As a timeshare owner, you are likely aware that your maintenance fees generally increase from year to year. But, did you know that your timeshare assessment fees could also be subject to inflation as well?
Timeshare resorts typically charge special assessment fees to cover unexpected, deficits in the cost of capital improvements or other one-time expenses. These fees are typically assessed on all timeshare owners in the resort and are paid in addition to your regular maintenance fees. While assessment fees can be unexpected and unwelcome, they are financially required to keep your timeshare resort from falling into un-forecasted disrepair. But what happens when the cost of deferred maintenance goes up due to inflation?
A Perfect Storm For Timeshare Owner Fees
While the timeshare resort industry has been relatively stable over the past few years, there is the potential for an increase in operating costs. Many timeshare resorts are located in desirable vacation destinations, which can drive up the cost of living and doing business in the area. In addition, many timeshare resorts are also located in areas that are prone to natural disasters, such as hurricanes or wildfires. The cost of those repairs and rebuilding after a natural disaster can be significant and often exceed insurance coverages. These inflationary costs are often a pass-through to timeshare owners in the form of higher assessment fees.
As an example, Breezy Shores Resort, a timeshare on the Detroit Lakes is preparing to experience an assessment after a deferred utility project went up 64% in just one year. Costs that are outside the control of the resort can be a shock to many timeshare owners, who are already paying maintenance fees that have been increasing at an average rate of 4-6% per year. With record inflation, that figure could increase to 8% or higher and with the addition of assessments, owners are not left with a lot of options.
For instance, let’s say you own a timeshare unit that has an annual maintenance fee of $1,000. If inflation is running at 5%, that means your maintenance fee for the next year will likely be $1,050. While an increase of 50 dollars may not seem like much, it can add up over time. And if inflation continues to rise, your timeshare costs could become more difficult to manage.
Breezy Shores Resort Manager Jamie Lewis was interviewed by DL-Online about the impact of a utility project on her resort and the owners who will be impacted by a potentially big assessment this year.
“We’ll probably have to do a special assessment to all the owners,” said Lewis.”
“(Owners) get a maintenance fee every year for the timeshare, and we have things go up in price, and of course when costs go up, we have to bring up their prices, and when you start having these big assessments and whatnot, you end up losing some owners.”
What You Can Do To Minimize Inflationary Fees?
If you are concerned about the potential for higher assessment fees due to inflation, there are a few things you can do to protect yourself.
First, check your timeshare contract to see if there is a provision that limits the amount of any assessment fee increase. If so, this provision may provide some protection from unexpected assessment fee increases. Second, request a copy of the most recent reserve study to determine if the property owners association’s reserves are properly funded. This can help to offset or reduce the impact of future assessment fee increases.
Finally, contact your timeshare resort’s management company or board of directors and ask about their plans for dealing with the potential for higher assessment fees in the future. Some timeshare resorts may have contingency plans in place to deal with unexpected assessment fee increases, while others may have no plan at all.
While some timeshare companies have tried to address this issue by implementing a cap on the assessment fees, others have been less successful. This leaves a wide disparity in potential outcomes. Inflation can also have an impact on timeshare resales. As assessments go up, so does the cost of ownership, making your timeshare less attractive to potential resale buyers. Timeshare owners who are considering selling their vacation property should be aware of this potential issue and factor it into their resale price.
Timeshare Resorts Pressured By Inflation
With inflation at an all-time high, the cost of running the resort’s operations as well as maintenance and replacement are all going up. Many areas in the country have seen costs double or even triple over the last year. While there is no easy answer to this issue, timeshare resorts are feeling the pressure to keep up with the rising costs.
One way that timeshare resorts have tried to address this issue is by increasing maintenance fees. This has been a controversial move, as many timeshare owners feel that they are already paying too much in fees. In some cases, the increase in fees has been so significant that it has caused owners to walk away from their timeshares.
Owning a timeshare can be expensive, with maintenance fees, special assessments, and other costs. And when inflation is high, as it is now, those costs can increase quite a bit, especially if your timeshare resort does not have a plan in place to deal with the issue. If you are considering buying a timeshare, be sure to do your research and ask plenty of questions to ensure that you understand all of the potential costs involved.
In conclusion, timeshare resorts are feeling the pressure of inflation just like everyone else. Assessment fees and maintenance costs are on the rise, and timeshare resorts are struggling. Timeshare owners should be prepared for the possibility of special assessment fees. Be sure to stay up-to-date on the finances of your resort and talk to your resort management about any potential fee increases. If you have legal questions, please contact us for a consultation.
This article is for informational purposes only and should not be construed as legal advice. Follow Finn Law Group on Twitter.