Though consumer awareness around fraudulent exit companies and the challenges associated with getting out of a timeshare has risen in recent years, experts say timeshare ownership remains popular.
Like other forms of travel, the timeshare industry suffered during the COVID-19 pandemic.
Net originated timeshare sales have since begun to rebound, increasing 15% from the fourth quarter of 2021 to the fourth quarter of 2022, according to a report from the American Resort Development Association, and this year — according to Jason Gamel, president and CEO — they rebounded from 2019 levels.
For some existing owners, however, the pandemic may have led them to rethink their timeshare needs.
“The pandemic has spurred an increase in people wanting to get out of their timeshares,” Brian Rogers, owner of Timeshare Users Group, an online consumer advocacy platform, says. “Maybe you’ve only taken a few vacations over the last few years or so, and with the pandemic, you became completely unable to use the timeshare.”
Whether your ability to take vacations changed amid the coronavirus pandemic or you simply no longer want to pay maintenance fees on your timeshare, there are legal and safe options for getting out of a timeshare.
Many of these options, however, won’t result in the financial windfall you may be hoping for.
“People shouldn’t buy timeshares thinking they’re going to make money on them,” Gamel says. “You buy it to use it. If you just hand it over to your developer, that’s considered a win. That’s a good outcome.”
To get out of a timeshare legally, consider these options:
— Use the rescission period.
— Call the timeshare developer.
— Rent your timeshare out.
— Sell your timeshare on the resale market (but expect to take a hit).
— Gift your timeshare to a friend, family member or stranger.
— Stop your timeshare payments (but expect consequences).
— Avoid timeshare scams.
Use the Rescission Period
If you recently purchased a timeshare and are having second thoughts, take advantage of rescission laws, which allow buyers to cancel their timeshare ownership. These laws vary state to state, so review the laws in the state where your timeshare is located.
To cancel your timeshare ownership, you may only have a short window of time. The window varies but is typically between three days to two weeks.
Call the Timeshare Developer
There are more than 1,500 timeshare resorts in the U.S., according to the ARDA, and each may have a different process and criteria for relinquishing ownership of or selling a timeshare. Experts say an owner’s first step toward forming an exit strategy is to contact the developer.
Developers may allow owners to relinquish the deed through a deed-back program or surrender program. In this case, of course, owners do not receive any proceeds from the timeshare. But these types of surrender programs have become more widely available in recent years and may be the safest and easiest way out of a timeshare.
Other developers may require owners to pay the resort to take back the timeshare.
“That’s a giant bucket of cold water on your head,” Rogers says. “But there comes a point in every timeshare owner’s life when it’s time to get rid of it, and they start looking into selling it or seeing what they can get out of it. The reality is, in most cases, it’s worth nothing.”
Rent Your Timeshare
Renting your timeshare may seem like a good opportunity to make money from the property, and platforms like Redweek make this easier than it may have been in the past but you may still face challenges.
First, some resorts don’t allow you to rent out your timeshare, so start by speaking with the resort or the developer. Also, consider the costs associated with renting out the property — such as potential property damage or the time you must spend finding renters.
Ultimately, renting out your timeshare may be a short-term solution while you explore other options for getting out of your obligations.
Sell Your Timeshare on the Resale Market (But Expect to Take a Hit)
Timeshares don’t appreciate, so don’t expect to make a profit off of the sale of yours.
Factors like your timeshare’s location and the amount left on your mortgage will affect its resale value. You may want to contact a real estate agent or research similar timeshare resale values online to get a better sense of an appropriate listing price for yours.
If you do seek outside help with listing your timeshare, proceed with caution.
“Unfortunately, timeshare owners are often pestered by third-party exit companies promising money-back guarantees with nothing backing it up other than the words spoken,” Gamel says.
Instead of a third-party company, he says, “If timeshare owners no longer have someone who can use or wants to use the timeshare, developers have programs where they can give the timeshare back or in some cases the developer can help the owner sell.”
Gift Your Timeshare to a Friend or Family Member
If you have paid off your timeshare, one simple course of action may be to give it to a friend or family member. Keep in mind, however, that whoever receives it will be responsible for its annual maintenance fees and have to get out of the timeshare down the road, should they choose to do so.
Keep in mind that if the owner of a timeshare passes away, their heirs don’t necessarily have any obligation regarding it.
“You need to inform the resort immediately when the owner on the deed passes away,” Rogers says. “If the child is not listed on the deed, they have no obligation to that timeshare.”
[READ: Tax-Efficient Family Gifting: An Advisor’s Guide.]
Stop Your Payments (But Expect Consequences)
Stopping payments on your timeshare will have significant consequences but it’s a last resort for those desperate to get out of their contracts. Defaulting on a timeshare contract and associated fees or mortgage payments could have a negative affect on your credit score and lead to foreclosure.
[READ: What You Need to Know About Foreclosure Rates]
Avoid Timeshare Scams
Unfortunately, timeshare owners are often targets for fraudsters who promise them an easy exit from the contract. Experts say there are a few obvious signs that indicate an exit company or strategy is a scam.
“The golden rule, if there’s one thing I could say to every timeshare owner, 100% of the scams involve convincing you to pay a large upfront fee,” Rogers says.
Instead, use reliable resources to explore your options on the ARDA website, which provides support to timeshare owners hoping to get out of their properties.
If you’re not sure whether a timeshare exit firm is legit, research the company before working with them. The Federal Trade Commission suggests starting by searching online for the company’s name along with the words “scam” or “complaint.”
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Looking to Get Out of a Timeshare? Here’s How to Do It Legally originally appeared on usnews.com
Update 05/25/23: This story was published at an earlier date and has been updated with new information.
