What to know when shedding a timeshare

Jul 6th, 2020 | By | Category: Personal Finance/Business

There are personal or financial reasons someone may want or need to exit their timeshare, and there are ways to do so–sale, transfer or cancellation. But the process can be complex and risky.

“Timeshare owners are never more vulnerable than when they’ve made the decision to end their ownership. The resale market is flooded, resorts have stacked the deck, and con artists are waiting to take advantage of your situation,” said Gordon Newton, president of Newton Group Transfers and author of “The Consumer’s Guide to Timeshare Exit.”

In Washington, state Attorney General Bob Ferguson filed a lawsuit in February against Bellevue-based Reed Hein and Associates LLC, alleging unfair or deceptive business practices related to services to “exit” consumers’ timeshares. The complaint, filed in King County Superior Court, accuses the company of numerous violations of the state’s Consumer Protection Act and the Debt Adjusting Act.

Newton says consumers can protect themselves by having a better handle on the timeshare industry. Among other things, he points out:

  • Many timeshare resort developers see the resale market as a direct threat to their revenue stream and have rigged the system in their favor. For example, some resorts restrict rights and benefits for owners who purchase their timeshares on the resale market, intentionally devaluing a timeshare while also making it harder for it to be unloaded.
  • Only sign an agreement offering you real protections in your timeshare exit. Specifically, any agent you hire should be aligned with your interests, agreeing in writing to cover all timeshare fees – or legal fees – that arise during the exit process for a flat fee.
  • Research your exit company’s credentials (through the Better Business Bureau, the state attorney general, consumer protection agencies, and a general Internet search), looking for a minimum five-year track record of success. Beware of companies that are hard to research.
  • Be wary of timeshare exit companies boasting “attorneys on staff.” Those attorneys will be acting in the best interests of the company, not yours.
  • If an exit deal sounds too good to be true, it probably is. Be wary of phone solicitors telling you someone has a buyer, anyone advising you to stop paying your timeshare mortgage or maintenance fees, “donate your timeshare” programs, or anyone marketing a guaranteed timeframe for the exit. These are all red flags.

In the Washington case involving Reed Hein, the attorney general claims the company advertised a 100 percent money-back guarantee, but consumers have struggled for years to obtain refunds. Under the terms of Reed Hein’s guarantee, clients who are facing foreclosure aren’t entitled to their money back, because Reed Hein considers foreclosure a successful outcome — despite the potential damage to the customer’s credit, Ferguson said, adding such practices are unfair or deceptive.

Reed Hein and Associates LLC is the legal entity for founder Brandon Reed, whose company does business under the name Timeshare Exit Team.

In online marketing materials, Timeshare Exit Team/Reed Hein and Associates “guarantees” that it “will find a way” to “transfer ownership or negotiate to get” clients out of their timeshare agreements.

Over the course of eight years, Reed Hein contracted with nearly 32,000 timeshare owners, including 2,500 Washingtonians, who hoped to get out of their contracts, Ferguson said. Of those, 17,000 are still pending — more than 8,000 for two years or longer, and more than 4,600 for three years or longer, according to the attorney general.

The American Resort Development Association (ARDA), a non-profit organization based in Washington, D.C., provides information to timeshare owners and consumers about resale, rental, transfer and relief companies who aim to profit through deception. In a case last May, ARDA issued a consumer alert about a company that allegedly used false and misleading information in an effort to pressure consumers into buying the company’s timeshare exit plan, including an up-front fee. The company invited timeshare owners to a dinner at a restaurant and talked to them about the plan.

According to ADRA, vacation timeshare ownership is highly regulated through state laws that address such issues as financial requirements for the developer, contract-cancellation rights, consumer information about resorts, and provisions for resort management. ADRA officials advise caution when purchasing a vacation product that sounds like a timeshare but isn’t registered as one under state timeshare laws.

State Attorney General Bob Ferguson has battled companies in court over allegedly unfair or deceptive business practices related to consumers’ attempts to exit timeshares.

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