What
are Timeshare Maintenance Fees?
While this may seem like an
EXTREMELY basic question, many timeshare owners simply do not know and
perhaps are afraid to ask it assuming that it just "comes with the
territory of owning a timeshare. Sadly while this may be
true, it is vital that you completely understand your responsibility
when it comes to maintenance fees as an owner of a timeshare for the
rest of your life (usually).
The cost to operate a
resort is spread out among all owners at that resort via an annual
maintenance fee. The fee must also build up reserves to pay
for non-recurring costs like furniture, landscaping, external
upgrades, appliances etc. that need periodic replacement and
other capital costs as normal physical deterioration occurs, just like
your own costs of owning your house or car etc. Cost is
established by the developer or HOA (homeowners association).
Caution: When a developer is in control,
maintenance fees may be temporarily subsidized by the developer as a
marketing tool while there is sales activity. After the HOA
takes over, fees may quickly rise to unsubsidized levels without any
warning.
Special Assessments
are sometimes added to maintenance fees to cover unexpected
(non-reserved) expenses. These assessments are passed by the
HOA board of directors. Severe storm damage not completely
covered by insurance would be an example where an extra assessment
would apply (think Florida or Caribbean timeshares during hurricane
season). These also come without warning and can actually be
levied at any time! Just another tidbit you are not likely to
hear about in a sales presentation before you buy (or after for that
matter until the bill arrives).
As for cost,
Maintenance fees vary with the location and resort, but are on average
in the $200 to $1000 dollar range. I believe a recent ARDA
research study put the average maint fee in the $400 dollar a year
range overall.
What is important to
understand is that when you buy your timeshare now, there is nothing
that locks in your maint. fee for the rest of your ownership tenure
which in most cases, is forever for deeded properties. This
means that 20 years from now, your annual fee of $400 could be (and
will be) significantly higher. Such is the case with the
industry now as many resorts have increased their annual maint. fees to
a point where it is becoming less and less desirable to own....and in
some rare cases...more expensive to own in annual maint fees, than a
non owner can RENT the unit for an entire week. Yes you read
that right, there are cases where it is more expensive to OWN the
interval than the average joe can RENT the exact same unit from an
existing owner (or RCI/II).
I recently read an
article written for Timeshare Salesmen that gave "answers" for the
commonly asked questions from buyers to counter any arguments or
objections the buyer may have to signing right then and there.
One of the questions was about maintenance fees and if they
would increase. The answer was quite amusing to me along the
lines of "of course they will go up, but you WANT them to".
Citing the fact that if you were a homeowner, and the value
of your house went up year after year...the cost of owning said house
would also increase etc etc. And thats true to a point, but
they also made a point to tell you that there were "restrictions" and
"guidelines" that limit the amount a resort can increase the annual
maintenance fee each year. I would certainly like the
salesman to whip out the bylaws and point out those guidelines and
restrictions to show me exactly what those limits are! AND
YOU SHOULD ASK!
Remember, education is
key BEFORE you buy. In no situation should you ever be
pressured to sign immediately. always always always ask
questions and do your research before you sign a lifetime commitment!
