Timeshare Resorts - Assessment Costs
Many people take their timeshare resorts' facilities and services for granted without realizing that upkeep and maintenance needs to be paid for by someone. Maintenance fees, also known as annual assessments, are essential to all timeshare resorts.
This annual charge can be split into three main categories:
This is the amount assessed as being the allocable portion of the common and operating expenses per interval interest (timeshare week). This means that the overall cost of maintenance and operating expenses is divided between each vacation owner. Common expenses refer to things that are common to all owners such as swimming pools, tennis courts, golf courses, roadways, sidewalks, gardens, beaches, housekeeping and other resort facilities. Operating expenses refer to things relating to the units of residence such as furniture, décor, bedding, utensils, house wares and appliances. Insurance for these various assets is included in these expenses.
This is the 'rainy day' fund and is accumulated over a period of time in order to ensure the resort has sufficient funds to replace components once they have outlived their usefulness. This is assessed by determining the amount required to replace certain items, such as a TV, in every unit. This amount is then divided between each vacation owner and charged on an annual basis. So if all the TVs need to be replaced in ten years, this annual charge will ensure that sufficient funds are accumulated by the end of the ten years and there will be enough to buy new TVs for each unit. If this reserve fund is not enough to cover the replacement costs then a Special Assessment is issued. This amount is only charged in order to supplement a reserve fund and is completely separate from all other annual assessments.
The tax portion of the assessment includes all tax-related expenses, such as filing fees, and in most cases is billed to the timeshare resort management or owner's association. In some cases, however, individual owners are billed. If this is the situation then it means taxes are not included in the annual assessment. Timeshare condos are taxed as a whole and this amount is then divided up between all the owners sharing an interval (week) in that unit.
There are two policies of an annual assessment that must be understood to avoid misunderstandings in the yearly charges: annual billing and collection policy (ABC) and the penalty provisions for non payment. The ABC policy stipulates billing information such as due dates and when other associated fees are added to the balance. The non payment provisions are penalties charged to those who do not pay their annual maintenance fees. Penalties could include forfeiting ownership benefits or even foreclosure from the timeshare resort all together.