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.