• May
    09
    2019
  • 3 min read

The Timeshare Sunset Clause

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What you need to know about your timeshare sunset clause.

Aging is an undeniable fact of life, even for timeshares! That’s why some contracts contain a timeshare sunset clause. What is a timeshare sunset clause and what are the other dangers with aging timeshare resorts?

The Timeshare Sunset Clause

This is a so-called self-destruct provision in the timeshare contract that specifies a date in the future for the timeshare agreements to effectively end. Every timeshare and every contract is different, but most sunset clauses allow for the Homeowners Association (HOA) to vote on how to proceed. So, what happens next depends on the HOA.

Stay the Course

If the resort is in good repair, the finances are healthy, and the owners are happy and paying, they may decide to continue to operate as before. In some cases, the Board of Directors may elect to repeal and replace the Sunset Clause, pushing the date into the future. But the resort would stay open and you would continue to pay your fees and hopefully enjoy your timeshare. And if you’re one of those happy owners, then that’s good news for you. However, if you were counting on the sunset clause as your exit strategy, you’ll be disappointed.

Change Course

But what if the HOA doesn’t vote to continue to operate? This can happen for two reasons. First, low voter turnout may mean that the measure simply doesn’t get enough votes. Many clauses require 51% of owners to vote in favor of continuing. Or they do get 51%, but that 51% votes no. This is a serious problem. In this case, the timeshare agreements are terminated. However, you may still be an owner in common along with all of the other owners. Needless to say, this is uncharted territory. And it’s legally very complex.

Aging or Failing Timeshares

Even though your timeshare contract seems to last forever, your resort might not. Even if the sunset clause isn’t looming, or in the absence of such a clause, resorts can age and fail. Here are some of the reasons a resort might fail.

Costly Upgrades

All resorts need repair and upkeep, but even with proper maintenance, no resort can continue without serious upgrades from time to time. And some “legacy” resorts are due for serious upgrades. Of course, this costs money. In the case of older resorts, the money might not be there. Perhaps maintenance fees have been too low. Or perhaps owners have died or foreclosed over time, so there’s no longer a large enough population to pay their maintenance fees. And sometimes the repairs are just too expensive.

Natural Disasters

Who doesn’t love a great beach vacation? That’s why so many timeshares are located on the water. Of course, this puts them squarely in the path of severe weather and other natural disasters. When tropical storms and hurricanes make landfall, timeshare resorts are often in harm’s way. If your resort is owned by a big corporation, they may choose to rebuild. But smaller resorts may not have the resources for such a project.

Bankruptcy

And sometimes resorts just run out of money. This can be due to mismanagement by the Board of Directors or the contractor. Or it can be the result of high levels of foreclosure or non-payment of fees. But just like any other business, timeshares sometimes fail.

Consequences of Failure

When a resort fails, the owners face consequences. In a best-case scenario, the owners could recoup their investment and be on their way. Or if the resort is part of a larger corporation, owners may be offered ownership at another company resort. But most commonly, the timeshare agreement is dissolved and the owners don’t get anything.

Of course, if you’re stuck in an unwanted timeshare, the failure of your resort might be welcome news. However, if you’re stuck in a timeshare that no longer meets your needs with no end in sight, contact us for help getting out. We specialize in helping people like you get out of their timeshares. Guaranteed.

(Image by Dũng Hoàng Trí from Pixabay)

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