Hawaii … Mexico … Jamaica …
Vacationing at any of these tropical locations is always a wonderful experience. But timeshare companies prey on happy vacationers, meaning that often they head home stuck with an expensive souvenir that lasts a lifetime — a timeshare contract.
If you’re somebody who did get roped in and need to exit the contract fast but haven’t had any luck, there’s plenty of companies promising to help – but be forewarned it isn’t cheap.
How Much Does it Cost to Get Out of a Timeshare Contract?
If you are hoping to get out of an average timeshare contract sometime soon, it will cost you.
Expect to shell out between $5,000 and $7,000 to legally get out of your timeshare, depending on the method you choose, with a few exceptions.
And be prepared to wait, as getting out of a timeshare contract does happen overnight, it could take between 12 to 18 months before all is said and done.
Additionally, it isn’t easy regardless of what the timeshare says or promises. Truth be told, some methods are more of a hassle than others and the price to get out of a contract might be more than you ever thought possible. Some complaints have cited costs as high as $14,000.
A good place to start researching is with the American Resort Development Association. The ARDA International Foundation (AIF) began in 1982 as the International Foundation for Timeshare (ITF) to fulfill the research needs of the fast-evolving timeshare industry. In 1997, it was restructured as a 501 (c) 3 organization and acquired its current name.
Are You in the Rescission Period?
The right of rescission is a consumer protection service provided by the federal Truth in Lending Act, aka Regulation Z.
It gives consumers the option to cancel certain residential loans within three business days of receiving and signing the paperwork.
The right of rescission serves as a remorse option to get out of a deal if you’re having second thoughts.
Here’s when it does and does not apply.
- When you refinance a mortgage with a different lender
- A cash refinance with the existing lender
- Home equity loans
- Most home equity conversion mortgage (HECM) reverse mortgages
- Bridge loans secured by the principal residence
- Home purchases
- Second home purchases
- Investment homes
- Vacation homes
- If you refinance a mortgage with the same lender.
- Business loans that are secured by a primary residence
Also, the right of rescission applies under four conditions:
- It’s a personal mortgage
- It’s secured by your primary residence
- It’s not being issued by your current lender
- It’s not being used to buy your home
Exception 1: If you’re doing a cash-out refinance with your existing lender, the right of rescission does apply to the amounts you’re borrowing that exceed what you currently owe.
Exception 2: The right of rescission does apply to a bridge loan that you’re using to buy your next home.
Even if you’re happy with the transaction and want to complete it, the right of rescission means it will take more than three business days for the loan to fund after signing the refinance or reverse mortgage contract. The lender needs to make sure you will follow through with the transaction before giving you the funds.
You can waive or modify your right of rescission in writing if you have a personal financial emergency. You must specify what the emergency is in a written request.
Your lender doesn’t have to approve your request. They might be reluctant to let you waive or shorten the rescission period because they don’t want a regulator or law firm to check their compliance with the Truth in Lending Act.
To exercise your right of rescission it must be in writing. Make sure to deliver it to the lender or get it postmarked and mailed before the three-day window closes.
Keep a copy for your records and get written confirmation that you exercised your right before the time expired in case your lender tries not to honor the request.
Write a Timeshare Cancellation Letter
An effective way to begin the timeshare cancellation process as mentioned above is to write a letter to the timeshare developer. It’s easy to draft a letter with these tips:
Get the cancellation request in writing
A cancellation request isn’t an email. It needs to be a typed letter, printed out and mailed to the timeshare provider. Keep a copy for your records.
Include a Clear Request to Cancel the Timeshare
Be very specific as to why you are writing — to cancel your timeshare purchase. No need to be rude, just be firm.
The subject line could say, “Request to Cancel Timeshare,” or “Timeshare Cancellation Request.”
In the body of the letter, state the request as quickly as possible; do it in the first one or two sentences.
Get to the point by stating you are writing to request immediate cancellation of your timeshare contract,” or “This letter is a formal request to immediately terminate my timeshare contract.”
List Vital Details
The job of the person receiving the timeshare cancellation letter is to prevent you from canceling your timeshare. Be sure to include all the details they will need to keep the request moving.
