Estate Handling of a TS

carvana wrote:

Jayjay says "the estate is responsible for all liens and maintenance fees until the estate can sell the property. An estate includes 'heirs', I would assume."

Jayjay's assumption is wrong. An estate is a separate entity from an heir just as a corporation is a separate entity from the stockholder.

The estate is liable for the debts of the decedent at the date of death including timeshare maintenance fees. I have some experience in collecting estate debts and I know that all states have statutes that govern the probate of estates. Typically the executor or administrator files a notice in the legal section of a newspaper where the decedent died notifying creditors of their right to file a claim. There is a time period that will vary from state to state but typically is a relative short time frame during which the claimant (creditor) must file a claim. If the creditor misses that deadline he/she is out of luck for collecting that debt. Most timeshare resorts do not have probate recovery departments but if they do and do timely file their claim they must hope that it is paid. A timeshare mf is an unsecured debt and will be at the bottom of the priority list for the payment of debts. Many executors and administrators will ignore unsecured claimaints - I know from experience - and this requires the creditor to file a suit to reduce (convert) the claim to a judgment. This is time consuming and is usually not done by a timeshare resort. They will just foreclose on the property.

The heir who receives the timeshare as a bequest in the will and elects to accept the property is of course liable for future MFs.

The bottom line is that upon the demise of the TS owner, the executor files a notice in the local paper (which the TS resort will probably not even notice). Then if the resort does not put in a claim after x number of months or years, the resort cannot collect the MFs. If the resort does file a claim it may get the $$, try to get a judgment against the estate, or foreclose on the property. That brings me to some other questions.

1. Can a resort forclose on a property if they do not hold a mortgage on the property? 2. Wouldn't it have been much easier for all, if upon the death of a TS owner, the resort took back the property? 3. If the resort doesn't in some manner take possession of the TS, what happens to it, does it go into a TS "Black Hole"?

Mike asks:

1. Can a resort forclose on a property if they do not hold a mortgage on the property?

Answer: Absolutely yes. The developer files a declaration (comparable to a deed restriction) in the county deed records before the first timeshare is sold that allows the resort (owners assocation) to foreclose on a timeshare when the MFs are not paid.

2. Wouldn't it have been much easier for all, if upon the death of a TS owner, the resort took back the property?

Answer: Certainly if the MFs are not paid and the timeshare is essentially worthless. On the other hand, most heirs gladly claim and take possession of timeshares that are in prime locations and in desireable seasons with reasonable MFs. It is the dogs that end up in foreclosure.

3. If the resort doesn't in some manner take possession of the TS, what happens to it, does it go into a TS "Black Hole"?

Answer: Not really. If all heirs decline (disclaim is the legal term) the timeshare it will fall into the residue of the estate. In time the resort will attempt to collect the MFs by using a collection agency. The collection agency will learn that the time frame for filing a claim has passed and there is nothing they can do but foreclose. The resort may attempt to contact the executor or administrator and seek a quit claim deed in lieu of a foreclosure but ultimately there will be either a quit claim deed or a foreclosure. The timeshare will not remain in a "black hole".

It is important to remember that an heir is not automatically liable for any MFs (this point seems to confuse Jayjay) until the title is in the heir's name and the resort is notified and changes its records to reflect the heir as the new owner.

You may also wonder about situations where there is no will and no administration of the estate. This is call intestacy. The various states have statutes that govern how property passes in the event of an intestacy. A timeshare could pass to an heir by intestacy but the heir can just ignore the MF bills if he or she chooses. The title is not in his name nor is the title changed on the resort's records until and unless there is an administration. The heir will not open an administration (expensive) merely to claim title to a worthless timeshare. The resort could force the opening of an administration but this is costly and the legal requirements so cumbersome that most resorts would never go to this extreme. The resort in this situation will foreclose.

mike1536 2. Wouldn't it have been much easier for all, if upon the death of a TS owner, the resort took back the property?

