Timeshare Closeouts and Liquidations
The closing process
Things you should know about your closing…
First of all, it is vital to remember that every timeshare closing has two basic parts; the completion of the transfer documents and the completion of the developer or Home Owners Association (HOA) process requirements.
When a closing title company is contacted to close a timeshare sale, they go to great lengths to ensure a quick and smooth closing. One of the ways they do this is to explain their process up front, so that you will feel comfortable that all the bases are being covered on your behalf, we will explain the process as follows:
The first thing the title company does is order a Right of First Refusal from the resort if required, and an Estoppels.
Some developers have a Right of First Refusal for resale contracts at their resorts. The title company will provide a copy of the executed agreement for sale and purchase to the developer or HOA if required. Most resorts will have a set period of time while they consider the transaction. There may also be various other procedures that your developer may require such as buyer pre-qualification, prepaid transfer fees, etc. If the resort exercises their right of first refusal, the developer will then replace the buyer in the transaction. If you are the Seller, all the terms of the original contract will still be followed and you simply have a different buyer. If you are the Buyer, any escrow deposits you made will be released back to you and the brokerage you are working with will start looking again for another property for you if you wish.
The Estoppels (Account Information Request) through the resort is requested on all transactions. This is the current owners account status. They are verifying that the Maintenance and Taxes are current, the amount, when they are payable again, mortgage information (if applicable), status of week, and if there are any resort transfer fees and if so, how much are they. Some resorts charge transfer fees to change the ownership over but not all. If an owner is behind on maintenance fees, they simply clear the account at closing via funds from the Seller's proceeds. Again, if a mortgage exists, it is paid from the Seller's proceeds at closing. As for the week status, the closing company needs to know if they have been space banked with exchange companies, put in a rental pool, banked for points etc. so that arrangements can be made for the first year occupancy with the unit., this is all part of discovery through the estoppels.
When all this information has been collected, it's organized into a Closing Instructions Package (which will include an itemized statement of charges). All appropriate paperwork is included in this package as it is the final stage for closing. The escrow agent will also be sending closing documents to the buyer and seller and usually due back in the closing company office within a week for closing as indicated on the Closing Instruction Letter.
Upon return to the closing company, the executed documents will then be reviewed by the closing agent and submitted for recording into public records, along with any tax related notifications. Executed deeds and all monies remain in escrow until all conditions of closing are met. For example: the Seller's executed deed will not be sent to recording until the Buyer's money is received, and the Buyer's money will not be disbursed until the Deed and all paperwork is received. This is for your protection, and is an important function of an escrow agent.
Upon Closing, the title company will disburse money and send the Warranty Deed to be recorded in the Official Records at the resort's county. The county usually takes anywhere from 2-8 weeks for their recording process before it arrives back in the title company office. Time frames can vary widely but your closing agent should be able to give you an estimate for how long this process will take. If you want to close quickly, you may want to request and pay for an expedited delivery service as often the county clerks will process these ahead of general mail deliveries.
Once the deed has been recorded and the local assessor notified of the ownership change, the closing company will receive a copy of the recorded deed. Your closing agent will finalize the transfer process by submitting a deed copy and any other specific resort requirements such as a transfer fee payment to the developer or HOA along with the new owner information so that the resort can update their records and acknowledge the ownership transfer. This internal process generally takes from a few days to a few months. As before, your closing agent should be able to provide you with an estimate of completion.
The Closing Tree (Step by Step Illustration)
Some resorts will send out a new owner information packet to notify the Buyer, but many do not provide any formal welcome letter.