Timeshare exit is stressful, but escrow is designed to alleviate some of that stress. Whether you just signed up for a timeshare and you regret it, or you’ve had one for years and you’ve decided you don’t want it anymore. There are many people who spend years looking for a way out of their timeshare agreement.
Donating a timeshare is impossible, reselling can take years, and abandoning a timeshare will inevitably destroy your credit score. This is why a lot of timeshare owners resort to working with a timeshare exit company.
If you find yourself in this position, don’t stress. The timeshare exit industry is saturated by scams and fraud, but there are still a handful of great companies out there who simply want to help relieve people of their timeshare.
One of the ways timeshare exit companies can prove that they are legitimate is by offering a third party payment plan, which we’ve discussed in many of our articles. The purpose of escrow is to keep sellers and buyers safe during transactions involving large amounts of money.
What is Escrow
To put it simply, escrow is defined as the process of holding a buyer’s funds in a third party account.
In timeshare exit, escrow also verifies a seller’s ownership and ability to get rid of their timeshare. A closing company is able to hold payment for two parties, but most timeshare exit companies choose to work with their preferred closing company.
There are a few things to look for in an escrow company. Find an escrow company that is:
Finding an escrow company that offers all three of these criteria gives the buyer and seller peace of mind. They hold the buyer’s initial payment, until the service is complete, and then they transfer the payment to the seller. This ensures the seller does not steal the buyer’s funds, and it also gives the seller incentive to complete the service. Not to mention, this makes a buyer much more comfortable submitting a payment.
A Step-by-Step Guide
Paying through escrow while seeking timeshare exit is a very simple process.
- The service provider (timeshare exit company) and buyer (timeshare owner) agree on a price for the service.
- The buyer will then give the money to the escrow company, typically through a check.
- The escrow company verifies the payment, and then the timeshare exit service is complete.
- The buyer has time to determine if they are happy with the service.
- If they are, the timeshare exit company is paid.
- If they are not, the timeshare exit company will not be paid.
- When everyone is satisfied with the service completed, the money will be released from escrow.
When is Escrow a Good Choice?
Escrow is useful when transactions involving very large sums of money are being exchanged. In the case of timeshare exit, in which the price ranges from $3,000 to $10,000, escrow is very important. It reduces the likelihood of timeshare exit scams, in which a fraudulent company will take the money directly from a client without intending to ever complete a service.
Escrow is also useful when a certain service needs to be completed prior to payment and payment can be held until a buyer can evaluate the quality of work. If a buyer determines the work was not done to their satisfaction, they can negotiate with the service provider, discussing what else needs to be done before payment.
While the payment is in escrow, the transaction can be carried out without the risk of scams or fraud. This allows for legal transactions without the fear of losing money to fraud, and thus enables both sellers and buyers to have peace of mind throughout the service in question.
Why Escrow Could Be Essential For Your Timeshare Exit
Escrow can be very important when someone is searching for a timeshare exit company to hire.
In short, escrow is when a third party company takes the upfront payment while the timeshare exit is being executed.
If the exit goes smoothly, all is successful, and the client is happy, the timeshare exit company gets the payment from the third party company.
The customer is protected in the sense that the timeshare has incentive to follow through with the agreement. In the same vein, the company knows that they will get paid once they complete the service.
Similar to timeshare exit scams, there are also escrow scams.
These scams are fraudulent escrow companies that claim they will hold a timeshare owner’s funds until the timeshare exit is complete.
Typically, these scams will request that their clients use unusual payment methods – such as gift cards. A legitimate company will never request that their clients pay through something like gift cards.
Once the client sends the money, they will never hear from the escrow company again.
How to Avoid Scams
The people behind escrow scams will typically prey on those who don’t know much about timeshare exit and escrow companies, which is why it’s important to stay vigilant. These are the things to look out for with escrow companies.
- Check the company’s email address.
The communication between client and escrow company is usually done via email. Many fraudulent companies will make email accounts with an address that does not include a company name, and is often just a variety of random letters or numbers.
Emails from fraudulent accounts can also contain computer viruses, so it is important to block the sender and delete the email if something seems off.
- Be cautious when opening links.
It’s crucial to ensure that the email address is legitimate before opening any links sent by the escrow account. Opening a fraudulent link leaves your computer more vulnerable to viruses and other malware.
- Be wary of unusual payment methods.
Wire transfers and gift cards are difficult to track. This is why fraudulent escrow companies utilize them most frequently to conduct their scams. Steer away from companies that request you use strange methods of payment.
At the end of the day, search for an escrow company with good reviews and a reputable website. Additionally, don’t shy away from asking as many questions as you need to prior to making any payments. Typically, reputable timeshare exit companies will already have a partnership with an escrow company, so it is rare that timeshare owners would have to find one on their own.
Escrow VS 100% Money-Back Guarantee
Escrow is an additional layer of protection for timeshare exit.
However, a 100% money-back guarantee may be a good choice for a client working with a company that has been in business for awhile. You should not fully rule out a company that only offers a money-back guarantee, as some choose not to work through escrow for different reasons.
Companies that offer a 100% money-back guarantee can be far cheaper than escrow.
Many companies pride themselves on having a 100% money-back guarantee. However, it can also be a con.
When a timeshare exit company happens to get sued, file for bankruptcy, or otherwise goes out of business, do they still have to refund the money?
The answer is no, usually not.
This is while escrow, while pricey, is a more secure choice for timeshare exit.
A recent example of a money-back guarantee scam is what occurred with a company called Resort Release. On the BBB, Better Business Bureau, website, many clients were complaining about their experience. Resort Release offered a 100% money-back guarantee for their clients. However, the company then filed for bankruptcy. Clients who chose to work with Resort Release still burdened with their unwanted timeshares and were out thousands of dollars. You can easily prevent this type of scam by working with an exit company that offers an escrow payment option.
Escrow may be a better option, but a lot of timeshare companies do not mention upfront that they have an escrow payment option. Using escrow in timeshare exit is much more expensive, so some companies do not use it, and others do not disclose the fact that they use it.
On average, timeshare exit companies take 8-12 months to cancel a timeshare contract. Consequently, timeshare exit companies will charge a higher fee considering they have to wait 8-12 months to be paid.
When a company has positive reviews and has been in business for a long time, it makes sense that they would prefer to use a 100% money back guarantee. If a company has already proven their legitimacy, it’s not a big red flag that they do not utilize escrow.
Be vigilant to avoid escrow scams, as they are almost as common as timeshare exit scams themselves. Stay away from companies that send suspicious emails, as well as ones that request unusual methods of payment.
Timeshare exit is stressful, but luckily, there are precautions you can take to exit your timeshare safely and legally.
As a timeshare owner, you can protect yourself from fraud by seeking out exit companies that have a good rapport in general. A company with an escrow payment option is just a plus.