Though timeshares provide an appealing opportunity to “get away” each year, they can also come with myriad hassles, both during lifetime and at death. Many individuals purchase timeshares because they offer predictable, guaranteed time in a vacation destination. However, in addition to annual maintenance fees, lack of control and steep resale discounts that may haunt timeshare owners during their lifetimes, disposing of a timeshare following the death of the owner can present even more significant challenges. The disposition of a timeshare (and the associated difficulty) can depend on many factors, including what type of property interest is owned, in what state (or country) the timeshare is located, and whether the timeshare is subject to any owners’ association or board.
A timeshare can be owned either as a real property interest (represented by a real estate deed) or as a personal property interest (represented by timeshare “points” or units in an entity that owns the property). The ownership characteristics greatly affect how a timeshare should be handled at the death of its owner. Accordingly, it is important that everyone who owns a timeshare understands exactly what it is that they own.
If a timeshare is purchased by real property deed, it often means that the owner has an interest in a specific vacation unit, usually during a fixed week each year, either permanently or as long as is specified by contract. Like other real property interests, the owner has the right to sell or bequeath the property interest. At death, ownership of the timeshare passes to the persons named by the owner’s Will to inherit the property.* Often the Will serves as a link in the chain of title, transferring ownership of the timeshare by the appropriate local probate of the Will, but local counsel should be consulted in the state where the timeshare is located to determine any further requirements.
Timeshares that come in the form of personal property interests are more common, more varied, more susceptible to scam, and oftentimes, more difficult to transfer. These timeshares are usually owned as points or “right to use” options, with floating times and advance reservation requirements. Individual timeshare companies should be contacted to determine the transfer requirements of personal property timeshare interests, as they are as varied as the contracts themselves.
What are your options if you have inherited a timeshare? Many heirs are displeased to learn that they have inherited a timeshare in a location undesirable to them and that they are now obligated to pay annual fees and maintenance expenses for a property they will likely never visit. Some timeshares can only be disposed of by sale back to the timeshare company or through a company-regulated timeshare exchange system, which often caps the price for which you can sell the timeshare to a third party. While a deeded timeshare is a real property interest usually subject to the real estate laws of the state where the property is located, the contract under which the timeshare was purchased may contain transfer restrictions, such as rights of first refusal. When selling a deeded timeshare (or any timeshare, for that matter), great caution should be exercised in employing real estate brokers and agents. The Federal Trade Commission and many state Attorneys General include on their websites information warning timeshare owners of resale scams, and such information should be reviewed prior to entering into any resale transaction.
Unfortunately, the bottom line is this: no two timeshares are identical and therefore, the ownership and transfer of timeshares should be considered only after (1) examining any purchase materials, such as deeds, contracts or purchase agreements, (2) contacting the timeshare company to determine any hidden costs or requirements for disposition (during life or at death), and (3) contacting local counsel in the jurisdiction where the timeshare is located (and/or where the timeshare company is located) to determine the consequences and requirements of local governing law.
Additional resources concerning timeshare ownership and transfers can be found at:
– Federal Trade Commission Consumer Information: Click here…, and
– American Resort Development Association: Click here….
* This assumes that the real property interest is governed by the laws of any of the United States (and title is not held as “survivorship” property). The disposition of real property interests governed by the laws of foreign countries should be carefully coordinated with the overall estate plan using the expertise of foreign local counsel.