Laying Down the Law – What You Need To Know About Timeshare Right To Cancel and Foreclosure Laws

Written by Columnist:

Christopher J. Charles, Esq.

According to a September 2020 report by the American Resort Development Association, Arizona is home to 48 timeshare resorts representing 4,811 units. Arizona’s Timeshare Owners’ Association and Management Act governs timeshare transactions in the state, including foreclosures and a buyer’s right to cancel a purchase.

Timeshare Foreclosures

Sometimes timeshare owners, for various reasons, decide they are no longer interested in using the timeshare.  In those instances, the owner should take action to try and sell or otherwise convey their interest in the timeshare back to the timeshare company or to a third party.  Stopping payments for the maintenance fees and property owner association fees is ill advised.   

Timeshare buyers that obtain a loan to pay for their interest in a deeded timeshare are likely to face foreclosure if they fail to timely make their mortgage payments. Timeshare foreclosures in Arizona are typically nonjudicial foreclosures, which means that the foreclosure is handled by a trustee instead of a court.

In addition, a timeshare’s homeowners’ association may initiate nonjudicial foreclosure proceedings if an owner has failed to pay assessments, which generally include maintenance fees, taxes, utilities, and other special assessments. Before a nonjudicial foreclosure action can be taken, the association or management group must provide the timeshare owner with a notice of delinquency that is mailed to the owner and recorded with the county recorder in the county where the timeshare is located.

Once notified, the owner has 30 days in which to cure the delinquency. If no action is taken by the owner within that 30-day timeframe, then the HOA or management group can request that the trustee begin nonjudicial foreclosure proceedings. However, if the owner acquired a timeshare prior to January 1, 2009, that owner can stop a nonjudicial foreclosure by signing and returning a form provided with their delinquency notice via certified mail. While this will halt the foreclosure proceedings, the HOA or management group can still pursue civil litigation to collect the delinquent assessments.

It should also be noted that Arizona law does not allow a deficiency judgment after a nonjudicial foreclosure on timeshares.

Timeshare Purchase Agreement Cancellations

Arizona law allows timeshare buyers to cancel a purchase contract up until midnight on the 7th calendar day following the date when the purchase agreement was signed. To cancel the contract, buyers must provide written notice to the seller at the seller’s address as indicated in the contract. The cancellation is effective as of the date on which the cancellation notice is sent.

Our real estate attorneys at Provident Law® represent clients concerning a variety of real estate matters. If you or someone you know has questions regarding timeshares or any other real estate matter, contact us today to schedule an office meeting or virtual consultation with one of our real estate attorneys. 

Christopher J. Charles is the founder and Managing Partner of Provident Law®. He is a State Bar Certified Real Estate Specialist and a former “Broker Hotline Attorney” for the Arizona Association of REALTORS® (the “AAR”). Mr. Charles holds the AV® Preeminent Rating by the Martindale-Hubbell Peer Review Ratings system which connotes the highest possible rating in both legal ability and ethical standards. He serves as an Arbitrator and Mediator for the AAR regarding real estate disputes; and he served on the State Bar of Arizona’s Civil Jury Instructions Committee where he helped draft the Agency Instructions and the Residential Landlord/Tenant Eviction Jury Instructions. Christopher teaches continuing education classes at the Arizona School of Real Estate and Business and he can be reached at Chris@ProvidentLawyers.com or at 480-388-3343.