As a timeshare owner, you should be aware of how much your maintenance fees change each year. Timeshare maintenance fees can be often be confusing to calculate so by learning about the association’s budget and what goes into it, you can determine what each expense is and what services you are paying for. If you understand the various charges in the maintenance fee statement, you will also be better informed when it comes time to vote on changes to the budget. Let’s look closer at understanding timeshare maintenance fees.
Who sets the budget for timeshare maintenance fees?
The budget is set by the timeshare association’s board of directors. The board reviews the maintenance fee budget at least once a year. They may also hold special meetings to discuss the budget if there are significant changes to be made. As the board is made up of elected representatives from the timeshare owner roster, it takes direction on setting the budget from the management company which sometimes includes corporate directors.
What are some areas maintenance fees go towards?
Some of the charges and services that are generally included in the annual resort budget:
Management Fees: The management fee is the cost of running the day-to-day operations of the property. This includes paying for direct and indirect expenses of staff salaries, travel, maintenance, utilities, and other general expenses. The management company charges a percentage of the budget, which is between 15% and 20%. This fee is based on the total annual expenses.
So, if the resort’s budget is 3 million dollars and the management fee is 20%, then the cost for the management fee would be $600k.
Reserve Fund: All timeshare properties are required to have a reserve fund to cover future major maintenance and repair costs, as well as any unforeseen expenses that may come up. The amount that is set aside each year is determined by the Board of Directors and should be reviewed periodically to ensure that the reserve is adequate. A reserve study is generally performed every 3-5 years by an independent firm to assess the needs of the timeshare property and recommend how much additional monies should be set aside each year.
Special Assessment: A special assessment is a fee that is charged to owners to cover a one-time expense, such as a major repair or renovation. These fees are generally not included in the annual maintenance fee budget and are voted on by the board. Special assessments can run thousands of dollars so it’s important to be aware of them when they are proposed.
It’s important to remember that each property is different and the budget will vary based on the size and age of the resort, as well as the location. Be sure to ask your board representative questions about the maintenance fee budget and what it covers. By understanding where your maintenance fees go, you can better participate in the decision-making process and ensure that your property is being run efficiently.
Voluntary Contribution Fee: Some timeshare resorts charge a voluntary owner contribution fee, which is used to fund the timeshare industry lobby. This fee is generally not mandatory, however most owners are required to deduct or opt out of this contribution from the maintenance fee statement. Owners who choose to contribute to the additional fees do not get a tax deduction.
Guest Reservations and Housekeeping Fee:
Another common fee charged by timeshare management companies is the reservation fee. This fee is often charged when a timeshare owner wants to make a guest reservation for their unit. Reservation fees can vary depending on the company, but they are typically around $50. Housekeeping fees are also common, and these are typically charged when a timeshare owner wants to have their unit cleaned.
How often are timeshare maintenance fees collected?
If you own a timeshare, it’s important to be aware of the maintenance fees that come with it. These fees are generally collected once a year, helping to cover the costs of keeping the property in good condition. This yearly collection is a standard practice in many places, making it easier for both the management and the timeshare owners.
However, the frequency of these collections can vary. Some resorts might choose to bill these fees twice a year or even every quarter to spread out the financial responsibility for the owners. If your timeshare is located outside the United States, you might notice that these fees are collected monthly, which means you’ll need to plan your budget accordingly.
In Florida, the Department of Business and Professional Regulation (DBPR) oversees the timeshare industry, including the management of maintenance fees. This organization ensures that the process of collecting these fees is transparent and fair, helping to avoid any conflicts or misunderstandings about the financial obligations of owning a timeshare.
As a timeshare owner, it’s recommended to stay informed about the schedule of maintenance fee collections and to communicate with the resort or management company to understand the details of the billing cycle and any other costs that might come up.
Review your annual timeshare maintenance fee for accuracy
By reviewing annual timeshare maintenance fees, you can be better prepared to budget for them in advance. The timeshare maintenance fee is somewhat standardized across properties based on timeshare weeks or membership points, but can differ based on the size of the timeshare unit, multi-site development program or resort location and use. There can be other indirect expenses that go into calculating the maintenance fee, and it can vary from resort to resort system, so it’s important to review your annual maintenance fee to ensure it is correct.
If your timeshare management company can’t answer specific questions about your maintenance fees, you should consult with an attorney who specializes in timeshares. This attorney can provide you with professional guidance and advice about timeshare maintenance fees.
Led by attorneys Michael D. Finn and J. Andrew Meyer, the Finn Law Group is a consumer protection firm that specializes in timeshare related matters. If you have a timeshare issue, contact us today for a free consultation or call 722-214-0700. Check us out on Twitter as well for more on understanding timeshare maintenance fees.