Timeshare Laws

In the timeshare industry, it is more than easy to get caught up in the free gifts and dream real estate, which is why many of us get stuck buying a timeshare we no longer want six months or a year down the line and finally ask the question, “How do I get rid of my timeshare?” However, buying a timeshare and trying to sell a timeshare, is more difficult and convoluted than people initially realize. In business transaction as complicated as buying, renting or selling a timeshare, it is important to know the timeshare laws.

To give some background on timeshare laws, it is important to first know that timeshares are actually created when the developer build a condominium type unit and completes all the legal requirements to be allowed to sell week long stays in each unit. Some states do consider some timeshare transactions to be actual pieces of real estate, therefore making all other real estate laws applicable to timeshare owners when they try to do a timeshare transfer.

Now that we know the basics of what a timeshare is, and what laws apply to it, let us go into the kinds of timeshare ownership. First, there is a deeded timeshare. With deeded timeshares, the owner purchases the ownership of a piece of real estate for a period of time, one particular unit for one particular week every year. This is usually called Fixed Time or Fixed Unit. The other kind is a non-deeded timeshare which has the timeshare owner buy a lease, license, or a club membership for a specific amount of time each year for a finite and specified number of years. The purchaser must contact the resort to make a reservation for the exact amount of time that is required. This is also called a Floating Time arrangement.

As far as the actual purchase of a timeshare, make sure to consort several different resources including local real estate agents, Better Business Bureau, and consumer protection offices to make sure that the company that you are considering buying your timeshare from is reputable. One other option to protect yourself as a consumer is to place your money in an escrow account in case the developer defaults. The contract should always have explicitly written the finish date to ensure the buyer’s safety.

Do not consider buying timeshares for investment possibilities as it is highly unlikely to accrue value. You may consider trying to rent timeshare weeks, but many owners hire a renting agency that they must pay an advanced fee to and they usually do not find any renters for that time frame. Also, total costs for the timeshare are usually higher than first led to believe. For example, the complete cost will include mortgage payments and expenses, travel costs, annual maintenance fees and taxes, closing costs, broker commissions on top of any random special assessments. Maintenance fees are also increasing fees, growing to typically several hundred dollars a year. Make sure to take into account all of these costs when deciding to sign the contract.

A purchase document for a timeshare is a binding legal contract and as such, should be reviewed by an attorney. Usually, the contract will include a timeshare cooling off period wherein the purchaser may cancel timeshare contract and obtain a refund if they change their mind. The contract may contain two other clauses; a non-disturbance clause and/or a non-performance clause. A non-disturbance provision is placed in the contract by management to ensure the continued use of the unit even if a third party claims against the developer or management firm. A non-performance protection clause allows the buyer to retain ownership rights if a third party is required to buy out the contract. All promises made by the salesperson should be incorporated into the contract, otherwise such provisions will not be enforceable in a court of law.

Any timeshare or vacation membership that is in a foreign country is subject to the law of the jurisdiction in which that timeshare is physically located. Any contract that is outside the United States involving a timeshare that is in another country will not be protected under U.S. federal or state contract property laws. State regulations now regulate timesharing within their own borders. The authority that presides over timeshares is usually the Real Estate Commission in that state where the timeshare is located. Some states have specific laws relevant only to timeshares located within their borders. For example, under the state of Florida’s Vacation Plan and Timesharing Act, any buyer can cancel their timeshare contract within 10 calendar days after the contract is signed. For more local information, contact your state Attorney General’s Office.

Finally, the thing to usually be most weary of with timeshares is their sales incentives. Timeshare resorts will sometimes offer free lodging to potential buyers in exchange for their attendance at some presentation where they will try to sell you their timeshares. Offers vary, but they usually offer a two night stay at the resort, itself. Almost every single offer is subject to certain conditions, including age and income. Both spouses must attend a sales presentation and are asked to provide proof of identity and an advanced deposit which is usually not refundable. A charge called a “processing fee” is nonrefundable while a “deposit fund” should mean that you are entitled to a refund.

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Consumer Advisor

Frank Leonard

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