Annual maintenance fees will be set by either your resort's developer or your homeowners' association, whichever is in control of the property at the time that you purchase your unit. As mentioned earlier in this chapter, the maintenance fees may be subsidized by the developer early in the life of the resort, but they will eventually, without fail, become the obligation solely of the homeowners' association members. This means that the association will do everything from setting the rate to ensuring that it gets collected on time, or with late penalties attached.

Basically, maintenance fees are composed of three things: hard costs, property taxes, and escrow accounts. If there is anything else rolled into your annual maintenance fee payment, it should be spelled out either in your purchase contract or in your association rules documents (as you learned in Chapter 7).

Hard Costs

Hard costs are the fixed expenses that your resort must sustain simply to continue running properly. These can include landscaping charges for maintaining gardens and waterfalls, indoor and outdoor swimming pool maintenance fees, unit-by-unit telephone and cable service bills, snow removal from streets and sidewalks in colder climates, and a bevy of similar outlays that are usually anticipated and negotiated with the service providers in advance. That is why they are called hard costs: They tend to be rigid and unchanging, at least for the duration of the service contracts that have been negotiated for any given year of timeshare ownership.

Hard costs can also include any fees that your homeowners' association agrees to pay a management company for services such as collecting dues, distributing a newsletter, monitoring on-site operations, and the like. These management company fees are not likely to be spelled out on your yearly bill, but you should be able to look at your association's annual audit to see exactly what percentage of your money is being used for this type of expense.

Property Taxes

Property taxes, while unfortunately nonnegotiable (darn that Uncle Sam!), are also a fixed expense — albeit one that tends to go up from year to year, just as the taxes on your primary residence typically increase annually. They can be very high or relatively low depending on the location of your resort and the size of your unit.

Property taxes are typically controlled by the state government, although local taxes may also be a factor in some states. As with everything else in the world of timeshares, it is your duty to ask what your responsibilities will be before you sign anything.

Escrow Accounts

Escrow accounts are reserve funds that homeowners' associations keep set aside for things like preventive maintenance, ongoing upkeep, and the scheduled replacement of everything from decorative outdoor cactus plants to wall-to-wall carpeting inside the actual timeshare units. Usually, these types of refurbishments are scheduled well in advance of their actually occurring, so that the escrow account will have enough time to build up and compound with interest before payment actually becomes due.

In some cases, escrow accounts can also be used to pay for unexpected one-time expenses such as natural disaster cleanup, replacement of damaged lounge chairs, or the purchase of a new painting to hang in the resort's lobby. But in most cases, these kinds of above-and-beyond expenses will take the form of special assessments.