According to Merriam Webster, the definitions of perpetuity are as follows:
1
2
: the quality or state of being perpetual
bequeathed to them in perpetuity
3
a
: the condition of an estate limited so that it will not take effect or vest within the period fixed by law
b
: an estate so limited
4
: an annuity payable forever
Timeshare owners often have a perpetuity clause in their contract. And many get hung up on that word, or it’s synonym-forever.
All too often not understanding what it really means opens up the doors to both complaints and scams.
Let’s get some clarification on this. In the US most timeshare contracts give the purchaser the so-called full bundle of rights. Those rights are: use, save, rent, will and sell. If you don’t get these rights when purchasing, perhaps it’s a sign to purchase something else.
Now, for purposes of this post, I’m not going to delve into the restrictions that come with those rights, for instance some developers limit the method that you can advertise rental or sale of your timeshare. And of course there’s the simple fact that your $20,000 timeshare is worth less than $5,000 the very next day. That’s fodder for another post.
With the usage benefits of your timeshare come a myriad of financial responsibilities which I’ve covered in previous posts. One of those financial responsibilities are maintenance fees. If you want to use your timeshare, you must be current on your fees. Maintenance fees is where the misunderstandings centered around perpetuity begin.
Your contract in perpetuity does not mean YOU are on the hook for these fees forever. It means that THE OWNER of the timeshare is on the hook for the fees. That’s a big difference. If you sell your timeshare, the new owner is responsible for those fees not you.
Many of the shady self-proclaimed exit companies use scare tactics saying exactly the opposite in an attempt to coerce you to cough up $5,000 or so for their non-existent services.
Now, there are cases where you might be responsible for these fees even if you’ve “sold” the timeshare. I put the word sold in quotes for a reason. Let me explain. In 90% of cases, if you sell your timeshare, it’s considered a valid sale. The other 10%? Well, if you’ve engaged one of those scammy exit companies and they transferred the timeshare to an asset-less company, known as a Viking Ship, the developer or HOA is not going to approve this transfer as they are well aware of the fact that the aforementioned company is not going to pay fees.
If however, the developer or the HOA approves the sale/transfer to someone else and that person fails to pay the fees, you are not responsible or liable.
Perpetuity does not mean that your heirs take on the financial burden, or the vacation advantages of the timeshare when you die, except if you still owe on it and/or if their names are on the deed. No one has to accept anything, including a timeshare, in the event of a death.
If you think about it, this is exactly the same as a house, but I don’t see anyone complaining about the fact that property taxes will be collectible in perpetuity unless/until the house no longer exists. If you sell the house, the new owner is responsible for the property taxes. If the sale or transfer of the house was fraudulent or outright illegal, then the onus is still on you.
Perpetuity yes. Perpetuity as it relates to you? No.
The morals to this post:
> Understand what you are planning on purchasing or already own
> Don’t engage with scammy self-proclaimed exit companies
> Don’t begrudge the developer/HOA/management company for doing what they’re supposed to do, which is collect maintenance fees
> If you’re thinking of purchasing a timeshare from an individual or a broker, do your due diligence to see if all fees are current or else that great deal could turn out to be anything but
> Before you complain about your contract’s perpetuity clause, understand what it means to you
