buying more points or “upgrading” before letting you exit. Simply decline, hang up, and move on to one of these other options.
- Stop payments. First, assess your situation. If you took out a loan for the property and still owe money, stopping payments will damage your credit. “The creditor doesn’t care why you can’t pay,” Rogers explains. “You loaned money and didn’t repay it.” However, ceasing to pay annual fees might not be reported to credit bureaus.
Frequently, resorts will accept a surrender when payments stop, as it’s often cheaper than foreclosing, Daniel Blinn, a Connecticut attorney specializing in timeshare cases, notes. “Usually, the cost isn’t high enough for a resort to sue. They’ll usually just resell the timeshare.”
- List it on the resale market. You might not recoup much, if anything, unless it’s a premium timeshare in a top-tier chain like Disney, Marriott, or Hilton. If a buyer is found, you deed the property to them, and they take over the fees. While listings may be available on eBay and Craigslist, dedicated forums like tug2.com (Timeshare Users Group) and redweek.com are more focused on timeshares.
- Hire a company to assist. Proceed with caution. The BBB (Better Business Bureau) reported in 2019 that “complaints against Missouri-based timeshare exit companies have surged in recent years.” Often, these companies emerged in Missouri due to the prevalent timeshare industry in the Branson area, and more have emerged as owners cut back on spending during the pandemic. Complaints involved high-pressure sales tactics, scare tactics — like claiming your heirs will be burdened with fees after your death — and cases that drag on for years. The biggest warning sign, Rogers mentions, is requiring upfront payment. “Absolutely not. An exit company should never be used,” Rogers states.
The exit company route is only worth considering if you can’t handle the process yourself and are willing to pay a significant sum — typically around $4,500. The company or its associated lawyer will handle the deed-back process or notify the timeshare company of your non-payment.
If you do opt for a company, choose one that’s been in business for at least five years, then check their BBB profile to see how they’ve handled complaints. “Any long-standing company has had complaints. Did they resolve them? Did they offer refunds and make things right?” asks Gordon Newton, whose Newton Group has an A-plus rating from the BBB.
The Resolution
Lisa’s story ended well. She didn’t need to take any of these steps. She called the resort company, explained the situation, and was informed that, without a formal deed-back program, they would accept the timeshare if she provided her father’s death certificate. The property would go through a foreclosure process, but it wouldn’t damage her mother’s credit score since the resort wouldn’t report it. The whole process would wrap up in under six months. “I’m thrilled!” Lisa said. “I wish I’d known this two years earlier.”
Author Bio
Clare Jacobs, AARP’s financial ambassador, is the founder and leader of HerWealth.com. As the host of AARP’s Bridging the Wealth Gap and HerWealth with Clare Jacobs podcasts, Clare is an award-winning financial journalist known for simplifying money matters and promoting financial literacy. She’s spent the past quarter-century dedicating her work to financial empowerment.
