When purchasing a timeshare many buyers look at the cost of the mortgage and believe that timeshare ownership is affordable. What they fail to realize is the other associated costs that are often overlooked when making their purchase. The two most commonly overlooked costs are maintenance fees and assessments.
The annual maintenance fees are used to cover the everyday operating cost of the resort and are split amongst the owners. These fees generally increase each year as the costs of goods and services increase. These maintenance fees may start out affordable. However, according to the American Resort and Development Association, maintenance fees increase an average of 8% per year. So after five (5) years these fees can almost double. Unless they are limited in your contract there is no cap to how high your maintenance fees may go. We have consulted with Clients whose maintenance fees have increased as much as 200%. As you can imagine this can become a very difficult expense to manage and often creates financial strain for timeshare owners.
Another often unaccounted cost is assessment fees. Assessment fees are fees that can be assessed by the resort for any repairs or refurbishments needed for the resort. These fees can be minimal, but if your resort is hit by a natural disaster such as a hurricane, these assessments can be significant. Recently, a resort issued an assessment fee of $5,893.32 per week owned. Needless to say, assessments of this amount can be financially disastrous to owners.
If a timeshare owner fails to pay either their maintenance or assessment fees, the resort can begin collections efforts, which will damage your credit and collection calls are serious nuisance. If an owner still refuses to or cannot pay these fees, the resort could resort to legal action in a court of law or a non-judicial foreclose on the timeshare which will seriously damage your credit. This could prevent you from purchasing or refinancing your home or getting any other type of loan.
Contact O’Grady Law for a free consultation. Call us today at 702-721-8708!