No Real Estate...So Why Closing Costs?

Lately, I've reviewed a number of timeshare sales contracts and to my dismay, discovered that developers were charging and consumers were paying "closing costs" when there was no real estate involved.

Here is how Wikipedia defines closing costs:

Closing costs are fees paid at the closing of a real estate transaction. This point in time called the closing is when the title to the property is conveyed (transferred) to the buyer. Closing costs are incurred by either the buyer or the seller.

Pretty straightforward to me.

Later in the document are examples of what can be included in closing costs.  I found these three particularly interesting:

• Attorney (Lawyer) Fees, paid by either or both parties, for the preparation and recording of official documents. The principals and/or lender may each be represented by their own attorney. Typically required by institutional/commercial lenders to ensure documents are prepared correctly.
• Appraisal Fees, usually paid by the buyer^{[citation needed]} (although occasionally by the seller through negotiation), charged by a licensed professional Appraiser. Many lenders will require that an appraisal be performed as a condition of the mortgage loan. The purpose of this appraisal is to verify that the sale price of the property (upon which the underwriting of the loan is based) is equal to or less than the fair market value of the property.
• Inspection Fees, usually paid by the buyer^{[citation needed]} (although occasionally by the seller), charged by licensed home, pest, or other inspectors. Some lenders require inspections (such as termite inspection) to verify that the property is in good condition, which is necessary to assure that the property will retain the necessary collateral value to secure the mortgage loan.

So, assuming the timeshare in question is in fact real estate (if you are unsure, I strongly caution you to STOP and figure it out), you should be asking these questions:

1)  Were you represented by an attorney at time of purchase?

2)  Was an appraisal conducted on the timeshare and did you have access to it before you purchased?

3)  Was an inspection done on the exact piece of real estate and did you have access to it before you purchased?

 

STOP blindly paying fees without asking questions.