Many timeshare developments have a homeowners' association (HOA), a nonprofit association that handles the day-to-day operation of the resort. Timeshare owners typically have to pay annual maintenance fees and special assessments to the HOA.
If, as an owner, you don’t pay the fees and assessments, the HOA might sue you for money or foreclose your timeshare.
What Are Annual Maintenance Fees and Special Assessments?
The HOA collects annual maintenance fees and occasional special assessments from timeshare owners to cover the costs of running the development.
How Timeshare Annual Maintenance Fees Work
An "annual maintenance fee," sometimes called an "annual assessment," covers everyday maintenance, repairs, and improvements for a timeshare development. The fee usually pays 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.
How Timeshare Special Assessments Work
A "special assessment" is a one-time charge for a timeshare cost or expense that annual maintenance fees won’t cover because not enough money is available. The amount of a special assessment varies widely, depending on what the HOA plans to do with the money. For example, an HOA might charge a special assessment of several hundred dollars to upgrade the gym at the resort or several thousand dollars to pay for repairs after a tropical storm.
What Happens If You Don’t Pay Your Timeshare Fees
If you don’t pay your timeshare fees or assessments, the HOA might cut off your access to the timeshare or its common facilities, like the community pool. Or the HOA could assign the debt to a collection agency. The HOA (or the collection agency) might also report you as delinquent to the credit reporting bureaus, which will hurt your credit scores.
Or it might sue you in court for the 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, instead of suing you for a money judgment, the HOA might foreclose your timeshare.
How Timeshare Foreclosures Work
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.
If your timeshare is deeded and you don’t pay the assessments, the HOA will probably also have the right to get a lien on the property. A timeshare lien on one owner’s interest doesn't affect the interests of the other timeshare owners. Once the HOA has a lien based on the debt you owe, it can then foreclose your interest in the property.
In most cases, the 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.
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. Normally, though, HOAs don’t start a foreclosure immediately after you fall behind; you'll get a chance to resolve the debt.
How to Avoid a Timeshare Foreclosure for Unpaid Fees or Assessments
If you can’t pay the HOA fees or assessments in full, you might be able to work out a payment plan or another option with 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. You might also consider:
- selling the timeshare
- negotiating with the resort to reduce the amount you owe, or
- working out a deal to give the timeshare back to the resort (called a "deed in lieu of foreclosure" or "deedback").
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.