A Step-by-Step Guide on How to Get Out of a Timeshare Contract

Are you one of the 9.9 million U.S. households that own a timeshare? If so, you’re all too familiar with the rising annual maintenance fees, which now average $1,170 per year. Add to that the long-term contracts, and it’s no wonder 85% of timeshare owners regret their purchase.

You’re not alone if you want to get out of your timeshare. 

Maybe you can no longer afford the fees, or your travel preferences have changed. Whatever the reason, getting out of a timeshare can be a daunting prospect. Where do you even begin?

This article will walk you through different options for legally and safely exiting your timeshare contract, including utilizing rescission periods and working with a reputable timeshare exit company. We’ll also cover potential costs, pitfalls, and common timeshare exit scams. By the end of this article, you’ll clearly understand your options and be equipped to take action toward freeing yourself from your unwanted real estate scheme. 

How Do Timeshares Work?

Timeshares allow multiple people to purchase a share in a vacation property, granting them the right to use it for a specified period each year. While they promise affordable vacations, timeshares often come with high upfront costs, ongoing maintenance fees, and difficulty in resale, making them a contentious choice for many. 

Timeshare companies frequently employ high-pressure sales tactics, including lengthy presentations and enticing promotions, to persuade individuals to sign contracts without fully understanding the financial commitments. 

Many buyers find themselves trapped in long-term agreements that are difficult to exit, facing unexpected fees and diminished property value.

The Rescission Period: Your First Line of Defense

You may be in luck if you’ve recently purchased a timeshare and have second thoughts. Most states have “rescission periods,” a short window after signing the contract during which you can cancel your purchase without penalty.

Here’s what you need to know about rescission periods:

• The length of the rescission period varies by state; they are usually only a few days but can range from 3 to 15 days.
• The clock starts ticking either when you sign the contract or when you receive the public offering statement, whichever comes later.
• You must notify the seller in writing of your intent to cancel within the rescission period.
• Your rescission letter must be postmarked by midnight of the final day of the rescission period.

If you’re still within your rescission window, follow these steps to try to cancel your timeshare purchase:

1. Review your contract and the state’s rescission laws carefully to ensure you’re eligible.
2. Write a clear, concise letter stating your intent to cancel the contract.
3. Include your name, contract number, and the date you signed the agreement.
4. Send the letter by certified mail to the address specified in your contract.
5. Keep copies of your letter and any correspondence with the seller.

If you successfully rescind your purchase, the seller must refund any money you’ve paid within 20-45 days, depending on the state. Hopefully, you’ll be released from any future obligations under the contract.

Giving the Timeshare Back to the Developer 

If you’re outside the rescission period, your next step should be to contact your timeshare developer or resort management company directly. Many developers now offer “deed-back” or “take-back” programs that allow you to return your timeshare to them.

Here’s how the process typically works:

1. Call your developer’s customer service department and ask if they have a deed-back program.
2. If they do, request written information on the program requirements and application process.
3. Gather any required documentation, which may include your deed, maintenance fee statements, or loan payoff info.
4. Submit your application and wait for the developer’s response.
5. If approved, follow their instructions to complete the transfer of ownership back to the developer.

Remember that deed-back programs are voluntary for developers, and not all offer them. Some may have restrictive qualifications, such as requiring that your loan be paid off or that you’re up-to-date on fees. You likely won’t receive any money from the developer for returning your timeshare.

However, if you qualify, a deed-back can be a simple way to unload an unwanted timeshare without the hassle and uncertainty of selling it yourself.

Selling Your Timeshare on the Resale Market

If your developer doesn’t take back your timeshare, you may need to consider selling it on the secondary market. But be forewarned—timeshares are notoriously hard to sell. 

Expect to take a loss on your original investment.

Follow these steps to determine your timeshare’s resale potential:

1. Research the resale value of similar units at your resort on sites like RedWeek.com, Timeshare Users Group, and eBay.
2. Check if your resort has a “first right of refusal” clause that allows them to approve or deny resale buyers.
3. Consider paying for a professional timeshare appraisal to get an objective value estimate.
4. Factor in closing costs, transfer fees, and commissions (if using a broker) to determine your bottom line.

If you decide to list your timeshare for sale, you have two main options:

• For sale by owner (FSBO): List the timeshare yourself on resale sites and market it to potential buyers. This saves on broker commissions but requires more time and effort.
• Use a licensed timeshare resale broker: Look for a reputable broker specializing in timeshare resales. They’ll typically charge a commission of 25-30% of the sale price. Always check the broker’s credentials and contract terms.

