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Not paying timeshare maintenance fees could hurt credit

Dear Benny: I am hoping you can help me with some information.

My husband and I bought a timeshare years ago and over time we upgraded and then converted to the point system. In that time the company we originally purchased with sold to another company that touted lower maintenance fees if we just paid “X” amount of dollars. So, mistakenly, we did.

Well, a few years later our maintenance fees went from $700 a year to almost $1,200. At that point my husband and I stopped paying.

My question is: What can they do to us legally? Can they put a lien against our home? We don’t care if they take our timeshare and sell it. They can have it.

I am just afraid there may be worse repercussions. –Lisa

Dear Lisa: If you have stopped paying, the timeshare developer who controls or manages the complex can either sue you for the back fees or foreclose on the timeshare or both.

You want to preserve your credit standing, so I can’t recommend that you do nothing.

However, if you have a written statement that if you pay that “X” amount your maintenance fees will not be increased, you should send that information to the timeshare manager. Advise him that unless your fee is reduced, you will have to take all appropriate legal action. This could include filing a lawsuit or filing a complaint with your state’s attorney general.

But make sure that the notice you received is clear that you would not have to pay a higher maintenance charge forever.

If it is not clear, then you are in the same boat as thousands of, if not more, consumers who bought timeshares and now are unable to get rid of them. Perhaps the manager will take it off your hands by way of a “deed in lieu.” In other words, you will give the timeshare back to the company and they will relieve you of any further financial obligations.

It probably won’t work, but is worth trying.

Dear Benny: I purchased a condo in California in January 2009 and was able to get a second mortgage through the seller to help me purchase.

Dealing with the sellers has been a bit of a hassle.

When I contacted the sellers in order to assure that I received a statement of the interest paid on my loan about two months ago, they informed me they were unable to deposit two payments I sent them through my online banking system. One of these payments was in April 2010 and the other in September.

How long does the lender have to inform me of a missed or late payment? Since it has been so long it has been somewhat difficult for the bank to figure out what exactly occurred with the April payment.

I am planning on refinancing in order to avoid dealing with this lender. –Brandy

Dear Brandy: That’s an interesting question that has never come up before. And I must confess that I really don’t know the answer.

I do know, however, that commercial mortgage lenders who receive more than $600 a year in interest must send their borrowers a Form 1098 by the end of each January. However, if your lender (the seller) is not in the business of lending money, he has no legal obligation to send that form to you.

My suggestion: Figure out how much mortgage interest you paid. You can get some assistance from the calculators at mtgprofessor.com/calculators.htm.

To protect yourself, however, you should check with your bank to see if those checks were, in fact, cashed. Most banks allow their customers to research their account online and this may be helpful to you.

One additional suggestion: Especially when you are not dealing with a commercial financial institution, such as a seller take-back mortgage, check with your bank monthly to see if your payment was negotiated and cashed.

Benny Kass is a practicing attorney in Washington, D.C., and Maryland. No legal relationship is created by this column. Questions for this column can be submitted to benny@inman.com.

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