1. What is a timeshare exit company?
A timeshare exit company is an unregulated and unlicensed company with no legal requirements to place consumer funds in a protected account. The company is usually comprised of individuals that used to sell timeshare at the resorts. They are trained salespeople familiar with high pressure sales tactics. Oftentimes gift incentives are used to lure you into attending a timeshare exit presentation such as a free dinner, tablet or gift card. Many times, a travel club or RCI points program is used as a “trade-in program” in which you trade your timeshare in to use as equity into their program. You are led to believe you will no longer own your timeshare. Timeshare exit companies are not licensed real estate brokerages and therefore do not follow any regulations, such as placing your money in a secure escrow trust account.
2. How are timeshare exit companies allowed to operate without a real estate brokerage license?
Only a licensed real estate brokerage can LEGALLY tranfser timeshares. The state real estate commission where the timeshare is located should be regulating unlicensed activity, however it is often difficult to track these fly-by-night companies that jump around from state to state. Remember the state law that dictates timeshare resale regulations is the state law where your timeshare is located. For example, if selling a timeshare that is located in Florida (a majority of timeshares are located in FL) it is a felony in the 3rd degree to resell timeshare without a license. Florida Statute 721.20(1) “Any seller of a timeshare plan must be a licensed real estate broker, broker associate or sales associate.” Under Florida Statute 475.42(1)(a) the crime of unlicensed practice of real estate is a third-degree felony. Other states that require a license to sell and resell timeshare include: Alabama, Arkansas, Arizona, California, Colorado, Connecticut, Delaware, Washington D.C., Florida, Georgia, Hawaii, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Washington, West Virginia, Wisconsin, and Wyoming. If you own a timeshare in any of the above states it is illegal to work with a timeshare exit company that is not a licensed real estate brokerage.
3. What do the timeshare exit companies do with my timeshare?
Sometimes, NOTHING AT ALL. You continue to receive maintenance fee bills that either go unpaid because you believe the timeshare exit company is paying them or you go into default with the resort because you believed you no longer owned the timeshare. Sometimes the exit companies transfer your timeshare into what is referred to in the business as a “Viking Ship” which is a shell company that has no intention of paying the maintenance fees resulting in the timeshare to eventually be foreclosed upon. In some cases, the timeshare exit company will try and sell the timeshare or hire a third-party transfer company, with no guarantee, to do the job for them. These transfer companies are also unregulated as they are performing legal and title work such as the preparation and recording of deeds which in most states requires a licensed title company or attorney. The states professional department of insurance regulation and the states bar associations should be regulating these companies but again they are difficult to track.
4. Is there anything I can do to recover against the timeshare exit company I signed up with?
Yes, there are a number of avenues to stop this illegal activity. It depends on the state law of where your timeshare is located, the state law of where you attended the sales presentation, and the state law of where the timeshare exit company is located.
5. I have a mortgage on my timeshare and the timeshare exit company signed me up with an attorney to eliminate my mortgage, is this legal?
No! A timeshare exit company representing they can get you out of your mortgage is fraudulent. First, the salespeople are not licensed attorneys and giving legal advice without a license is against the law in ALL states. Secondly, no guarantee can be made (attorneys included) of the outcome of a legal matter. And finally, if they did sign you up with a law firm at the sales presentation the attorney involved is violating their state’s professional rules of conduct as having another company solicit clients on their behalf violates attorney’s ethical rules.