Many years ago when Timeshare first appeared as a concept the attraction was quite simple – you owned/purchased a single week in an apartment (often called a “unit”) in a resort and this worked out significantly cheaper than the cost of buying that whole apartment. And one of the major selling points for Timeshare resorts and for prospective Timeshare purchasers was the manageable ongoing costs of Timeshare ownership. Maintenance costs would of course work out significantly cheaper for one week than the maintenance cost of the whole apartment as they would be shared out across the owners of all the weeks. As a result Timeshare was conceived and sold as the perfect low cost alternative to buying a whole property.
Unfortunately maintenance fees (sometimes called “management fees”) at Timeshare resorts have increased substantially for most people over the years of their ownership. The vast majority of owners who contact us were originally paying less than £100 per week for maintenance at the time of their purchase yet are now paying in excess of £500 per week for that same maintenance.
So, why have maintenance fees increased so much. There can be a number of different reasons depending on the resort;
- Maintenance fees were kept artificially low at the beginning of a new resort in order to encourage prospective Timeshare owners to sign up and buy. A new resort requires less maintenance than an established resort and therefore maintenance fees could be kept to an attractive level in order not to scare potential buyers. The Timeshare resort know these fees will have to gradually increase over time but believed by then the individual owners would have no choice but to pay.
- The resort is too slow in increasing the management fees over time. The resort requires constant updating and any unexpected or significant expense that hasn’t been planned for can create a large financial hole that needs to be filled.
- The resort simply gets its calculations wrong. Some resorts have vastly underestimated the ongoing costs of the resort or have not anticipated a particular problem that has cost much more than it should to remedy. When these costs are identified the individual owners are invariably targeted; and maintenance fees increase to meet this demand.
- The maintenance fees are not spent on maintenance at all and are payed out of the management company for the benefit of the owners of that company by way of large staff costs. And as a result the resort gradually declines in terms of maintenance.
- Owners themselves have inadvertently contributed to the increasing costs. As ongoing resort costs have increased and owners decide not to use their Timeshare, they are of course less inclined to pay the maintenance fees. As fewer people pay on time - or at all - the management company is forced to allocate money away from the upkeep of the resort and spends more on administration costs and legal fees pursuing the non-paying owners.
- In many cases however it is simply a case of the management company being greedy. Resorts have realised they can not only make a lot of money from selling the timeshare in the first place but can generate a steady and ever growing profit every year from providing the maintenance of the resort. In order to exercise this financial control the resort will normally “keep back” a certain number of weeks supposedly for its own use, and as such it can normally control the AGM (Annual General Meeting) thus voting in their own maintenance company to carry on with the contract.
All of the reasons above – and many more – have left Timeshare owners facing potential hardship in meeting their financial obligations, and as a result these owners have increasingly found themselves the target of aggressive resort owners chasing annual fees.
Typically, the Timeshare resorts will employ the services of UK debt collection agencies to vigorously pursue the non-paying owners.
If you have been contacted by a debt collection agency regarding non –payment of fees or are encountering a problem with a Timeshare in Spain or Portugal and would like to speak to a UK based solicitor who has been dealing with timeshare for over 20 years then you can contact our timeshare team
Disclaimer – International legal issues are a complex area of law and this information is no substitute for independent legal advice on an individual basis taking into consideration your personal circumstances and legal requirements. This information is provided to provide general information only and was correct at the time of publishing. The legal position in relation to international transactions can change frequently and this page may not have been updated following any changes in the law. You should therefore not rely on this information and should seek legal advice in relation to your personal circumstances.