Deed in Lieu of Foreclosure for Timeshare
Whether you are facing timeshare foreclosure, or are looking for a way to get rid of an unwanted time share, a deed in-lieu of foreclosure can be a great option to get rid of your timeshare obligation. It is important to note that a deed in lieu of can usually only be (easily) obtained by an owner that has already paid off the principal balance of the property, whose only remaining financial obligations are yearly/monthly maintenance fees. If you still owe money on the property, in addition to maintenance fees, you will want to discuss a deed in lieu of foreclosure with your lender - their willingness to allow you to sign the deed instead of foreclosing depends on a variety of factors including the amount owed, frequency of delinquent payments, your personal situation and resort desirability. If the deed in lieu of foreclosure is accepted and executed in this case, the former owner may be responsible for any applicable legal fees and/or amount owed different than what the property was resold for; although I have found that many timeshare resort property owners do not take this extra legal step, as it involves a series of court orders and legal fees for their company.
With regards to your credit in the case of obtaining a deed-in-lieu of foreclosure, your credit should not be greatly affected at all. It is an excellent idea to obtain a written statement from the lawyer preparing the document to state that the lender and/or timeshare resort property owner will not be recording or reporting this deed to credit agencies. Some lenders/property developers will not agree to this, however, so you should at the very least obtain a signed statement acknowledging that any information reported will be accurate - including the fact that there was no delinquency or default if your payments are current. This document should be signed by the parties to whom you are returning the property, and while it is not a guarantee that the deed in lieu of foreclosure will not be reported to credit agencies, it will come in handy if any errors in reporting to FICO occur.
July 19th, 2008 at 6:36 pm
Hi mandie,
in the 1st section of the article it says “the former owner may be responsible for any applicable legal fees and/or amount owed different than what the property was resold for”.
Any idea on how much money can this be?? I’m starting the 2nd year out of 10 on the payments for a TS in Orlando and i dont want to do that anymore. i’m not a US resident and based on what i have read on your post “what-happens-if-i-stop-paying-my-timeshare/” the credit record is not an issue for non US residents, since it applies only within the US.
Finally, what do you mean by “I have found that many timeshare resort property owners do not take this extra legal step”?
thanks for the advice.
July 19th, 2008 at 7:19 pm
Hi Keny,
The amount owed on the property depends on the amount already paid on the principal balance and what the lender was able to resell the property for after foreclosure. For example, if you bought a $20,000 timeshare, and paid $2,000 on it before you foreclosed you would still owe $18,000, and the lender could possibly sue you for this amount. Lenders also sometimes will resell the property and hold the previous owner responsible for the difference in what they owed vs. the amount the property was sold for.
That said, it is not very common for lenders/resorts to go after timeshare owners that have foreclosed on their properties. The reason for this is because there is a lot of cost and time involved in pursuing a lawsuit against someone that has gone through with a foreclosure; it is more beneficial for the timeshare companies to keep reeling more people in and selling more timeshares rather than going after people who have not paid.
Hope this helps a bit:)
July 19th, 2008 at 7:57 pm
I get a clearer picture now thanks to you. by the way i’m am the same Keny which you have replied on the other post.
one more thing: would it be the best to contact the TS management and tell them that i’m not able to pay the MF anymore to see what options they can offer? or is better to just stop paying without giving any notice …
thanks again.
August 6th, 2008 at 5:15 pm
My ex and I own at Orbit One (an Island One resort). We got divorced in 2000 and he got that timeshare as part of his settlement. He never did the paperwork to get me off the deed, however, because it didn’t seem necessary. In 2004 he got suckered into joining Club Navigo for $3000, which converted his weeks to points. Because my name was on the deed, HE FORGED MY SIGNATURE ON THE MORTGAGE AND JOINDER! The salesperson witnessed it and noted that he had seen our drivers licenses as proof of identity. I knew nothing about it until last week when I got a letter from them stating their intention to foreclose and asking for deed in lieu of foreclosure. I called and explained that I knew nothing about it, and got them to fax me copies of the documents. From there I recognized my ex’s handwriting.
I have perfect credit; he is in bankruptcy and his house is being foreclosed on. I offered to pay the $1200 remaining in return for him signing over his interest to me but he’s so smart that he’s going to sell it-ha ha, won’t happen.
I can’t sign it over to Island One because the divorce decree awards my interest to the ex. I’ve notified Island One that my signature was forged. If they go ahead with the foreclosure, they will have to go against me because my name is on the deed!
Any advice out there? although I believe my ex did the forgery (he denies everything of course), their salesperson is culpable as well because he witnessed the signatures and attested to me signing when I didn’t. I think their salesman is guilty of fraud and aiding & abetting forgery? Is the whole contract invalid? What can I do to get out of the situation without running up legal bills and having my credit damaged?
November 5th, 2008 at 6:09 pm
Hello
I just have a question about a timeshare once it has been forclosed upon. My mother bought a timeshare in Orlando that was never used and since has been foreclosed on. How do we find out if the timeshare has been resold, and the amount, so we can know what her obligation is after the resale. Thanks in advance for any info about this.
January 19th, 2009 at 1:37 am
I purchased a timeshare at Fairfield Cypress Palms in 1997. It was paid off in 2003. I never used it. I stop paying and spoke with someone at their company headquarters in Las Vegas. We discussed options and he suggested I donate the timeshare or return the deed. I have been getting threating mail for 4 years. It is owned by Wyndham. This article states that my timeshare should have been in foreclosure. The fees are still going and it is up tp $10,000. Four thousand more than I paid for it. Please tell me why this has not gone into foreclosure. I know that I do not understand much but I believe they will try to take my home or garnish my pay.
February 11th, 2009 at 10:57 am
Darlene, Just a word of advice. I asked about this. When you donate your timeshare, you may claim on your income tax what it was resold for and not what you paid for it or the current value. If you return the deed, you may claim the current worth minus what you paid for it. That really doesn’t seem fair either. Either way these timeshares are such a racket. I have been trying to get rid of ours for several years. I have contacted the resort owners and they are considering the return of deed in exchange for not owing the maintenance fees for the past two years. Its just a shame. We have tried to sell it through newspaper ads, ebay, and a realtor to try to recoup at least some of our money. We just absolutely will not put out any money to a reseller because there are no guarantees that you will get money back. That is just another scam.
March 26th, 2009 at 3:08 am
hi. I have not paid my timeshare since late last year and have been offered a deed-in-lieu of foreclosure. I am in the process of doing all the paperwork. I want to find out if anyone out there has been through this and what happened afterwards. Does the DIL guarantee that we will not be pursued after? (That is what is written in the paperwork I received, that my debt will be forgiven). I am also worried of possible tax consequences. Can someone explain or advice? Is there anything I can do to minimize my losses further (money-wise, as I don’t have a job and cannot afford to pay hefty taxes). Also, I am not a US resident, but have intentions of immigrating there.
April 19th, 2009 at 11:10 am
Hello, in Dec. 2006 I sign an modification and extension of mortgage from my timeshare I have the legal documents but on the due date of which was January 2007 they they call me to informed me that they could not accept the modification. I recieved notice of foreclosure on my timeshare.What shall I do.
June 30th, 2009 at 11:52 am
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