Whichever option you choose, be realistic about the price, emphasize your unit’s best features and location, and be prepared to negotiate with buyers. It may take months or even years to find the right buyer, so patience and persistence are key.

Timeshare Exit Companies: Savior or Scam?

If you’ve been researching eliminating your timeshare, you’ve probably seen ads for timeshare exit companies. These firms claim to help timeshare owners cancel their contracts, but they can be costly and carry their own risks.

What exactly do timeshare exit companies do? 

Theoretically, they work on your behalf to get the resort to take back your timeshare or find a new buyer to take over your contract. The specifics vary by company, but most require you to pay a large upfront fee before they begin any work.

Sounds simple enough, but there are several things to watch out for:

• High fees: Timeshare exit companies often charge thousands of dollars, regardless of whether they successfully get you out of your contract. 
• No guarantees: Many exit companies don’t offer refunds if they can’t actually cancel your timeshare.
• Long time frame: The exit process can drag on for months or even years, during which you may still be liable for maintenance fees and loan payments.
• Fraudulent practices: Some exit companies use misleading advertising or aggressive sales tactics to lure in desperate timeshare owners.

So, how can you tell if a timeshare exit company is legitimate? Look out for these red flags:

• Pressure to sign up immediately.
• Promises that sound too good to be true.
• Lack of a written contract outlining their services and fees.
• Requests for payment or sensitive info before providing a consultation.

If you do decide to work with a timeshare exit company, make sure to:

1. Research their track record through the Better Business Bureau, the state Attorney General’s office, and online reviews.
2. Read the fine print of their contract and make sure you understand their fee structure and refund policy.
3. Keep paying your timeshare maintenance fees and loan payments throughout the exit process to avoid foreclosure and credit damage.

While a reputable exit company may help you in complex situations, it’s generally best to try working with your resort directly or selling the timeshare yourself before considering this option.

The Bottom Line: Weighing the Costs of Exiting Your Timeshare

As you can see, getting out of a timeshare is rarely free. But it’s important to consider the long-term costs of keeping an unwanted timeshare versus the upfront costs of exiting.

Some key costs to keep in mind:

• Rescission: If you cancel during the rescission period, you should be refunded any money paid. You’ll only be out the cost of postage for your cancellation letter.
• Deed-back: If your resort takes back your timeshare, you typically won’t receive any money, but you’ll be free of future maintenance fees and taxes.
• Selling: If you sell your timeshare, you’ll likely take a loss on the original purchase price. If using a broker, factor in closing costs, transfer fees, and commissions. But once the sale is complete, you’ll be free of ongoing costs.
• Exit company: Fees for exit companies can vary widely, but expect to pay several thousand dollars. And there’s no guarantee of success or getting that money back if they fail to exit your timeshare.
• Default: If you stop making payments on your timeshare, you’ll likely face foreclosure and severe credit damage. Your resort could even sue you for unpaid fees. This is the riskiest option.

In addition to direct costs, be aware of the potential tax implications of canceling or selling your timeshare, especially if you claimed a deduction on your purchase or rental income. Consult a tax professional for guidance.

Ultimately, while exiting a timeshare can be expensive and time-consuming, it may still be preferable to the mounting costs and stress of unwanted real estate. You can find the best path to timeshare freedom for your situation by weighing your options carefully and following the steps outlined here.

Escaping the Timeshare Trap

We’ve covered a lot of ground in this guide, from examining your rescission rights to navigating the resale market and spotting exit company scams. While getting out of a timeshare can seem overwhelming, remember that you have options and don’t have to face this challenge alone.

With this knowledge, you can start acting to free yourself from a timeshare that no longer serves you. Remember, it may take time, persistence, and a financial hit in the short term—but the long-term relief of unburdening yourself from this financial weight will be well worth it.

If you’re feeling stuck or unsure of your next steps, don’t hesitate to consult with legal and financial professionals who specialize in timeshare issues. They can provide personalized guidance based on your unique situation.

Remember, you’re not the first person to go through this process, and you won’t be the last. Many have successfully untangled themselves from unwanted timeshares, and you can, too. 

Stay focused on your goal, stay informed, and don’t give up. A timeshare-free future awaits!