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How to Get Out of a Timeshare

Molly McCluskey

Depending on the perspective, vacation timeshares are either a great investment for frequent travelers or a money pit foisted upon the vulnerable by duplicitous salespeople. But whether someone bought a timeshare willingly and their vacation needs have changed, or they felt duped by pushy salespeople, there are 9.6 million timeshare owners in the U.S., and sometimes, an owner just wants out.

Vacation timeshares, in which owners purchase the rights to dedicated time at a resort or other getaway property, have been around for decades. An early forerunner to the sharing economy, timeshares are purchased either directly from a developer like Westin, Holiday Inn or Hyatt or on the resale market, often for a fraction of the price. The upfront costs and annual maintenance fees are designed to guarantee travelers a prepaid vacation, either at their home resort or traded for travel elsewhere.

"There are always people wanting to get rid of their timeshares year in and year out," says Brian Rogers, owner of the Timeshare Users Group, an online consumer advocacy platform. "More people out there are looking to sell than looking to buy."

When that's the case, experts say there are a variety of options, ranging from the free (or nearly free) and simple, to the more complicated and legally questionable:

-- Call the developer.

-- Rent it out.

-- Sell it on the resale market (expect to take a hit).

-- Gift it to a friend, family member or stranger.

-- Stop your payments (but expect consequences).

-- Avoid scams.

[See: 25 Ways to Fix Your Finances Fast.]

Call the Developer

When Joe Esch decided he was done using the timeshare he had purchased 15 years earlier for regular jaunts to Las Vegas, the 70-year-old retiree from Tennessee searched for options on how to legally exit it before deciding on a relatively new program within the industry that allows owners to simply surrender the deed.

"It was pretty painless," Esch says of the process of returning the deed to the developer, known as a "deed-back" program. "Getting the right number to call was a bit of a chore, and there were some fumbles along the way with submitting the right paperwork, but overall it was really a fairly easy process."

Although many of the largest timeshare developers, including Westin, Hilton Grand Vacations, Diamond Resorts, Marriott Vacation Club, Club Wyndham, Westgate Resorts, Hyatt, Sheraton and more, now offer some sort of deed-back or surrender program, it's not exactly something they advertise to their owners. After all, if all owners suddenly surrendered their timeshares, it would have dramatic consequences for the industry.

"The biggest change in the last five years is the number of deed-back or surrender programs offered by developers," says Rogers, who has been involved with Timeshare Users Group, or TUG, since its creation by his father 27 years ago as the first online timeshare community, and a current timeshare owner. "Some have just popped up, some have been in place for a long time and some need work. But there are now official surrender programs."

Esch consulted a list of resources created by TUG for owners needing to sell their timeshare. The American Resort Development Association, a lobbying group for the timeshare industry, has compiled a list of developers that offer deed-back programs.

"Your developer should be your first call," says Jason Gamel, president and CEO of ARDA. "When a timeshare no longer meets your vacation needs or your life circumstances have changed, call your developer and ask about free exit options. It can save you thousands of dollars and a lot of headaches to make that call first."

"There's a difference between 'I don't want to pay anymore,' and 'I'm 85, I've owned for 30 years, my husband's passed away, and I can't travel anymore,'" Rogers says. "Be honest with your situation, especially people who are seniors or who have been hit by coronavirus or haven't quite recovered from the last recession. This is a serious issue for many owners."

Esch, who purchased his timeshare on the resale market rather than directly from a developer, says he paid a fraction of the original retail price, didn't hold a mortgage on it, and didn't expect to, and didn't, receive anything in return. "I had used (the timeshare) for 13 or 14 years, and my circumstances changed. I'm 70 now, and have no desire to go back out to Las Vegas," he says. "I more than got my money's worth, and I'm more than happy to deed it back to the developer."

The process took about six months from Esch's initial phone call to the developer to the moment he received a letter stating he was out of his contract. It cost him $30. The developer, Holiday Inn Club Vacations, even sent him a prepaid envelope.

