Divorce is about unwinding two people’s professional and personal relationship. Each party to the divorce keeps certain assets and is assigned responsibility for certain debts. But some things are either both an asset and a debt or kind of neither, like a timeshare. So, what happens to a timeshare in an Illinois divorce?
What Is A Timeshare?
A timeshare is the partial ownership of a property (or group of properties) where the division of the value of the timeshare is divided amongst the various owners by their right to occupy that property. Usually each owner is allotted a week within which to use the timeshare.
These timeshare properties are almost always condos at vacation resorts.
Many timeshares offer an actual deed to the member indicating that the member owns the condo and/or land underneath the condo. Along with this actual ownership comes the responsibility for proportional real estate taxes and maintenance of the property.
Other timeshares dispense with the complexity of selling fractional shares of a piece of real estate in favor of just being a right-to-use contract. These contracts always have maintenance fees as well.
Both the fractional deed and the right-to-use contract are assets. The assets can even be traded for the right-to-use different properties managed by the same timeshare company.
The maintenance fees are liabilities.
Pros and Cons Of A Timeshare
Timeshares offer luxury vacations at bargain rates compared to a similar hotel stay.
But, timeshares demand regular maintenance payments every month or year, whether the timeshare is used or not.
Timeshares, being a fractional ownership under management by the timeshare company are essentially impossible to sell to anyone…but the timeshare company.
So, a timeshare doesn’t really function as an asset as you cannot price an existing timeshare on the open market.
But, the timeshare’s ongoing maintenance expense is definitely a liability…but not a fixed amount like any other kind of debt.
What Should You Do With A Timeshare In An Illinois Divorce?
A timeshare, neither being a fixed asset or a debt whose equity can be offset by a mortgage “pay off” amount, has no real ascertainable value in the eyes of most Illinois divorce courts.
To ascertain the value of an asset or debt requires some kind of evidence to determine that value. Without a secondary market or pay off amount for timeshares, timeshares cannot be valued by a court. In re Marriage of Nord, 932 NE 2d 543 – Ill: Appellate Court, 4th Dist. 2010
So, whoever wants the timeshare gets to keep the timeshare…and the responsibility for all of the maintenance payments.
Of course, if the timeshare is in the other party’s name (in whole or in part) the party keeping the timeshare must indemnify the other party for the maintenance payments. A timeshare cannot be refinanced in one person’s name for the reasons listed above: a timeshare is a quasi-asset.
Indemnification is the process by which you promise to be responsible for the other person’s obligations and save them from harm. So, an indemnifier were to miss a timeshare payment and the other party had to pay that payment, the other party could go back to the divorce court to force the indemnifier to pay the payment, any penalties and attorney’s fees incurred during enforcement of the agreement.
If someone keeps the timeshare and rents the timeshare out for currency rather than points which are only reimbursable for more timeshare time, then any net income from that rental can be applied towards a child support or maintenance calculation. This also applies if there is a net loss on the rental of the timeshare.
If the timeshare is not rented, then it will be presumed that you used the time share for your own pleasure and you will not able to apply the loss of rent as a loss of income for child support or maintenance purposes.
If no one wants the timeshare, sell the timeshare back to the timeshare company (you’ll probably have to pay the company in order to sell it to them) or you can hire a timeshare resale company to negotiate the sale of the timeshare on your behalf.
At the point of sale, where the timeshare is finally no longer a married couple’s asset or liability, you will finally have a value for this quasi-asset in either the final sale price or pay-off amount.
This certain asset or debt can be turned over to the Illinois divorce courts who “shall divide the marital property.” 750 ILCS 5/503(d)
If you’re going through a divorce and you have a timeshare, you probably have a lot of other strange assets and liabilities that need to be sorted out. Contact my Chicago, Illinois divorce firm to speak with an experienced Chicago divorce lawyer.