Timeshare Questions - Can a Timeshare Be Foreclosed On?

by Emma Martin
(USA)

Thinking about walking away from your timeshare? It's a thought that crosses many people's mind, especially when the bill for the maintenance fees comes during the early part of the year.

If you have trouble keeping up with your maintenance fees each year, you might wonder what would happen if you just abandoned it. Would your timeshare get foreclosed on? What would happen to your credit rating? Here's an overview of how you can expect the resort to handle this.

Most timeshare associations don't act like you expect your bank to act when you don't pay your mortgage. Your house is a valuable piece of property that your bank can sell after they foreclose on it. It will cost them money and in a market like the one we are experiencing now, they may be left holding it for a long time. But it is still a pretty sure bet that eventually they will be able to sell the house and recoup most of their investment, possibly even making a profit if the house's value has risen substantially.

This isn't the case for most timeshares however as they do not retain value the way homes do. In fact, most timeshares sell for less than 50% of their original price when they are put up for resale. Some sell for far less than that.

This means that there is no advantage to the timeshare association that would encourage them to foreclose. So instead, they will pursue the outstanding maintenance fees through legal means. In most cases, this means that a collection agency will be hired to follow up on your non-payment. It is also possible you can take a hit to your credit reports for non-payment or late payment too. An aggressive association may even pursue you in small claims court and have a judgment made against you.

So as you can see, it isn't simply the case that you can walk away from a timeshare and the association will foreclose on it. In most cases, they won't do that, as they would much rather have their money than get stuck with a timeshare that they can't resell. In the long run, you will most likely wind up having to pay the maintenance fees anyway, while still suffering harm to your credit report. So your best bet is to do what you can to get this year's maintenance fee paid and then start looking for a buyer who can take over the timeshare before next year's fees become due.