How to Get Rid of a Timeshare with a Mortgage Balance

Getting rid of a timeshare is never easy and a mortgage only makes it harder. If you want to get rid of a timeshare with a mortgage balance, you’re facing an uphill battle. It will be difficult, it may cost money, and you may not succeed. That’s not good news, but it’s the truth.

Can you get rid of a timeshare with a mortgage balance? Let’s take a closer look.

Know Your Loan: Is the Mortgage Loan On Your Timeshare Secured By The Property?

Many timeshare buyers finance their purchases through the resort. Timeshare sales presentations almost always include a financing option. In this case, your mortgage is secured by your timeshare ownership. Your timeshare is considered to be encumbered. You will not be able to sell the timeshare unless you find a buyer willing to assume the mortgage, which is unlikely.

If you want to get rid of a timeshare with a mortgage balance, you need to know who you owe the balance to, how much you still owe and whether your loan is secured by the timeshare you own.

Know Your Timeshare: Different Kinds of Timeshare Plans

There are four types of timeshares.

• Deeded Timeshares. A deeded timeshare owner gets a deed for their week and is a part owner of the property. Deeded timeshares typically involve a contract in perpetuity (forever) and tie the owner to a specific resort.
• Right to Use Timeshares. A right to use timeshare does not involve ownership. Instead you have a lease that gives you the right to use the timeshare under stated conditions for a set period of time. The lease can still be sold.
• Leasehold Timeshares. Some timeshare resorts, notably Disney Vacation Club, use a lease with a specific expiration date rather than a deed.
• Points-Based Timeshares. With a points-based timeshare contract you buy annual points that you can redeem at different resorts under a specific owner. These are usually offered through well-known hotel companies, like Hilton and Marriott.

Knowing what type of timeshare you have will help you choose a plan to dispose of it!

Consider Refinancing

Refinancing won’t get rid of your timeshare, but it can get rid of your timeshare mortgage. It’s easier to dispose of a timeshare if the mortgage is paid off.

You will still have to pay off the loan, but you can sell the timeshare and stop paying that annual fee. You may also get a better interest rate than you have on your timeshare mortgage. Before considering a refinance, check your timeshare mortgage to see if there’s a prepayment penalty.

Refinancing is a good option if your credit is good, which will enable you to get a good interest rate on your new loan, and if the balance left on your timeshare mortgage is relatively low.

Will The Resort Take Your Timeshare Back?

You may be able to return your timeshare to the resort. Some timeshare resorts have deed-back programs that allow you to return the timeshare to the resort. Two examples are Wyndham’s Certified Exit Program and Marriott’s Deed-Back program.

These programs may not be advertised. Call your resort and ask to speak to whoever handles deed-back or exit programs. Many deed-back programs will not accept properties with an outstanding mortgage balance. In this case, refinancing your timeshare mortgage could be an option.

Can You Sell Your Timeshare?

Selling your timeshare sounds like a perfect solution. You sell the timeshare, use the proceeds to pay off the mortgage, and you’re free. It usually isn’t that easy.

Timeshares are difficult to sell. Timeshares at popular high-demand resorts may be salable, but you will probably get only a fraction of the price you paid for the timeshare. The secondary market is filled with people eager to get rid of their timeshares, and many sellers are offering their timeshares for next to nothing.

It may be difficult or impossible to sell a timeshare that is encumbered by a mortgage. Your resort may also have restrictions on sales. The resort may have to approve the sale and the contract may specify that if the buyer fails to pay the fees the resort can still come after you. Check your contract and seek advice from a lawyer if the terms aren’t clear.

Ask the People Who Own the Timeshare Weeks Before and After Yours

Your timeshare may have more value to the owners of the adjacent time blocks before and after yours. An additional week will give them extended vacation time. This will only work with deeded timeshares that give you the right to a specific week at a specific resort.

