Maintenance fees are part and parcel with timeshare ownership – a lifelong financial commitment that can quickly turn a timeshare obligation into an unwelcome burden for many consumers.
In fact, annual maintenance fees – which almost always tend to increase year to year, in excess of the rate of inflation – are one of the biggest factors driving consumers away from the timeshare industry. According to the 2016 AIF Owner’s Study, 66% of consumers wishing to exit a timeshare want to do so because “the maintenance fees are too high.” 46% of respondents also noted that high maintenance fees were their “most important” reason for wanting to exit a timeshare commitment.
So, what options do consumers have for dealing with maintenance fees that are too high? Unfortunately, the issue is more complex than you may think.
Annual fees are written into timeshare contracts; the consumer who signs their name on the dotted line makes themselves responsible for paying them. And the avenues for dispute or complaint are often notably limited.
As our Michael Finn has noted before, particularly in his piece “Who Is This Property Owner’s Association to Whom I Pay My Resort Maintenance Fees?”, the issue of who is responsible for setting and regulating maintenance fees can become obfuscated, divided as it is between two entities, the timeshare Property Owner’s Association, as governed by their board, and their delegated counterpart, the management company, which is typically left unchecked to charge huge sums in management fees.
In theory, it is the Board of Directors of the Property Owner’s Association that is responsible for assessing owners their proportionate share of the resort’s operating expenses as maintenance fees, and subsequently disbursing payments to the service providers who are maintaining the resort and keeping it operational. However, this responsibility of the board is typically delegated off to a management company that, with the larger resort chains, is typically developer-owned and -operated. By nature of their management contracts, these developer-controlled management companies tend to retain their position, providing operational support to the resort, for years and years.
As Michael notes in his post:
“A review of many of the management agreements involving management companies that are owned and operated by the original developer reveal that management fees are often not based upon the value of management services rendered, but instead computed as a percentage of association monies expended on maintenance and other budgetary expenses. In other words, rather than management fees being determined from a basis capable of measurement, such as services rendered on an hourly-rate basis, they are instead based upon the total amount of actual expenditures.”
So, these management companies, operating from a privileged position of institutional support and little interference from the board, are actually rewarded for spending as much as possible. At the very least, they have no incentive to curb spending. The more they spend on operations, the more they charge in management fees, the more the buck is passed to the owners in the form of an inflated maintenance fee.
All of this is a long way of explaining that timeshare maintenance fees are all but impossible to protest or appeal, in large part because developers have set up a system that allows them to operate resorts per their own directives, with very little engagement with, consideration for, or interference from the resort’s “actual owners.”
With this in mind, the best course of action for consumers looking for relief from maintenance fees may be to find a way to exit their timeshare obligation entirely. A negotiated cancellation with the assistance of an experienced legal professional is the surest way to cleanly walk away from the pressure of timeshare maintenance fees and get a more secure handle on your financial future.
Have any more questions or concerns? Led by Attorney Michael D. Finn with 50 years of experience, the Finn Law Group is a consumer protection firm specializing in timeshare law. Our lawyers understand vacation ownership as well as the many pitfalls of the secondary market of timeshare resales. If you feel you have been victimized by a timeshare company, contact our offices for a free consultation. Know your rights as a consumer and don’t hesitate to drop us a line with any questions or concerns.