In your timeshare cancellation letter, make sure you include the following details:
- The name of the timeshare is listed on the contract
- The name of the contract holder
- The contract numbers
- The purchase dates
- Your membership ID
- Your phone number
In your letter, state that you aren’t interested in a resale, beneficiary transfer, or any other ownership opportunities. And state that you expect a response, by certified mail, acknowledging receipt of your letter within 30 days.
Send All Correspondence by Certified Mail
Send everything through certified mail so you know the request was received. Do the same thing for any future correspondence required throughout the cancellation process.
Here is a template to help write a cancellation letter to your timeshare company.
It is actually possible to make it through a timeshare presentation unscathed. Here are some tips:
If the above suggestions fail or don’t apply to your case, here are a few other options:
Is There a Deed-Back Program?
A deed-back clause or program allows you to give your timeshare back to the resort. Until then, are responsible for paying the annual maintenance fees along with the mortgage payments.s.
Ask the Resort to Take it Back
You can surely try but whether they will take it back is not likely. This is a legal, low-cost, and straightforward way to get out of it if you can. Check your paperwork to see if this is an option. Even if it’s not, give the sales manager a call. If properties are selling quickly they might see an opportunity to get the timeshare back for free and resell it.
You can surely try to get the resort to take back your unwanted timeshare, but it’s not likely. This is a legal, low-cost, and straightforward way to get out of it if you can. Check your paperwork to see if this is an option. Even if it’s not, give the sales manager a call. If properties are selling quickly they might see an opportunity to get the timeshare back for free and resell it.
Investigate the Timeshare Resale Market
You’ll need to do a lot of legwork searching for comparable properties and the sales rate. Check eBay, Craigslist, RedWeek, Timeshare Users Group and any other resale sites. If you can do it yourself you can save money. You will find that properties don’t have a lot of value unless they’re in high demand (Disney, for example) but selling even at a rock-bottom price can be a bargain if it keeps you from having to hire a company to help you get out of it. If you’re locked into a specific week, it’s worth checking with the people who own the week before/after yours to see if they’re interested in adding another week. If you don’t want to D-I-Y, hire an experienced timeshare broker.
Again, a good place to do some research about all timeshare-related items is at ARDA.
Hire an Attorney
Some lawyers have years of experience working in the timeshare exit industry. Their experience is why they are experts and why they can offer legal strategies to a client to get them out of a timeshare contract, even after the rescission deadline.
Hire a Timeshare Exit Company
Find an experienced timeshare exit team with a proven track record. Watch out for scams and always, ask questions. Many said companies offer free consultations, check with several before choosing. Some specialize in timeshares with mortgages, others focus on units that are paid in full, and some use legal strategies. Find the one that works best for your situation. Be careful as there are a lot of timeshare scams. Some legit companies have declared bankruptcy, leaving customers out of money but still saddled with the timeshare. Many charge upfront fees, so see if you can find one that offers a money-back guarantee and keeps some of your money in escrow. Escrow will help protect you if the company you’re working with suddenly declares bankruptcy.
TimeShatter is our top pick. They analyze your current contract and pair you with an expert who can help you legally exit your contract, saving you thousands of dollars in fees and giving you your vacation freedom back.
Texas-based Lonestar Transfer is a great choice if you still owe money on your timeshare, because it specializes in properties with mortgages.
Check out the rest of our recommendations here.
Rent Out Your Timeshare
One effective way to ease the burden is to hire a company that specializes in renting out timeshares, they will know each resort’s rules, and will make sure you’re protected if the renter damages your property. Some vacationers opt for these because they get the additional space and amenities of a timeshare property without timeshare ownership. Another important thing about renting it out is that you can at least make enough to cover maintenance fees and special assessment fees.
Give Your Timeshare Away
See if a friend or family member wants the timeshare or offer it to a stranger who will take over the contract and assume the annual fees. You may have to pay an attorney to cover the contract transfer process. Don’t give it to a charity or church as chances are they won’t want it. Some places might take it if you agree to keep paying the fees, but what’s the point? You’d be better off renting it out and at least reaping some of the rewards as stated above.
