While no one loves paying additional fees when buying a timeshare resale, closing costs are truly a necessary part of any Real Estate transaction. By helping you better understanding what you’re spending your money on, we aim to show you why closing costs are an important part of ensuring the safety and legitimacy of your timeshare purchase.
In this article, we’ll explain exactly what timeshare closing costs are, what your closing costs cover, how it benefits both parties to pay them when transferring a timeshare, and answer some frequently asked questions. With this knowledge in hand you will be ready to confidently navigate the process of buying or selling a timeshare without placing your property or your money at risk.
Timeshare Closing Costs: Defined
Closing costs are the charges for timeshare closing services and fees due at the completion of your timeshare purchase or sale. In other words, closing costs refer to those fees that are necessary to complete the final stages of a Real Estate transaction.
These fees are generally paid to cover the cost of timeshare closing services provided by a closing company, transfer documents needed to verify and transfer the ownership, and developer-imposed transfer costs.
What Fees Are Timeshare Resale Closing Costs Comprised Of?
Closing costs encompass a handful of various fees that are necessary to transfer a timeshare resale. Let’s explore some of the most common fees that are grouped together for most timeshare closings. While all of the fees listed below may not be applicable in all situations, the overview below should help most buyers and sellers understand what each fee is for.
This is a developer-imposed fee that is charged for the transfer of the timeshare to either your name as the buyer, or that of the buyer. The transfer fees that each resort developer charges can vary dramatically depending on the timeshare you are transferring. Be sure to consult with a trusted broker to understand what portion of your closing costs are allotted to satisfy the developer’s transfer costs.
The escrow and title fees are paid to a timeshare closing agency to cover the cost of their services. These services typically include the preparation and verification of documents necessary for transferring ownership, holding the buyer’s funds in escrow throughout the closing process, and many other timeshare closing services needed to successfully and safely transfer the timeshare.
This can include the following administrative duties:
- escrow services
- title search / deed search
- verification of timeshare title
- document / deed preparation
- paying recording fees from escrow
- setting up title insurance (optional)
- paying taxes from escrow (if applicable)
- resort notification
- dispersing funds from escrow to sellers, developers, or resorts
Your closing company will work hand-in-hand with your broker or Real Estate agent and the resort to oversee the transfer process throughout the timeshare closing. If the property being transferred requires a new deed be recorded with the county, the closing company will work with the local government to ensure the deed has been recorded correctly and all recording fees and taxes have been remitted on the buyer’s behalf from the escrow account.
Some resorts may charge a fee for an estoppel or status letter, which is essentially a document that confirms the attributes of the ownership and its financial status, whether that be verifying the annual maintenance fee, or any outstanding loan balances that may be present.
The estoppel will show any outstanding balances or assessments associated with the timeshare and your closing company will compare what is shown in the estoppel letter to what you are contracted to buy or sell. In this way, an estoppel is an important step in ensuring that the buyer is receiving the exact timeshare they were contracted to receive, as well as ensuring the seller has paid all outstanding maintenance fees leading up to the closing process.
Depending on which brand of timeshare is being sold, fees associated with the developer’s right of first refusal process may need to be included. Some developers have a clause in the original agreement that the seller signed which grants them the chance to purchase the timeshare directly from the seller prior to the seller being able to transfer the timeshare on the secondary market.
The buyer can elect to purchase title insurance when buying timeshares on the resale market. This is an optional fee that will cover any title defects, liens or encumbrances that may not have been previously discovered throughout the closing process.
Why Should I Pay Closing Costs?
The use of a third-party closing company is an incredibly important step in successfully and safely transferring timeshares. A closing company is empowered to be an impartial agent that will protect both the buyer’s funds as well as the seller’s property, ensure the transaction is performed in accordance with the signed purchase agreement, and will be the central contact for developers, local governments, brokers, agents, and both buyer and seller throughout the sale.
How Much Are Timeshare Closing Costs?
To get the most accurate estimate on your timeshare resale closing services, it’s best to reach out to a dependable and trustworthy broker about a particular listing that piques your interest. These costs can vary greatly on the specific services you need, the resort / property you are interested in purchasing, which state the property is located within, among many other factors.
Who Traditionally Pays Closing Costs?
Just like in traditional real estate, it’s typically that the buyer pays for timeshare closing service costs; however, both the buyer and seller can negotiate to share costs.
How Long Does It Take To Close On A Timeshare?
The process to transfer and ultimately close on a timeshare sale can vary greatly depending on the particular timeshare you wish to buy or sell. Generally, many transfers can be completed in about 60 – 90 days, but you will want to speak to a knowledgeable broker to get the most accurate estimate for your situation.
Can I Purchase A Timeshare Without Using A Closing Company?
While it is possible to purchase a timeshare from a private party, and transfer the timeshare on your own, it’s an extremely risky endeavor. Depending on which resort you are transferring, you may need specialized knowledge of drafting a new deed, navigating the right of first refusal process, satisfying the resort developer’s varying transfer requirements and many other skills most owners would not possess.
Outside of the procedure of transferring the ownership, you would be foregoing all of the protection that a title search, escrow services, and estoppel verifications would provide you. Any reputable broker will require the use of a third-party closing company for every transaction to ensure their clients’ funds and property are protected throughout the transaction.
Contact Us Today
Whether you are looking into buying a timeshare on the secondary market, or selling your ownership, feel free to fill in a contact form today. Our team of licensed agents have years of specializing in all the name-brand timeshare developers, and will offer a free consultation to answer any questions you may have about the process.
