Can I get out of a timeshare contract?
Dear Senior Legal Line,
I went to Florida on vacation with my wife. While there, we were enticed to sit through a presentation about a timeshare. Well, the short of it is that we signed up for the timeshare. It seemed like a good idea at the time, but now I think we were just caught up in the moment – and the salesman was so smooth! Now, we realize that we will not be able to use the timeshare (one week per year), so we want to get out of it. Can we, and what happens if we don’t?
While some people really like timeshares, most people spend their time trying to get rid of them. If you realize that you do not want the timeshare right away, most timeshare contracts have a window of time to cancel the contract. Usually, this window of time is only a few days long. Unfortunately, after the short “cooling off” period, timeshares are notoriously hard to get rid of. I assume that you are beyond the cooling off period and now appear to be stuck with the timeshare.
If this was a Minnesota timeshare, instead of a Florida one, the cooling off period does not start to run until you get a copy of the contract, and a copy of the public offering statement of the timeshare (if the project consists of more than 100 potential sales). See Minnesota Statutes Section 83.28. A public offering statement tells you more information about the timeshare company. To cancel it, in Minnesota, you have to send a written cancellation notice to the seller to the address in the contract. The cancellation does not have to be in a particular format and it is effective on the date of mailing. I do not know if Florida law is similar. Perhaps your cooling off period has not started if Florida has a similar law and you have not received everything in writing. I encourage you to contact the Florida attorney general’s office.
The first thing you have to do is to know what you bought. I presume you own a fixed week, because there was no deed to you. There are other kinds of timeshares like deeded property, life property, floating time, and points. If you do not know what you own, call the main office at the time share resort in Florida and ask for this information in writing.
Typically, a person pays over $10,000 for the timeshare and then has a contract to pay another sum per year for fees. Sometimes, if you are current on the fees, you may be able to convince the resort to take the timeshare back. Sometimes, the contract actually gives the resort a right to buy it back first, typically at a percentage of what you paid. For example, they might pay you 20% of what you bought it for in order for you to get rid of it.
What if the timeshare resort does not buy it back? Timeshares are a depreciating asset. There are always more sellers than buyers for timeshares. It is likely that you will lose money on the timeshare in order to get rid of it, but if you get rid of it, you will save yourself all those fees. It is also likely that the fees will increase over time as the condo gets older. If there is a fire or other damage to the condo that the insurance does not cover, there may even be risk that you will have to help pay for repairs. In other words, even if you take a big hit in getting rid of the timeshare, you probably will save money in the long run.
So, what happens if the resort refuses to buy it back from you? Unfortunately, you cannot force them to take it back. They know how hard it is to sell timeshares, so perhaps they’d rather get your maintenance fees. Perhaps you could send a complaint to the Florida attorney general’s office, in order to help stir some movement from the resort.
You can try to sell the timeshare on Craigslist, Ebay, in the classifieds (either in the paper or on-line in a reputable timeshare site). Craigslist is free. Ebay will have a small charge. Do not pay anything upfront other than a small fee (e.g. $10 or less) to any on-line sites. The on-line sites should be those exclusively for selling timeshares. Keep in mind that you should think like a realtor and describe the timeshare so that others will be interested in it. I do not know what week you have in Florida, but hopefully it is during the winter, which would probably have more interest to buyers. If you do not get any takers, then perhaps you could find out who has the timeshare weeks immediately before or after your week at your condo – they may want your timeshare to extend their vacation time.
You could hire a real estate agent to sell the timeshare for you, but don’t pay anything up front since timeshares are hard to sell, your money will be wasted. Get a real estate agent who works on commission.
You may be able to give your timeshare away. Freecycle is a website that is free. Some charities like to get them in order to use in fund raising promotions. You must be paid off and current in your fees. You may be able to deduct the fair market value of the timeshare on your federal taxes, but you should contact your tax advisor for more details. Keep in mind that if you give something away without getting fair value in return, and need the county to help pay for your long term care within five years (Medical Assistance aka Medicaid), the gift will make you ineligible for a period of time from the date of application forward based on the value of the gift. The timeshare will suck money out of your assets at a high rate, so that this loss of money is probably of higher importance to you than a potential Medical Assistance issue. Also, since timeshares are so difficult to get rid of, you could probably argue that it had little to no value – to prove this, document your efforts to sell the timeshare.
I suppose you could also just walk away, but you risk getting sued for the fees etc. If you get sued in Florida and the resort wins a judgment, they can try to have it docketed as a foreign judgment in Minnesota and if successful it becomes a lien on your Minnesota real estate. If they sue you in Minnesota and win, it will automatically become a lien on your real estate you own in the county in which you were sued. If the real estate is your homestead, the lien cannot be foreclosed. If you sell you homestead while the lien is attached, Minnesota law also protects the sales proceeds from having to be paid to the lien, but only protects them for one year after the sale. Minnesota Statutes Section 510.07.
Further, if they try to collect a judgment by going after your income they will not be successful if your income is from Social Security benefits, Veterans benefits, a pension, is a low wage, or if you receive government benefits based on need. These types of income are protected from garnishment by federal and state law. Pensions are protected by state law up to an amount needed for living expenses. One car is exempt up to an equity value of $4600. If you have more than one car, they could try to take it but most judgment-creditors want cash. Also, if you walk away from the timeshare, your credit report will reflect the unpaid debt and your credit score will get worse. If you need credit in the near future, it may not be a good idea to walk away.
If you have the type of timeshare where you have a deed, if you do not pay the fees, the timeshare may be foreclosed.
I know how frustrating this must be for you. Hopefully, others can learn from your experience. Do not buy anything under pressure – walk away. Do not sign anything when you feel rushed or that you do not understand.
Senior Legal Line is a legal question and answer line for Seniors.
The column is written by the Senior Citizens’ Law Project. It is not meant to give complete answers to individual questions. If you are 60 years of age or older and live within the Minnesota Arrowhead Region, you may contact the Legal Aid Service of Northeastern Minnesota with questions for legal help by writing to: Senior Citizens’ Law Project, Legal Aid Service of Northeastern Minnesota, 302 Ordean Bldg., Duluth, MN 55802. Please include a phone number and return address. To view previous articles, go to: www.lasnem.org. Reprints by permission only.