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Basic Closing Process for Deeded Ownerships in the US
(This information is not legal advice and is not intended to be taken as legal advice. This article is intended to provide only general, non-specific information. This article is not intended to cover all the issues related to the topic discussed. If you have any legal questions, you should consult with an attorney familiar with the issues and the laws addressed.)
Congratulations! You've reached a purchase agreement for a deeded timeshare........ Now what do you do?
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 HOA process requirements.. If you don't complete both parts- your transfer won't be completed!
I strongly recommended that Buyers and Sellers use a contract that details the full terms and conditions of the sale before you proceed to the closing. Each state may have various legal requirements and disclosures that should be included in your contract. Your resort or HOA may be able to provide you with a referral to an attorney or closing agent who can assist you with a contract template and the closing process for your property. If the offer was made through a brokerage, your sales agent should walk you through this entire transfer process (hint, hint.....nudge, nudge... wink, wink....).
Each states legal requirements for a binding contract may vary. If you're not sure, always consult with your legal counsel..
I recommend you address the choice of a third-party closing agent in your contract. Traditionally, the party responsible for the closing costs has the right to choose the escrow and/or closing agent for the transaction. I never recommend that you accept a closing agent with a direct relationship to the other party in your sale. An impartial closing agent who is familiar with your specific resort can be the most important part of your transaction! The transfer process itself can vary greatly by resort, and you should always confirm that your closing agent has experience with your particular resort.(Remember, as a Seller you're responsible for the property until the transfer completes and as a Buyer you can't get access until everything is finished- you don't want to wait while your closing agent learns through trial and error!).... A closing agent may be able to provide you with references of past clients for the same property. I recommend that you choose a closing agent that is able to provide title insurance, or that offers deed preparation from an attorney licensed in the state where the property is located.
Your contract should also address the issue of an initial good faith deposit from the Buyer. This money should be placed into an escrow account within a specified period of time. Cancellation penalties for both parties should be defined in the written agreement, as well as instructions for the escrow agent to disburse funds in the event of default.
A specified closing date is also strongly recommended! Be careful to ensure you've allowed a reasonable amount of time. Closing durations can vary greatly by resort. In some instances, a transfer can be completed within a month's time. There are also resorts which may take six months to a year for completion!
Once you have an executed contract, it's time to proceed to the property verification or estoppels process. During this process, the ownership details will be verified for the buyer, and the exact transfer processed required by the developer discovered (Even if you've completed a prior transfer at this resort in the past- verify the process again! It's common for a developer or HOA to change the requirements without notice!).. Never trust a verbal estoppels.. Request everything in writing to protect both parties! If you are the Buyer, always ask for a copy of the estoppels for review.
Many developers have a Right of First Refusal for resale contracts at their resorts. This means you will need to provide a copy of the executed agreement for sale and purchase to your developer or HOA. Most will have a set period of time while they consider the transaction. You should always receive a written waiver that should be submitted to the county clerk for recording with the new deed. 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 should still be followed- you simply have a different buyer. If you are the Buyer, any escrow deposits you made should be released back to you and you start looking again!
Don't confuse the estoppels process with an opinion of title. I always recommend a title search be ordered for each transaction. The estoppels can provide you with verification of resort controlled issues such as maintenance fees and assessment balances, unit type, usage type, etc.. The estoppels will not be able to confirm clear title can be transferred. Liens, judgments, bankruptcies, etc. can all wreak havoc for a Buyer- and often will not be discovered until long after the transfer took place. Locating a Seller years after a closing to clean a title issue is often impossible.
Once the verification and estoppels process have been completed, final escrow demands/closing statements will be issued along with the prepared documents for execution. Follow the execution instructions completely! Each state may have different requirements, and your closing agent should provide you with specific instructions to sign your full name as shown on the document, and to provide for proper witness and notary requirements as needed. Failure to do so could result in the deed being rejected by the county or the developer.
The executed documents will then be reviewed by the closing agent and submitted for recording into public records, along with any tax related notifications. Time frames can very 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 resort must be now notified of transfer. 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 to acknowledge the ownership transfer. This internal process can at times be the most frustrating delay you will face. Processing times vary by resort, generally from a few days to a few months. As before, your closing agent should be able to provide you with an estimate of completion- and should have scheduled a follow up call with the developer or HOA to confirm the ownership has been transferred. Some resorts will send out a new owner information packet to notify the Buyer, but many do not provide any formal welcome letter. Sellers generally will not receive any type of notification of completion from the resort, so be sure to save copies of your correspondence with the closing agent!
Transferring a timeshare ownership can be a complicated process, but when done properly it should be a step-by-step progression that follows the above outline.
