Although you may think of a timeshare like a extended hotel, it is real property that creditors can take to satisfy a debt. However, putting a lien on a timeshare usually does not work to a creditor's advantage, especially if another creditor has a lien against the property. Because liens on timeshare work like any other property, you should try to repay the debt to remove the lien.
Owning a timeshare is like owning a home, but only a fraction of it. If you have a timeshare mortgage, the lender automatically holds a lien against the property until you repay the mortgage balance. Other creditors may put a lien against the property by going to court and obtaining a judgment. If you owe money to the federal government, it has an automatic lien against all of your property.
When a creditor puts a lien against your timeshare, you cannot sell the place without the consent of the creditor, or you may have to use proceeds from the sale to repay the debt. Usually, creditors demand you repay the debt in full to release the lien. A lien holder can force foreclosure, but foreclosure often results in a deficiency balance if there is a mortgage on the property, so a secondary lien holder probably would receive nothing from the sale.
If a creditor can put a lien on your property, it probably will place it against a second property, such as a timeshare, rather than a primary residence. You want to avoid a lien sale on a timeshare, because timeshares usually sell for half of their initial value. If you have a mortgage, you owe any money on the mortgage left after a sale -- called a deficiency balance. The timeshare mortgage lender can file a lawsuit to pursue a deficiency balance, which might mean a lien against other property.
You do not want to risk a creditor forcing the sale of your timeshare, so ask the lender about ways to settle the debt, such as an installment plan or lump-sum payoff. A lien does not always prevent the sale of a timeshare, but few lenders will finance a timeshare with a lien on it, and few buyers want to risk foreclosure on the property. You might be able to transfer the title to the timeshare to someone more willing to take a risk on it, such as a relative.
- USA Today; Many Fed-Up Time Share Owners Are Stuck Trying to Sell; Roger Yu; January 2010
- Nolo; Collect Your Court Judgment With a Real Estate Lien; Ralph Warner
- Bills.com: Can Creditors For Unpaid Unsecured Debt Seize My Home?
- Bills.com; Second Home in Foreclosure; May 2008
- Resort Company Information; What Happens if I Stop Paying My Timeshare?; March 2008
- Lawyers.com: Real Estate Liens
- Federal Trade Commission. "Timeshares and Vacation Plans." Accessed April 20, 2020.
Russell Huebsch has written freelance articles covering a range of topics from basketball to politics in print and online publications. He graduated from Baylor University in 2009 with a Bachelor of Arts degree in political science.