This is not recommended and may even be a bad idea if you stop payments and walk away unless you’ve been guided to do so by a lawyer.
Stopping payments will hurt your credit score, and no one wants a foreclosure on their credit report. Plus, you’ll have to deal with a collection agency which could be frustrating and annoying.
Before You Decide How to Proceed…
Make sure you know what kind of timeshare you have as they are not all the same or work the same.
Deeded Timeshare Agreements
With a deeded timeshare you typically buy a specific week at a specific property each year. The period is not flexible so be very clear on your dates if you can.
Also, note according to the Federal Trade Commission, these are considered actual real estate that your heirs could inherit.
With a deeded timeshare, you own an interest in the timeshare, and typically, it’s a percentage of a timeshare unit, along with other people who also purchased interests.
You’ll get a deed that spells out all ownership rights, and your interest is legally considered real property. If you purchase a right-to-use timeshare interest, you don’t get a legal interest in real property. Instead, this means you’re buying the right to use the property.
Right-to-use timeshares often expire after many years — 20 or 99 years — and at the end of this time, your right to use the timeshare ends.
These let you use your allotted timeshare points at various properties and are usually offered by popular hotel brands like Hilton, Hyatt, Wyndham, and Marriott. The number of points needed varies on the property, location, length of stay, and time of year. You’ll still pay a timeshare maintenance fee even though you aren’t buying a specific spot at one property.
Vacation clubs let you pay an initial fee, and after enrollment, you choose the resorts where you’ll stay. The difference is that you pay each time for the cost of staying there. Other vacation clubs claim that, once you enroll, you’ll get discounts on travel, lodging, or other vacation-related amenities.
However, before you enroll in a vacation club, know what you’re getting upfront. Even if marketers and salespeople are calling it a “vacation club,” they might be referring to something completely different. For example, “Disney Vacation Club,” is not a vacation club, it’s a points-based timeshare.
Vacation clubs can be a viable alternative to timeshares as they offer discounted travel options.
Before You Commit to a Timeshare or Vacation Club…
It’s imperative to learn the actual cost from the get-go before signing up.
Add all the payments, including the initial payment, fees, taxes, and travel costs to get there, plus any other yearly charges. Is that the amount you want to spend on a vacation every year? Do you want to vacation at the same spot every year? If there’s an exchange program, be clear on how it works.
If it says you can exchange your points or weeks to vacation at different properties, find out if there’s an extra charge for booking a property through the exchange — or different charges for other types of properties. Is this still a good deal? If there’s a point system, understand the details. The maintenance fees and special assessment fees are going to increase, so keep that in mind, too.
Why are Timeshares a Bad Idea?
- They can be quite expensive
- You’re stuck with the same company and vacation location
- You may not be able to use it when you want
- You might get too busy to travel
- Job — or life —- circumstances may change (There might be a global pandemic that prevents travel)
- The value doesn’t appreciate
- They don’t generate income
- They aren’t a liquid asset
The Bottom Line
Overall, the average cost of trying to get yourself out of a timeshare contract is certainly not cheap as it can cost a lot depending on each case. But don’t despair as there are several ways to unburden yourself from a timeshare contract — be it writing a letter yourself to the timeshare company or hiring a lawyer, or timeshare company to do it for you.
It’s best to do explore all your options before you do sign on with a company or a lawyer to help you get rid of the property that’s currently causing you stress.
Special assessments are one-time fees levied by timeshare HOAs or the Board of Directors to cover unique or unexpected resort expenses. These fees are often unscheduled and can be substantial, in addition to standard annual maintenance fees.
A timeshare foreclosure will not ruin your credit score forever, but it could leave a significant mark on your ability to obtain another mortgage for up to seven years. You might also face future loan denials or high-interest rates if you apply for other forms of credit, i.e., a car loan or credit card.
It is not simple, or easy to sell a timeshare regardless of what you may have heard, but it can be done if you take the time to research the resale market. Do know beforehand how to recognize and avoid scams.
If you stop paying on your timeshare loan, you could face foreclosure. Foreclosure is the process when the lender files to take possession of the property and sells it at auction to recoup the money owed. Your contract authorizes the trustee to sell the timeshare in the event you stop paying for it.