[Read: What to Do if You Can't Pay Rent During the Coronavirus Pandemic]

Rent It Out

For those who hold a mortgage on their timeshare and are feeling the financial pinch of maintenance fees in the midst of soaring unemployment and other hardships, renting might be an option. Most timeshare contracts allow for subletting, and timeshares are frequently listed on places like Airbnb and other sharing platforms. Ebay also offers hundreds of timeshares for auction at any given time, and TUG offers a rental marketplace as well as advice for owners on how to list their rental.

Sell It on the Resale Market (Expect to Take a Hit)

When frequent travelers Vicki and Gene Bozniak of Salt Lake City decided to streamline their adventures, they opted to buy into Vidanta vacation club in Mexico. During the onboarding process, the club offered to help the Bozniaks sell their timeshares in the Berkshires in Massachusetts and in Orlando, Florida, which they purchased for the points exchange options on the secondary market. "We're pleased because we're in the process of unloading timeshares where we have annual obligations," Gene Bozniak says. "We're getting older, and we probably won't be traveling as much internationally."

Timeshares aren't real estate and so don't appreciate in value. Quite the opposite, actually. And unloading one will depend on a number of factors, including how much, if anything, is left on the mortgage.

"If you told me you had no idea you could buy a used car or a new car, I would look at you like there's a third eye on your head, but most people have no idea about the resale market for timeshares," Rogers says.

Vicki Bozniak says she's not expecting the sale to be easy. "We'd like it to be quick, but people who want to sell timeshares always have a difficult time."

Gift It to a Friend, Family Member or Stranger

"Because timeshares lose almost all of their value almost immediately, some owners will literally pay to give their timeshare away, by paying the legal fees, deed transfer, closing costs and more," Rogers says.

If a timeshare is completely paid off, it can be a relatively simple matter of transferring the deed, and the recipient will then assume responsibility for maintenance payments. It gets more complicated if there is a balance left on the mortgage. Because the laws for gifts this size can vary by state, it might be helpful to consult with a tax attorney or financial advisor to avoid any surprises.

Stop Your Payments (But Expect Consequences)

A timeshare is a legally binding contract, so defaulting on payments, whether mortgage or maintenance, can have financial consequences, including impacting credit reports. But owners who have gone through all other options and still aren't able to find relief might have no other choice. Ultimately, the timeshare will be foreclosed upon for nonpayment.

"If it's the difference between putting food on your table, paying rent or paying medical bills, it's not a difficult decision," Rogers says. "If you've made an effort to sell it, give it away, give it back, if you've gone through good-faith efforts and you've run out of other options, not paying is an option. It's not the best option, but it is an option."

[Read: How to Avoid Financial Scams.]

Avoid Scams

There are a number of scams, ranging from the obvious to the sophisticated, that promise to help owners legally get out of their timeshare agreements. Experts and owners alike warn that they prey on those most desperate to get out of their timeshare, often older people and those in financial trouble. Using all the free online resources before attempting to engage with a possibly disreputable company that will ask for lots of money upfront can help people avoid adding more financial hardship to an already difficult time.

"Every scam out there involves collecting an upfront fee," Rogers says. "These companies range from doing nothing (to) targeting owners of companies that have free deed-back programs that owners could use themselves if they knew about them." The upfront fees can be in the thousands of dollars, even if that's more than the balance left in the mortgage, and can take several years to resolve.

Esch's neighbor was considering using an exit company until Esch pointed him to the free resources on TUG. Ultimately, his neighbor gave away the timeshare to a mutual friend, paying only a small fee to a title transfer company. Esch says he'd never recommend anyone pay a third party to get out of their timeshare.

"People think there's some sort of magic that these companies can do for you," Esch says, "but I don't know of a single person who's used one and gotten out of a contract smoothly and cleanly for what they could have done themselves for a lot less money."

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