Timeshare Maintenance and Other Fees; Rising with No End in Sight?
All timeshare owners and/or members must pay fees annually, or bi-annually, regardless of if they attempted to utilize their timeshare interest during that billing period, or not. Taken collectively, these fees add up to a significant amount, and many continue to rise annually well beyond the average rate of inflation. Are they in any manner controllable by the owner/member? For the most part, no!
Property Owners Association
In earlier years, say before 2010, the majority of these fees were calculated by and paid by the owners directly to their particular resort’s Property Owners Association, a non-profit entity comprised of all of the resort owners.
The POA’s primary function is to estimate the total operating costs and expenses associated with the operation of that specific resort and assess those owners with their proportional interest percentage of that total operating cost budget. The resort owners annually elect the sitting officers and directors of the POA, and in that manner exercised some control over their annual maintenance cost assessments.
Right To Use Interest
Around 2010, give or take a few years, as the resort developers consolidated their resort holdings, and built-up larger branded resort chains, a newer timeshare product known as a ‘right to use’ interest began to emerge. It brought more flexibility to the owners’ ability to book their vacations in other resorts owned by the same developer, and at differing times of the year, allowing the owners more freedom in terms of no longer having to book the same resort and at the same time every year.
However, this positive change also came at a price. The owners gave up their deeded interests in favor of the new ‘right to use’ timeshare product and in doing so, no longer ‘owned’ a specific unit at a specific resort, and for a specific amount of time. No longer were they tied to their former resort exclusively and no longer were their maintenance fees necessarily calculated by solely using their former owned resorts costs and expenses. Developer controlled management companies supplanted local boards of directors, using different computational formulas in many cases to calculate more complex annual maintenance fees. The newer or converted owners were now ‘members’ (as opposed to unit owners), and although ‘members’ remain statutorily obligated to pay annual maintenance and other resort fees, the connection between a ‘member’, who may vacation at different resorts within the chain, and the management company who may operate all or many of the resorts within the chain, is much less than previously and ‘members’ have essentially lost any ability to control the laundry list of resort fees that arguably as an owner, they at least, had some, if minimal, control over.
Annual Maintenance Fees
Annual resort maintenance fees consistently make up the largest percentage of fees that the typical owner or member is contractually responsible for, but they don’t provide the entire picture. There are also others, including possible assessments, exchange fees, parking, housekeeping, resort, and destination fees, and are all potential additional fees. Some will not apply in all instances, but some may end up adding significantly to the total annual fee burden. Certain fees are use based, like the parking and exchange fees, but others, like the potential capital expenditure assessment may be both inescapable and quite expensive.
The capital expenditure assessment will come into play if the amount of money projected in the annual operating budget and thereby assessed as operational maintenance fees is insufficient to cover the resort’s costs as a result of capital improvements and/or unanticipated and unbudgeted major construction projects. This kind of issue fortunately does not occur frequently, but it does occur, and when it does, the contractually mandated assessment against owner/members can be quite significant, and the fact that it probably wasn’t anticipated, makes the additional assessment hit to the owner/member both a real surprise and a potential budget breaker for many.
Timeshare Interests Have Evolved
Timeshare interests have evolved over the years, and some of the changes have enhanced some owner/members vacation experiences, however, these changes have not come without a cost. The evolution from single resort ownership to multi-resort chain membership has come at a price, one that individual owner/members have little say in, and those contractual fees and costs are trending in one direction only, and it certainly isn’t downward!
If you are having an issue with the raising costs of fees, you should consult a qualified timeshare attorney for a consultation. Read more information of maintenance fees and other costs of timeshare on our blog for timeshare owners.