All owners will die sooner or later so if a resort took back weeks from deceased owners it would one day go bankrupt due to lack of paid maintenance fees. A resort's bread and butter are mainteance fees.

The same would be said of any debt the deceased owes after his/her death. The estate is responsible for those debts.

jayjay wrote:

All owners will die sooner or later so if a resort took back weeks from deceased owners it would one day go bankrupt due to lack of paid maintenance fees. A resort's bread and butter are mainteance fees.

The same would be said of any debt the deceased owes after his/her death. The estate is responsible for those debts.

Based on Carvana's posts, the resort might not even get to file a claim in the alloted timeframe at which time the estate is settled (did i I understand that right?). What funds are then available in the estate to continue to pay MFs? Maybe the will should be written such that the TS is put into a trust and $$ is provided to pay the fees for some predetermined time. Then the estate can be closed. Eventually though, the trust will run out of money (but would the trustee be liable?). IMO, in either case, if the resort takes back the TS, then it can be rented or resold. As Arte Johnson used to say, "Verrrrrry Interesting".

Jayjay says:

"All owners will die sooner or later so if a resort took back weeks from deceased owners it would one day go bankrupt due to lack of paid maintenance fees. A resort's bread and butter are mainteance fees."

Response: Most heirs are glad to take timeshares in prime locations in desireable seasons and once they are owners they continue to pay the MFs. It is the worthless timeshares than end up back in the hands of the resorts due to foreclosure. These are usually resold by the resort and the new owner pays the MFs. I am aware of a poorly managed resort that had about a third of their owners "walk away" from the timeshares but the last report I saw indicated that resort had sold all but five of the units. The buyers on EBay who think they are getting a bargain for a $1 soon discover to their dismay that they have purchased someone else's lemon.

The poorly managed resorts that can not resell the timeshares should go bankrupt. This would enable their poor owners who cannot sell their worthless timeshare to at least get something in the liquidation.

Jayjay says:

"The same would be said of any debt the deceased owes after his/her death. The estate is responsible for those debts."

Response: Actually it is very rare for the decedent to "owe" or incur any debts after his/her death. This could occur when using an accural method of accounting but this situation would not apply to timeshare MFs. The debts due at the date of death are the responsibility of the estate and there is a time frame for the creditor (resort) to file a claim for these debts. The worthless timeshare is not an albatross around the executor's neck into infinity as there are time limits for the resort to claim and collect these MFs

carvana wrote:

Jayjay says:

"The same would be said of any debt the deceased owes after his/her death. The estate is responsible for those debts."

Response: Actually it is very rare for the decedent to "owe" or incur any debts after his/her death. This could occur when using an accural method of accounting but this situation would not apply to timeshare MFs. The debts due at the date of death are the responsibility of the estate and there is a time frame for the creditor (resort) to file a claim for these debts. The worthless timeshare is not an albatross around the executor's neck into infinity as there are time limits for the resort to claim and collect these MFs

I didn't mean to say 'after death', I meant to say 'upon death' , debts that the deceased may owe.

carvana wrote:

Response: Most heirs are glad to take timeshares in prime locations in desireable seasons and once they are owners they continue to pay the MFs. It is the worthless timeshares than end up back in the hands of the resorts due to foreclosure. These are usually resold by the resort and the new owner pays the MFs.

I doubt all heirs would be glad to take a timeshare after the owner dies with their neverending maintenance fees and possible special assessments every year. The deceased's circumstances were probably entirely different than his heirs (ie: retired, plenty of time to travel, etc.) I read all the time on Tug of people that have owned a timeshare for years but have never used it due to life circumstances (work schedules, limited funds, kid's school schedule, divorce, relocation ...... etc.).

And unless a foreclosed week is highly sought after then the resort itself may not even be able to give it away, much less resell it (ie: all the $1 timeshares on Ebay with no bids.