“Timeshares” typically apply to vacation properties using an arrangement that allows several owners to use a property under a timesharing agreement. Typically, owners would be able to use the property in their allotted weeks and a yearly maintenance fee is usually payable to the resort and management company. Therefore, the timeshare arrangement can be an attractive venture as it results in owners paying a fraction of the price of owning a property outright.
Despite the popularity of timeshares particularly in the 1980s, we are now increasingly seeing issues when it comes to the disposal of timeshares and particularly where they form part of a deceased’s estate.
We discuss some of the timeshare issues below:
Valuations of timeshares
Timeshares are notoriously difficult to value due to the difficulty in knowing what the value would be on the open market. Therefore, when the owner of a timeshare passes away, a question arises as to how this interest is valued on death for probate purposes.
We discuss two main ways in which a timeshare can be valued below, however both come with limitations and problems:
- Valuation by a professional
It is possible to ask a professional to value the timeshare providing they have been given all the information and data. Whilst this method is the preferred and more reliable approach, it is not easy to find professionals who can assist. A professional valuation can also be very expensive and it should be noted that most timeshares are not worth much at resale value. The cost of the valuation may therefore outweigh the gain on the sale of the timeshare.
- Valuation based on market information
Another option is to value the timeshare by basing the value on other timeshares currently on the market. Whilst this information should be publicly available, it should be noted that it is purely an “asking price” and the information on the actual sale value agreed will be more difficult to ascertain. It is therefore very much an estimate and different factors would need to be considered such as whether the owner is entitled to use the property in high or low season, the week, the maintenance fees, the state of the property etc. Due to the numerous factors which need to be considered, it makes the estimate even harder to ascertain.
Timeshares in estate administrations
As part of the estate administration procedure, the executors will need to administer the timeshare as part of their role. If the beneficiaries do not wish to retain the timeshare, then the executors will then need to consider the options for selling the timeshare.
As long as the estate continues to retain the timeshare, there will still be ongoing liabilities that must be paid until the timeshare is either sold or given to a beneficiary. This includes maintenance fees which can often be more that the actual value of the timeshare.
The executors will therefore want to dispose of the timeshare sooner to prevent further liabilities being incurred.
A timeshare can be sold on the resale market. However there are a number of factors that determine if and when a timeshare will sell easily, including the location and price. An important consideration for executors is that the value of a timeshare is often very low on resale. This is due to the fact there are a lot more timeshares available for resale compared to the demand for timeshares. There are a number of companies who can assist with advertising the timeshare and dealing with the sale though a fee will be payable for this service. It should be noted that as well as being a costly exercise, it can be a long time before a buyer is found.
An alternative route is relinquishment. This involves the executors relinquishing the estate’s interest in the timeshare by effectively giving back the timeshare to the resort. Dependent on the country where the timeshare is located and the resort, there will be various paperwork to complete and specific procedures to be followed. It is incredibly important to ensure the procedure is followed correctly as if not, the estate would still be responsible for the ongoing liabilities even if the executors believe they have relinquished the interest!
This method does have costs associated, including legal fees, registration fees and fees to the resort as well as ensuring the maintenance fees are paid to date before the process is started. It is vital that the relinquishment is done both correctly and legally due to the various problems encountered if the timeshare is not correctly relinquished.
Timeshare legal issues
The above only touches on some of the potential timeshare issues which can arise and we recommend that anyone dealing with timeshares as part of an estate administration exercises caution and checks that all the correct procedures have been followed.
If you would like any further information regarding timeshares and dealing with timeshares during an estate administration, please contact our team who will be pleased to assist.
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