With the global economy in crisis, timeshare developers are facing a credit crunch that reduces the number of timeshare buyers. With a reduction in overall sales, timeshare companies must tap another source of revenue for some relief to these tough financial times. Timeshare owners have already started receiving notices of abnormally large special assessment fees.
While some timeshare owners know of the special assessment fee, few know that timeshare resorts can call for nearly any amount they deem necessary. The financial impact for these economic extenuating circumstances can add up to high dollar amounts for owners.
Recently, timeshare owners have opened up their mailboxes to find bills ranging from $500 upwards of $3,000. It’s a crushing blow to those who may have lost jobs, experienced cuts in pay and/or work hours, and seen their stock portfolios plummet in value. Owners are truly understanding where they fit in the financial pecking order of the timeshare industry.
Even with the bad economy, why are the special assessments so large? In good times, developers can leverage the upfront fees that owners pay or finance to get new commercial loans to build more timeshares. As timeshare sales drop, there may be no income to pay the interest and principal on the loans. The maintenance fees are not enough to cover everything.
But owners should not think about NOT paying those timeshare bills. Through decades of legal precedence, timeshare companies can and do impose stiff penalties for non-compliance. These include high interest rates on principal owed, collecting debt through employers, and placing liens on assets like homes, bank accounts, etc.
Even in decent economic times, solutions are few. Desperate resorts have rented units far below annual maintenance fees, and timeshare resales have always been notoriously difficult. Now, resales are next to impossible. Who has the money to buy? And, who wants to pay a large special assessment bill? No one.