Why an Estoppel Letter Is Crucial for Timeshare Owners

Estoppel letter: man thinking and reading

Estoppel letter is a term that even long-term timeshare owners may be unfamiliar with. So what exactly is it? In short, an estoppel letter is a legally binding document that details all the maintenance fees, taxes, and special assessments that you will be responsible for once you become the new owner of a timeshare property. This legal document also lists non-financial details like the specific weeks or the amount of points you’ve been assigned for your specific timeshare purchase. 

Let’s break down the details of what an estoppel letter is, why every timeshare owner should obtain one as soon as they agree to a purchase, and the consequences you may have to pay if you don’t receive an estoppel letter prior to signing your timeshare contract. 

What Is an Estoppel Letter?

Any time a real estate transaction takes place, the property owner or real estate management company must provide a legal document to the buyer disclosing all fees associated with their property purchase. 

This real estate contract has different names depending on how and from whom you are obtaining the property. It may be called an HOA estoppel letter, status certificate, current dues letter,  or tenant estoppel certificate. Within the timeshare industry, however, this document is usually called an estoppel certificate or letter. 

An estoppel letter outlines everything you need to know about the timeshare you are about to purchase. The letter should include the following information regarding the timeshare:

  • Yearly maintenance costs, association dues, and additional fees required
  • Assigned timeshare weeks or annual allotment of points
  • Rules, restrictions, and bylaws of your timeshare resort or property
  • Consequences for skipped, late, or underpaid payments

An estoppel letter must list all the fees, responsibilities, and rights having to do with the timeshare condominium, unit, or home you are purchasing. This assures that you know exactly what you are agreeing to when you sign your contract. Timeshare developers may alternatively provide their customers with a public offering statement, which encompasses all the same information as an estoppel letter. 

Why Are Estoppel Letters Important?

Estoppel letter: man reading a document while standing

Estoppel letters also disclose the status of your timeshare property at the time it is sold. Knowing this information can protect new buyers from financial obligations they may not be privy to. This is especially true if the timeshare you’ve purchased is a resale, meaning that you’ve purchased from a previous owner of a timeshare rather than purchasing it directly from the timeshare company itself. It’s also important to obtain an estoppel letter if the timeshare is being transferred to you from a friend or family member. 

So why is it so important to have an estoppel letter for timeshare resales and transfers? Because you don’t want to be responsible for paying delinquent fees, outstanding balances, unpaid mortgage dues, or other leftover expenses that the current timeshare owner owes. 

Estoppel letters prevent this from happening by detailing what fees need to be paid by the current owner before ownership is transferred to you. If you do not receive an estoppel letter prior to finalizing your ownership, you could be held responsible for any fees that the former owner neglected to pay.

Even if the previous timeshare owner is someone you trust, it’s still important to retrieve a payoff letter indicating that any overdue fees have been taken care of before your purchase or transfer is finalized. You should also check to see how many weeks or points have been cashed in for the year so far as this will affect how soon you’ll be able to stay in your timeshare. 

Knowing this information prevents any party, whether that be the former timeshare owner or the timeshare company your unit belongs to, from making any legal claims that were not detailed in your estoppel letter

How to Obtain an Estoppel Letter

Only the official owner of a timeshare can request an estoppel letter. So if you are considering a timeshare purchase, you need to ask the entity you’re purchasing the timeshare from to provide it to you. If your timeshare is being transferred to you or purchased via resale, the previous owner of the timeshare must request the letter from their timeshare resort. 

The process of actually obtaining an estoppel letter should be pretty simple if you are purchasing a timeshare for resale or transfer. All the current owner needs to do is make a phone call to their timeshare company, ask for the letter to be delivered, and pay a fee, which typically costs less than $100. 

But what happens when your reseller is making this process difficult for you?

If the person you’re trying to purchase your timeshare from is hesitating to provide you with an estoppel letter, there may be many reasons why. 

Some people choose to resell their property because they are stuck in a bad timeshare contract. But even if their timeshare company is a scam, their maintenance fees are ridiculously high, or the unit itself is nothing like they had imagined, they still want their timeshare to appear as alluring as possible to prospective buyers. 

Sometimes this leads sellers to list their timeshare property with inaccurate or exaggerated information. For example, they may provide misleading pictures of the unit and surrounding common areas of the resort it’s on. Or they might list underestimates of annual maintenance fees owed to the timeshare property.

Obtaining an estoppel letter verifies that you are purchasing exactly what you think you are. So if you are buying from a timeshare company or reseller that is hesitating to provide you with an estoppel letter, do not follow through with the purchase. It’s likely that they are withholding information about what the timeshare actually looks like, what additional fees you will be responsible for, and/or how often you’ll actually be able to use the timeshare. 

Having an estoppel letter is like buying a warranty for an expensive product. Although it doesn’t allow you to return the timeshare, it does protect you from being liable for any false claims or misplaced fees that your timeshare provider or seller may accuse you of in the future. 

What if I Never Received an Estoppel Letter?

Stressed woman crying

By now, you’ve probably been warned about tricky tactics timeshare salespeople use to get customers to sign a contract. One of the major tactics is omitting information about your timeshare purchase, namely preventing you from seeing all the details. Having an estoppel letter can prevent this kind of deception from occurring and is obligated by law.

But what if your timeshare provider failed to give you an estoppel letter prior to the signing of your timeshare contract? Now you may be liable for paying any overdue fees that the previous owner neglected. What’s worse is that the information disclosed in the estoppel letter may have prevented you from purchasing the timeshare in the first place. 

If you found yourself in this tricky situation, you may be wondering if timeshare cancellation is a possibility.

Centerstone Group hates to see people tricked and taken advantage of by timeshare sellers. So if you have dealt with a seller who has used fraud, high-pressure sales tactics, or misrepresentation in order to get you to agree to timeshare ownership, we may be able to help you. 

Centerstone Group is a full-service advocacy group that specializes in resolving timeshare contracts. Our leadership team does our due diligence by using a comprehensive three-pronged resolution process that can get clients out of their contracts in as little as a month. Check out our contact information and schedule a free consultation today.


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