DEAR READERS: I frequently receive questions about how to get rid of a time share. I must admit that my response thus far has been less than satisfactory. I once suggested that the time share be donated to a church or a synagogue, but several priests wrote and asked that I stop making that recommendation, because the religious groups don't want the expense or the headaches of ownership.
Other readers asked if they could just walk away, and while I reluctantly indicated that was a possibility, I warned that the time-share management could file suit to collect the moneys that were due. This obviously would impact credit ratings.
Many readers advised me they had been taken advantage of by a scammer who promised (for as much as $5,000 upfront) to quickly sell the time share. As you all can guess, the scammer pocketed the money and did absolutely nothing. Fortunately, some of the state attorneys general -- Florida, for instance -- are investigating and prosecuting some of these crooks.
However, I just learned of an organization called the Timeshare Users Group (TUG) that may be of assistance to my readers who own time shares. According to its website (www.tug2.net), the Timeshare Users Group, which started in 1993, "is a family-run self-help organization providing an unbiased source of consumer-oriented information and advice on time shares and the time-share concept. ..."
TUG offers advice to owners, as well as a bulletin board for people seeking to rent or sell.
I offer this information with absolutely no guarantees or representations. I learned about this in an AARP publication and checked it out myself on the Web. Readers are cautioned not to take any action (or spend any money) before consulting with a legal adviser.
DEAR BENNY: After talking to several "agents" that specialize in the sale of time shares (all of which I would consider scam artists), I found Redweek.com and sold my mother's two weeks (late January in Florida) to legitimate buyers, and the association gave us the name of a legitimate title company who took care of everything for $300.
Obviously, I didn't get the "big" money out of them that was originally paid, but I did get $3,000 for one week and $3,500 for the other, so it is possible to sell them. The advertising in Redweek.com was between $40 and $45 for a six-month listing with pictures. It is certainly better than giving them away just to avoid paying the maintenance fees.
Don't ever pay one of the "crooked" agents that call you and say they will sell your time share, and all you have to do is give them $798 upfront for advertising, which will get you a one-year listing. It will not sell and you'll be out the $798. --Candy
DEAR CANDY: Thank you for writing. I searched Redweek.com and it appears to be acceptable. However, as with the Timeshare Users Group website, I make no guarantees or representations that this is a legitimate operation. Readers will have to find out on their own -- and hopefully with legal advice.
Candy's point must be repeated: Don't give any money upfront to someone who calls you cold, whether it be $798 or (as I have heard) much larger.
DEAR BENNY: If a homeowner is behind on his mortgage payments at the time a lease-option closes, in the event of foreclosure what is the effect on the lessee/purchaser? Is the lease dissolved and tenant removed prior to the end of lease term? --Debi
DEAR DEBI: To some extent, it depends on your state laws. For example, in the District of Columbia where I practice law, if a bank forecloses on an owner, the owner has no rights. However, if the bank forecloses on a property with tenants, the tenants have all the rights as tenants, and their lease remains in full force and effect.
In such a situation involving a lease with option to purchase, local law may give you guidance.
However, practically, it's really up to the bank that has foreclosed on the property. If the tenant who has a contract to purchase has the financial ability to buy, my experience is that the bank will work with the tenant. Clearly, despite what we all think of banks, they do not want to own property that they have just foreclosed upon. They have to pay real estate taxes and insurance, and try to keep the house from falling apart.
Technically, however, the bank is not a party to the lease with an option to purchase. So unless the bank actually agreed to such an arrangement, the bank does not have to honor that contract.
There is a law on the books that not everyone knows about. Called the "Helping Families Save Their Homes Act," it provides that tenants have the right to stay in their homes after foreclosure for 90 days or through the term of their lease. The protections go into effect immediately and expire at the end of this year.
So, whether there is a lease with an option to purchase or just a plain lease, tenants in properties that have been foreclosed upon have the absolute right to stay through the end of their lease or a minimum of 90 days.
If you are a tenant with a purchase option, make sure you contact the bank that foreclosed. You may be able to get a good deal and stay in the house.
DEAR BENNY: The exact situation referenced in your recent column (in which the landlord took money from the tenant but did not make the mortgage payment) happened with regard to a property in our area. The circumstances were well-documented in our local newspaper.
When the bank found out the landlord had taken option money for a purchase and rent money from prospective buyers, it negotiated a settlement whereby it credited the tenants with what they had paid the landlord, and the landlord had to pay to the bank those funds. The landlord had to transfer ownership of the property to the tenants, and the bank refinanced the property to the tenants who were deemed creditworthy since they had lived in the house paying rent for more than a year.
In our state, deeds of trust are public information that can be researched in the online deed records for each county. And foreclosure actions are posted in the paper. So the tenants can find out this information for themselves in most states. In other states with private property information laws (like Massachusetts) they have to have an attorney research the information, or gather the information from the mail that was delivered to the house.
The tenants have leasehold rights to the property that the lender must acknowledge in any foreclosure action. In this case, they also have an option to purchase, which should allow them to go through with the purchase and pay off the foreclosure action. They or the owner can ask the lender to postpone the action to allow them to try to get the property financed for the purchase transaction.
As you know, many properties in today's market have lost value. Hopefully, the tenants did not agree to pay more for the property than it is worth today. In any case, they should get an appraisal and find out if the property will appraise for what the owner had it financed for. If the value has dropped below that or what they agreed to pay, then they should renegotiate the purchase contract.
Also, the bank can allow what is called a short sale, whereby the property sells for less than it is financed for. The bank needs to know that there is an option/contract for sale. This should have been disclosed to them when the preforeclosure appraisal was completed. But, in many cases, the banks are not using appraisers to come up with this value, and if they didn't use an appraiser, then they may have no knowledge of the existence of the option.
Even if an appraiser was used, they may have asked for an exterior appraisal only and may have told the appraiser not to disturb the occupants. In that case, neither the appraiser nor the bank would have any awareness of the existence of the tenants' occupancy.
Just my two cents for your consideration. --Susan
DEAR SUSAN: Thank you. Your comments are worth more than two cents. I actually thought that deeds of trusts (the mortgage document) were public throughout the country, so, if you are correct, I am surprised.