(This information is not legal advice and is not intended to be taken as legal advice. This article is intended to provide only general, non-specific information. This article is not intended to cover all the issues related to the topic discussed. If you have any legal questions, you should consult with an attorney familiar with the issues and the laws addressed.)
Congratulations! You've reached a purchase agreement for a deeded timeshare........ Now what do you do?
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 HOA process requirements.. If you don't complete both parts- your transfer won't be completed!
I strongly recommended that Buyers and Sellers use a contract that details the full terms and conditions of the sale before you proceed to the closing. Each state may have various legal requirements and disclosures that should be included in your contract. Your resort or HOA may be able to provide you with a referral to an attorney or closing agent who can assist you with a contract template and the closing process for your property. If the offer was made through a brokerage, your sales agent should walk you through this entire transfer process (hint, hint.....nudge, nudge... wink, wink....).
Each states legal requirements for a binding contract may vary. If you're not sure, always consult with your legal counsel..
I recommend you address the choice of a third-party closing agent in your contract. Traditionally, the party responsible for the closing costs has the right to choose the escrow and/or closing agent for the transaction. I never recommend that you accept a closing agent with a direct relationship to the other party in your sale. An impartial closing agent who is familiar with your specific resort can be the most important part of your transaction! The transfer process itself can vary greatly by resort, and you should always confirm that your closing agent has experience with your particular resort.(Remember, as a Seller you're responsible for the property until the transfer completes and as a Buyer you can't get access until everything is finished- you don't want to wait while your closing agent learns through trial and error!).... A closing agent may be able to provide you with references of past clients for the same property. I recommend that you choose a closing agent that is able to provide title insurance, or that offers deed preparation from an attorney licensed in the state where the property is located.
Your contract should also address the issue of an initial good faith deposit from the Buyer. This money should be placed into an escrow account within a specified period of time. Cancellation penalties for both parties should be defined in the written agreement, as well as instructions for the escrow agent to disburse funds in the event of default.
A specified closing date is also strongly recommended! Be careful to ensure you've allowed a reasonable amount of time. Closing durations can vary greatly by resort. In some instances, a transfer can be completed within a month's time. There are also resorts which may take six months to a year for completion!
Once you have an executed contract, it's time to proceed to the property verification or estoppels process. During this process, the ownership details will be verified for the buyer, and the exact transfer processed required by the developer discovered (Even if you've completed a prior transfer at this resort in the past- verify the process again! It's common for a developer or HOA to change the requirements without notice!).. Never trust a verbal estoppels.. Request everything in writing to protect both parties! If you are the Buyer, always ask for a copy of the estoppels for review.
Many developers have a Right of First Refusal for resale contracts at their resorts. This means you will need to provide a copy of the executed agreement for sale and purchase to your developer or HOA. Most will have a set period of time while they consider the transaction. You should always receive a written waiver that should be submitted to the county clerk for recording with the new deed. 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 should still be followed- you simply have a different buyer. If you are the Buyer, any escrow deposits you made should be released back to you and you start looking again!
Don't confuse the estoppels process with an opinion of title. I always recommend a title search be ordered for each transaction. The estoppels can provide you with verification of resort controlled issues such as maintenance fees and assessment balances, unit type, usage type, etc.. The estoppels will not be able to confirm clear title can be transferred. Liens, judgments, bankruptcies, etc. can all wreak havoc for a Buyer- and often will not be discovered until long after the transfer took place. Locating a Seller years after a closing to clean a title issue is often impossible.
Once the verification and estoppels process have been completed, final escrow demands/closing statements will be issued along with the prepared documents for execution. Follow the execution instructions completely! Each state may have different requirements, and your closing agent should provide you with specific instructions to sign your full name as shown on the document, and to provide for proper witness and notary requirements as needed. Failure to do so could result in the deed being rejected by the county or the developer.
The executed documents will then be reviewed by the closing agent and submitted for recording into public records, along with any tax related notifications. Time frames can very 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 resort must be now notified of transfer. 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 to acknowledge the ownership transfer. This internal process can at times be the most frustrating delay you will face. Processing times vary by resort, generally from a few days to a few months. As before, your closing agent should be able to provide you with an estimate of completion- and should have scheduled a follow up call with the developer or HOA to confirm the ownership has been transferred. Some resorts will send out a new owner information packet to notify the Buyer, but many do not provide any formal welcome letter. Sellers generally will not receive any type of notification of completion from the resort, so be sure to save copies of your correspondence with the closing agent!
Transferring a timeshare ownership can be a complicated process, but when done properly it should be a step-by-step progression that follows the above outline.