-by Mark W. Bidwell
Timeshares can allow you and your family to share quality time together and create lifelong memories of days on the beach. But if you find yourself too busy or financially unable to take your vacation each year, a timeshare can quickly become a burden to both you and your heirs.
The problems with timeshares include an immediate loss of value the second you sign the contract, annual maintenance fees whether you use it or not and travel expenses in order to use your timeshare.
If you decide that the benefits of owning a timeshare no longer outweigh the costs, you have a few options available to you.
1. You can simply transfer ownership to someone else as an outright gift. For instance, if you would like to sign over your timeshare to your son or daughter as a gift, all you have to do is transfer the timeshare title into their name and file all of the appropriate paperwork, including quit claim deed, with the proper authorities.
2. You can sell your timeshare via a timeshare broker and hope to profit from the sale.
A couple of things to keep in mind: unlike traditional real estate agents, the timeshare broker does not work on a contingency basis. Instead, most brokers charge an upfront fee. This fee is paid even if a buyer is never found.
The timeshare broker may use his or her best efforts and have the most honest intentions to sell the timeshare, but if there is no market and no one is willing to buy, then the timeshare remains yours, along with all of the related costs, and you also lose the money that you paid upfront to the broker.
3. You can attempt to cut your losses and sell directly to a “sham corporation.”
Sham Corporations “buy” the timeshare from you, the timeshare owner. But instead of you actually receiving money from this “sale,” you actually pay the Corporation a service fee to take over ownership of the timeshare.
Why would you want to pay someone to take a timeshare off your hands? To avoid the ongoing yearly fees that again, you pay whether you use your timeshare or not.
Once you “sell” it, the timeshare is now owned by the Sham Corporation. Theoretically, the timeshare resort management company will then attempt to collect any related fees from the corporation/business entity instead of you.
However, typically these Sham Corporations neglect to pay any maintenance fees. But because there is no longer an individual to whom the resort management company can send threatening collections letters or make harassing phone calls, the timeshare sits in limbo.
The Sham Corporation makes their money from the service fee they collect from you when they take ownership. Obviously there are enough people willing to pay someone else to take over their timeshare to keep these Sham Corporations in business.
Some of the more creative Sham Corporations will contact the resort management company to sell them the timeshare back. It may be better from the resort’s point of view to take back ownership and sell it to someone else than to have at timeshare sit in limbo without receipt of the maintenance fees.
Because of this, many resort management companies will now no longer accept transfer of ownership to a business entity such as a Corporation, or Limited Liability Company. Instead, they continue to hold the prior individual owner responsible for the maintenance fees even though you have officially transferred ownership to “someone” else.
So be warned that this “opportunity” to unload your timeshare will cost you upfront and might not work in the end.
The safest way to transfer your timeshare is to give it away as a gift to a friend or family member. Deed and Record offers an alternative with genuine, bona fide gifting to friends and relatives.
Mark W. Bidwell has served on the Estate Planning Steering Committee, Orange County Long Beach Chapter of CPAs, the California Association of Marriage and Family Therapists Board, and Ocean Institute Endowment/Planned Giving Committee. Mr. Bidwell has been an adjunct professor for Pepperdine University, lecturer for the California CPA Education Foundation, coach for the American Youth Soccer Organization and coach for National Junior Basketball.
Mark W. Bidwell’s undergraduate degree is from the University of Colorado, Boulder, and his juris doctorate degree is from Loyola Law School of Los Angeles, California.