Beware of time share maintenance fees

Owners in default may be sued for unpaid charges, foreclosed

By Inman News Feed
Add Comment Add Comment | Comments: 0 | Posted May. 9, 2011

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Owners in default may be sued for unpaid charges, foreclosed

Benny Kass
Inman News™

DEAR BENNY: I am hoping you can help me with some information. My husband and I bought a time share years ago and over time we upgraded, and then converted to the point system. In that time the company we originally purchased with sold to another company that touted lower maintenance fees if we just paid "X" amount of dollars, so mistakenly we did.

Well, a few years later our maintenance fees went from $700 a year to almost $1,200. At that point my husband and I stopped paying.

My question is: What can they do to us legally? Can they put a lien against our home? We don't care if they take our time share and sell it -- they can have it! I am just afraid there may be worse repercussions. --Lisa

DEAR LISA: If you have stopped paying, the time share developer who controls (or manages) the complex can either sue you for the back fees or foreclose on the time share, or both. You want to preserve your credit standing so I can't recommend that you do nothing.

However, if you have a written statement that if you pay that "X" amount your maintenance fees will not be increased, you should send that information to the time-share manager. Advise him that unless your fee is reduced, you will have to take all appropriate legal action. This could include filing a lawsuit, or filing a complaint with your state's attorney general.

But make sure that the notice you received is clear that you would not have to pay a higher maintenance charge forever.

If it is not clear, then you are in the same boat as thousands of (if not more) consumers who bought time shares and now are unable to get rid of them. Perhaps the manager will take it off your hands, by way of a "deed in lieu."

In other words, you will give the time share back to the company and they will relieve you of any further financial obligations. It probably won't work, but is worth trying.

DEAR BENNY: I am a California broker and here is my understanding of condos, etc. A condominium (condo) building is where an individual owner has the right of sole occupancy of the airspace within the walls of the unit but owns the land, etc., only in common with the other owners.

A townhome is a physical design. The owner may own the land underneath the home, in which case the legal state is a planned unit development (PUD), but it also may legally be a condo where the owner does not solely own the land underneath just like a condo.

Then there is a "de minimis" planned unit development, where there are single-family homes but where such items as streets, recreation facilities, parks, etc., are owned in common with the other owners.

All of the above have homeowners associations (HOAs), which are controlled by the governing documents -- namely, articles of incorporation, CC&Rs and bylaws.

These terms should not used interchangeably. --Jo

DEAR JO: Thanks for writing. You are right on, and have confirmed my opinion that a condominium is not a homeowners association and vice versa. If you want to lump them collectively, the correct term is "a community association."

DEAR BENNY: You previously mentioned in one of your articles that owners who are bound by no-rent clauses in their homeowners association documents can sell with a rent-to-own agreement. How can I find out more about such options?

Units in our condo building have not been selling. Due to the economy some of our homeowners find themselves in a bind. They need to sell because they have been forced into early retirement or now have jobs with very long commutes. I'm concerned that some of these homeowners may walk away from their obligations if they can't rent and can't find a buyer who qualifies for a traditional mortgage. Changing our governing documents is not a viable option at this point. --Janice

DEAR JANICE: I am sure that many community association attorneys will disagree with me, but I am convinced that in economic times such as we are still in, boards of directors should be flexible and not vigorously enforce any bylaw restrictions on rentals.

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