In response to a reader’s request, this week we’ll go over the types of timeshares and considerations before buying a timeshare. If you decide to buy a timeshare, take time in the buying process to fully understand the contract, your obligations, and your ability to resell the product.
A timeshare is not an investment. Timeshare values typically decrease over time. Your resale price will be less than your buying price. Throughout your “ownership,” you’re responsible for periodic maintenance fees. These fees can increase every year. You must also consider your cost to travel to your timeshare for the total investment price.
Deeded Timeshare versus Right to Use. A deeded timeshare is a real property right where you are guaranteed a specific unit for a specific time every year. You can rent, sell, exchange, or bequeath your unit in your estate plan. You collectively own the property with other timeshare owners. Because you “own” the property, you are also responsible for costs of upkeep and potentially the mortgage which should be included in your periodic fees.
Right to Use. You do not own the property and have access to an interval of time to use the property. Your interest in the property is considered personal property and you are not guaranteed a specific unit or specific time to use the property. This type of timeshare may also include a complex point system, alternate years of use, and other clauses affecting your actual ability to use the unit.
Potential scams. Don’t buy a timeshare under pressure or as an impulse, regardless of the incentives offered. The timeshare market is glutted with unsold timeshares so whatever deal today IS NOT A “ONCE-IN-A-LIFETIME OPPORTUNITY.” Ask for such incentives to be in writing. Review your contract before signing and make sure to read the cancellation and resale policies. In the moment, you can’t imagine selling, but your family or yourself might need to in 20 years. Keep a paper trail of transactions and correspondence. Whatever someone tells you in person or on the phone is harder to prove than what’s in writing. Do not agree to anything over the phone or in person unless it is in writing and you’ve reviewed the document. Feeling rushed or isolated before making a big decision is often used by scam artists.
Exchanging your timeshare. Tired of the Florida beach and considering Gulf Coast? Want to change your skiing location? If so, you could exchange your timeshare with another plan owner with an equivalent unit. Read your contract closely to understand the process to transfer. This can take weeks to accomplish and will have additional costs.
Selling your timeshare. Be wary of companies who approach you and offer to resell your timeshare. After you research the company, ask for everything in writing. Do not agree to anything over the phone. Like selling other property, ask about fees, advertising progress reports, and if the company is licensed to sell real estate where your timeshare is located. Expect to sell your timeshare at a lower price than you bought it.
Consider your options. If you are impulsive by nature or not, consider the total costs of a timeshare and its value to your life. For some, they are great opportunities to create annual family memories. For others, they are expensive headaches that take more money to sell than ever expected. Remember, there is no free lunch or a legitimate opportunity that’s too good to be true. You’ll have to pay in some way. And if you are okay with the costs and understand your risks, enjoy your timeshare and enjoy your vacation.
Disclaimer. As always, my column is not legal advice, instead merely insight into the law and legal profession. If you have a general question about the law or legal profession, please email me at firstname.lastname@example.org or call 435.610.1431.
Published in The Wayne & Garfield County Insider 7/25/2018.
Photo courtesy of the Federal Trade Commission.