Contact your resort and ask them for the contact details of the timeshare owners with the weeks before and after yours. The effort will cost you nothing so it’s worth a try.

Will the Lender Allow a Short Sale?

A short sale occurs when the property is sold for less than the amount remaining on the mortgage. The balance has to be either written off or converted to an unsecured loan.

Some lenders may be willing to settle for a short sale as an alternative to foreclosure, which can be an extended and expensive legal process. You’ll still need to find a buyer and if the gap between the sale price and the amount remaining on the mortgage is large the lender may not be willing to approve the deal.

Can You Sell Your Timeshare on ther Open Market?

There is an active resale market for timeshares. The two busiest timeshare listing sites are Timeshare Users Group (TUG) and Redweek, both of which have large numbers of listings. Check listings for timeshares similar to yours on sites like eBay and Craigslist to see what sellers are asking for them.

Recent data from Redweek give some idea of the resale value of timeshares. They state that a timeshare at Wyndham’s Bonnet Creek Resort near Orlando, Florida is currently listed for sale at $2,900. The maintenance fees on the property are $2,600 per year. Another listing at Hyatt’s Pinon Pointe Resort in Arizona asks $2,900 for a property with $1,026 in annual maintenance fees.

If anyone claims that they can sell your timeshare at a high price, watch out. Many timeshare sales sites will take a large listing fee in advance and do very little to sell your timeshare. That’s a way to spend even more money with little chance of return.

Can You Give Your Timeshare Away?

You’ll hear many stories of people who gave their timeshares to charities, to relatives or to strangers. In reality, this seldom happens. Most charities and most potential recipients don’t want your timeshare, for the same reasons that you want to get rid of it.

Again, the resort will probably have to approve any transfer and if the party receiving the timeshare fails to make payments, you may be liable.

Can Your Rent Your Timeshare Out?

Renting your timeshare out won’t get it off your back, but it may cover your maintenance fees and part of your mortgage. If you’re putting your timeshare up for sale you may want to consider renting it out while you look for a buyer.

There are three main options for renting your timeshare out.

• Ask the resort. Many resorts or timeshare developers will rent your week for you.
• List your rental on Redweek or TUG. These sites have active rental listing marketplaces.
• Use a third-party listing service. Watch out for excessive listing fees and promises of unrealistic rental fees.

Remember that there are often more people trying to rent out timeshares than there are prospective renters. It may be hard to get the price you want.

What If You Just Stop Paying and Walk Away?

Some users claim that if you just stop making payments on the mortgage and timeshare maintenance fees, the resort will cancel your contract and take the property back. Unfortunately, the reality is not so simple.

If you’re trying to get rid of a timeshare with a mortgage balance you are looking at two payments. There are maintenance fees and special assessments, which you pay to the resort, and mortgage payments, which you pay to the lender.

If you stop making payments, both will report your late payments to the credit bureaus. Your credit will plummet. If you stop making payments for an extended period, the resort will initiate foreclosure proceedings, which will hurt your credit even more.

You may be able to escape foreclosure with a short sale or deed in lieu of foreclosure, which returns your deed to the resort voluntarily, but there’s no assurance of this.

If you stop making payments and the resort forecloses, they will take the timeshare back and sell it. If the sale price is lower than the balance on your loan, the lender can still come after you for the balance through a deficiency judgment.

If you refuse to pay this the lender will probably sell your account to a collection agency. You could start getting harassing phone calls from a debt collector, and the agency will place a collection account on your credit report and could sue you.

Seek legal advice before stopping payments on your timeshare. The consequences can be significant.

Do You Have Legal Grounds to Get Out of Your Timeshare?

The timeshare sales business is notoriously sketchy. Salespeople will promise the world and skip past important details. If they didn’t, they wouldn’t sell many timeshares: not many people would sign these contracts if they fully understood what they were committing to.

If your timeshare resort owner or their sales staff violated consumer protection laws, your contract may not be valid. That could be a viable escape. There are several possible grounds to challenge a timeshare contract.

