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Dealing with timeshares in a divorce

Attorneys working in matrimonial law have to deal with the equitable distribution of various properties, both real and personal. Sometimes working out the distribution is not too involved, but sometimes there can be a hitch in determining which party gets a particular asset.

One of those hitches can occur when there is a marital timeshare resort property. Not uncommonly, neither party wants the timeshare — with the attendant fees. When that happens with ordinary real estate, the solution is as simple as putting the property on the market and selling it. However, timeshares are a different thing, and how to resolve the timeshare issue can be very aggravating for not only the parties but also their lawyers. What follows is some very basic information about dealing with unwanted timeshare property in a divorce.

Timeshares are real property, right? Maybe. The majority of timeshares are deeded (fee simple) real property, though an unusual type. What you own via the deed is the use of the property for a particular time period each year. Because it is real property, there are state and local real property laws that dictate what can and cannot be done.

For instance, if one party in a divorce is giving the timeshare to another, there will need to be a deed drafted, transfer forms to fill out, and taxes and fees attached to the transfer. Unless matrimonial counsel is licensed in Florida (or Hawaii or Arizona), arrangements will have to be made for the deed to be drafted by someone who is. Of course, the real property counsel has to have experience with this sort of thing.

When timeshares are not real property (which is particularly likely when the property is not in the United States), the transfer of the timeshare is more like selling a club membership and governed mostly by contracts rather than specific laws. Again, there is no generalization of how these things are handled and the parties’ lawyers will need to research in order to figure out what needs to be done.

How do you find a buyer for the timeshare if neither party wants it? Very occasionally, the resort management is willing to buy back the timeshare. There are usually catches to this, and the major one is price: The resort will offer to pay less than what the parties paid for it — sometimes much less. Then there are various fees charged by the resort in order to assume ownership. Also, occasionally the resort will market the property for the parties — but, again, at a cost.

As neither of these options is usually available, the next route is to retain a real estate agency to sell it. The American Resort Development Association (ARDA) has a Resort Owners’ Coalition that represents timeshare owners. This coalition can provide a list of licensed real estate brokers who handle timeshares, and there are also websites that provide advertising of “for sale by owner” postings. Unfortunately, there are a lot of scammers in the timeshare selling marker; no one should ever pay anyone up front to market a timeshare.

Additionally, the sellers have to accept the fact that the secondary market for timeshares is glutted and if they can find a buyer, the price will likely be far lower than what they paid for it. If a buyer is found, the deed and transfer documents will need to be provided. Fortunately, in many states with popular timeshares, like Florida, title companies do the closing on the sale and provide the necessary legal documents.

What about just walking away from the property? When a timeshare owner fails to pay the maintenance fee to the resort, the end result is a foreclosure. It may be possible to bargain with the resort by offering the property free to the resort up front, pointing out that they can save time and legal fees by taking it now and making it clear that the owners are not going to be cajoled or threatened into paying the maintenance fees. Not surprisingly, this final option is probably more likely to be successful if one or both of the divorce attorneys makes the offer rather than one of the parties.

Sara Stout Ashcraft is a partner in Ashcraft Franklin & Young LLP in Rochester, New York. She concentrates her practice in the areas of matrimonial and family law.

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