Marriott Surf Club Aruba – International Foreclosures

We received the following comment from one of our users:

Help–I haven’t paid my maintenance fees or renewal fees since October. I cannot afford it anymore since my husband passed away…I spoke with a rep who stated it was international and would not affect my credit too much, my name would just be in the back of the newspaper. Then another rep said the complete opposite. The sad part is I didn’t owe too much more but now with late fees it adds up. Please help me find a reputable person to take this off my plate!

As with any other timeshare contract that has passed its rescission period, you have three options that will not affect your credit score: sell, transfer, or donate. You can read more about each of those options here. If you are unable to sell, transfer, or donate your timeshare and do not keep up with maintenance or renewal fees, you are at risk of foreclosure. At this point you might try pursuing a deed-in-lieu of foreclosure, which will not affect your credit score as severely as a foreclosure would. It is ultimately up to Aruba law and the timeshare company if they will accept a deed-in-lieu of foreclosure.

international foreclosures

An international timeshare situation will be a bit different than a timeshare in the U.S. because while most U.S. states have laws that strictly regulate timeshares, those laws to do not apply to a timeshare in a foreign country. Remember that there are likely different legal requirements for selling, transferring, or donating a timeshare in countries outside of the continental U.S as well. Be aware, however, that if your international timeshare is foreclosed on, it will still hurt your credit score. Consequences of foreclosure are the same regardless of where the property was located. If you find yourself stuck in this situation, it is best to contact an attorney who is familiar with the laws that govern timeshares in that particular country to avoid any miscommunication or legal troubles.

Bluebeard’s Castle Foreclosure

We received the following submission from one of our users about their experience with Bluebeard’s Castle Resort in St. Thomas:

“I was roped into buying a timeshare in 1993 on my honeymoon. Once we returned my wife and I realized we couldn’t afford it so never paid for it. We received a foreclosure notice from the bank that financed it and never heard from them again until last month. I received a collection notice from a collection agency saying we owe $25,000 in back maintenance fees and interest. The deed is still in my name? How is that possible when it was foreclosed on 23 years ago? What can they do if I deny owning the property listed on the deed?”

Our first reaction to this person’s story was that it is definitely a strange situation. It makes sense that the property was foreclosed on since it was never paid for, but receiving a single collection notice over 20 years later is unusual to say the least. There are a couple factors that come into play here:

  • Deeded vs. right-to-use interest. When you take out a loan to purchase a deeded timeshare, you sign both a mortgage and a promissory note. The mortgage is security for the debt and permits a lender to foreclose if you don’t make the monthly payments. The promissory note promises the lender that you will repay the loan with interest. It is likely that this person’s timeshare was a deeded interest, since right-to-use timeshares are generally “repossessed” instead of foreclosed. foreclosure
  • Deficiency judgment. When a lender forecloses on a mortgage, the lender then obtains possession of the property and sells it at auction. Since timeshares rarely sell at auction for the amount owed on the deed, the lender has the option to take legal action and sue you for the remaining balance owed, called a deficiency judgment. Once entered by the court, the judgment can be executed against the remaining assets of the borrower until the judgment is fully satisfied. *Note: depending on where you live, you might not have to worry about facing a deficiency judgment, since the laws vary by state. It is our understanding, however, that the U.S. Virgin Islands does allow deficiency judgments.

The strikingly odd thing in this person’s case is that the collection notice claimed to be for “back maintenance fees and interest,” not for a deficiency from the foreclosure sale. We’re also curious as to why it was only pursued once by the collection agency, and 23 years after the foreclosure. It’s likely that this was some kind of mistake and requires a phone call to the collection agency. Has anyone else heard of this happening?

Timeshare Deedbacks

We recently received the following submission from one of our users regarding their timeshare property at Orange Lake Resort and Country Club in Florida:

We bought our timeshare 21 years ago and used it to exchange vacations in other resorts. It was a good experience but now that my wife has passed away and I am older, trying to unload the resort proves difficult. I am willing to surrender my title to the resort but the warranty deed does not say a word about releasing me from all obligations; I have to take their word that after the title reverts to the resort they will close the account and I will have no obligations. Anyone have any thoughts or comments about this predicament?

Here we will discuss the concept of deedbacks–signing the deed of your timeshare property back over to its owner, relieving you of any ownership rights, fees, and other obligations. If you no longer want your timeshare and have been unable to sell or donate it, deeding it back to the resort may be an option, but only under a special set of circumstances.

You first must determine if your timeshare is deeded or leased. A deeded timeshare binds you to the contract as an exclusive owner, while a leased timeshare means you are only the owner for a certain number of years. If you have a leased timeshare, you may not be able to get out of it until the lease expires, but always check with your contract for details. deedbacks

Perhaps one of the most important things to understand about a deedback program is that the recipient of the property (in this case, the resort) must be willing to accept it and give you permission to deed it back. You cannot deedback your property to an unwilling recipient. If you attempt to do so by signing a quit claim deed to the resort owner without permission, it will not be considered a legal transaction and you will still be liable for paying the maintenance fees.

To qualify for a deedback, most resorts require that all maintenance and special assessment fees are paid in full; they generally will not accept if you are behind in fees or have a mortgage on the property. Even if you are up to date on all your payments, it is not uncommon for the resort to refuse a deedback, in part because so many people are taking advantage of this option. But there’s only one way to find out if the resort will accept a deedback: you have to ask!

Be aware that you may need to dedicate some time to being on the phone until you reach the appropriate person to talk to, which is usually not the first person to pick up the phone. Stay focused and calm during this process. If the resort refuses to accept a deedback, you may be able to sell it back to them for a fraction of the timeshare’s market value. Again, just ask. It might not be the most ideal option, but it’s probably better than spending thousands more dollars on a property you don’t use or want.