They Sold Something They Didn’t Have

Some timeshare resorts sell more weeks than they have available, expecting that some owners won’t use their weeks or will try to return them during a brief window (the rescission period) when returns are allowed. In 2020, the Manhattan Club reached a $6.5 million settlement after repeatedly misleading customers.

It’s worth checking to see if your timeshare is the target of regulatory action, class action lawsuits, or has an unusual pattern of online complaints. These may indicate that you have a valid legal ground to challenge your contract.

They Used Illegal Sales Practices

Many sales practices used by timeshare resorts are questionable and some are downright illegal. If you can prove that your resort made inaccurate promises or used deceptive sales techniques, you may be able to invalidate your contract.

Some questions to ask:

• Did the timeshare resort tell you about the rescission period?
• Did anyone imply that the timeshare resort would buy your existing timeshare if you bought it with their resort and then not follow through?
• Did a timeshare resort advertise no or low interest financing but then charge you a normal or high interest rate on your loan?
• Were you promised a tax benefit?
• Were all of the fees disclosed?
• Did the resort refuse to give you a promised gift if you didn’t agree to purchase a timeshare?
• Were you told your timeshare purchase was an investment that increases in value?
• Were you told the developer would buy the timeshare back when you want to sell, only to find this wasn’t true?
• Were you told your maintenance fees would never go up?
• Were you promised an hour-long tour that lasted all day?
• Were you asked to join a dinner party or meeting that turned out to be a sales presentation?

If any of these are the case, you may be able to cancel your timeshare contract. That may require negotiations with the resort and possibly legal advice. You can get this from a reputable timeshare cancellation company or from an attorney.

Want to know more about getting rid of a timeshare if you’re still paying it off? Watch this to learn more:

Should You Try a Timeshare Cancellation Service?

Many companies will promise to get rid of a timeshare with a mortgage balance. Many of them will charge you large fees, sometimes in advance. They may make unrealistic promises. Some of them are outright scams.

If you’re considering using a timeshare exit company, do your research carefully and choose one with a verifiable track record. Make sure any company you talk to offers a free consultation. Look for an exit team with an escrow option that assures that they don’t get paid until they get results.

See a Lawyer First

If you believe that your timeshare resort broke the law and that you have grounds to cancel your contract, you may wish to consult an attorney before you talk to the resort or to a timeshare exit company. Many law firms will provide a free initial consultation and a professional opinion may help you choose the best course of action.

Many timeshare exit companies will simply pass your case on to an attorney, so you might as well hire one yourself. At least the lawyer will be working for you, and not for the timeshare exit company!

Watch For Scams

Watch out for companies that will take your money and subcontract your case to a lawyer. Be wary of companies that don’t offer an escrow payment option that releases your money to the company only when you are free of your timeshare. Watch out for aggressive sales pitches, and always do research into a company’s record before retaining them.

Timeshare scams are rampant, and people who are desperate to get out of a timeshare are prime targets. You may have been fooled by the timeshare resort, don’t be fooled again by companies that promise to cancel or sell your timeshare!

The American Resort Development Association (ARDA) has compiled a helpful list of steps to follow to avoid timeshare exit scams.

The Bottom Line

Getting rid of a timeshare is not easy. A mortgage makes it even more difficult. It is still possible. You’ll have to thoroughly evaluate your situation before making a move. Know what type of timeshare you own, what type of loan you have, and what your loan balance is. Check the resale and rental markets to get a realistic sense of your timeshare’s value.

If you believe that your resort used fraudulent or deceptive methods to sell your timeshare, talk to a lawyer. That will give you a professional review of your options and the probability of success.

Above all, be alert for people who want to cheat you. The timeshare industry is rife with scams. Anyone who promises to sell, rent, or otherwise gets rid of a timeshare with a mortgage balance but wants a hefty sum upfront is probably not working in your interests!

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