Examples of State Regulation of Timeshares
Timeshares are jointly owned properties used for vacation by different prospective purchasers. Under the purchase agreement, each owner of the timeshare gets a different occupancy time. A timeshare can be set up over different types of real property, including:
- Vacation resorts
- Apartment buildings
Most states now regulate time-sharing and allow timeshare developers to hold sales presentations. Timeshare laws are structured either under existing state land sale laws or laws specifically enacted for time-sharing. Many state laws on time-sharing carry specific protections for buyers, including rights to cancellation of purchase. The regulating authority is usually the Real Estate Commission in the state where the timeshare property is located. The authority, which typically issues real estate licenses, may regulate:
- Real estate timeshare disclosure statements
- Issuance of timeshare vacation ownerships
- Required timeshare disclaimers for consumer protection
- Real estate brokers and salespersons that pitch timeshares
- Timeshare exchange companies, including those that handle resales
- Below are a series of examples regarding state regulation of timeshares.
Under the Florida Vacation Plan and Time-Sharing Act, purchasers have important rights. They may cancel timeshare contracts within 10 calendar days after the date the contract is signed. Cancellation will be effective if the seller is notified in writing in a timely manner. Any attempt by the seller to obtain a waiver of the cancellation right is void and of no effect. While closing documents may be executed, the closing cannot actually take place until the 10-day cancellation period has expired.
Hawaii state law requires the purchaser to have a seven-day right of rescission of any time-sharing sales contract. Hawaii law also outlines specific guidelines for developers, acquisition agents, and sales agents of timeshare units. Failure to fully disclose certain actions as sales solicitations constitutes unfair and deceptive business practices. The law is also quite severe with respect to seller misrepresentations.
In Maryland, the timeshare purchaser may cancel the sales contract, whichever is latest:
This right of cancellation cannot be waived by the purchaser or any other person. Although documents may be signed in advance, closing cannot occur until the purchaser's cancellation period has expired. Any false representation made by or on behalf of a developer is illegal. Examples of false representations include statements that:
In such situations, the transaction is voidable at the option of the purchaser for a period of one year after the expiration of the cancellation period.
In Massachusetts, timeshares are considered real estate. Notices of assessments and bills for taxes are required to be furnished to and paid by the managing entity. If there is no managing entity, it's to each timeshare owner. The managing entity is required by law to give notice of such assessment to the timeshare owners.
In Nevada, the purchaser of a timeshare may cancel the contract of sale by written notice. They have until midnight of the fifth calendar day after the date of execution of the contract. The contract of sale must include a statement of this right. This right of cancellation may not be waived. Any attempt by the developer to obtain a waiver will result in a contract that is voidable by the purchaser. The cancellation notice may be delivered personally to the developer or sent by certified mail to the developer's business address. The developer shall, within 15 days after receipt of the notice of cancellation, return all payments made by the purchaser.
The contract of sale is voidable by the purchaser within seven days after execution of the contract of sale. The contract shall conspicuously disclose the purchaser's right to cancel under this subsection and how that right may be exercised. An instrument transferring a timeshare shall not be recorded until seven days after the execution of the contract of sale. Advertisements that include the offer of a prize or other inducement must fully comply with state laws.
The law requires that buyers' deposits must be held in escrow accounts until the closing. Some projects must present a public offering statement to each buyer before or at the time of purchase. Buyers may cancel their purchase, whichever is later:
A seller offering an exchange program to a purchaser in conjunction with a timeshare plan must:
A purchaser from a developer may cancel, for any reason, any contract, agreement, or other evidence of indebtedness associated with the sale of the timeshare:
A notice of cancellation given by a purchaser need not take a particular form. It's sufficient if it indicates in writing the purchaser's intent not to be bound by the contract or evidence of indebtedness. Notice of cancellation, if given by mail, shall be:
Upon receipt of a timely notice of cancellation, the developer shall immediately return any payment received from the purchaser. If the payment was made by check, the developer shall not be required to return the payment to the purchaser until the check is finally paid. Upon return of all payments, the purchaser shall:
No act of a purchaser shall be effective to waive the right of cancellation.
Contracts must inform the purchaser of the right to cancel the contract within four days. This does not include Sunday if that is the fourth day from the date of the contract. Additionally, the purchaser may cancel at any time if the accommodations or facilities are no longer available as provided in the contract. The cancellation notice must be sent to the seller by certified mail, return receipt requested.
Under the Texas Timeshare Act, a purchaser may cancel a contract to purchase a timeshare interest before the sixth day after the date the contract is signed. If a purchaser doesn't receive a copy of the contract at the time the contract is signed, the purchaser may cancel the contract to purchase the timeshare interest before the sixth day after the date the purchaser receives the contract. A purchaser may not waive the right of cancellation under this section. A contract containing a waiver is voidable by the purchaser.
Facing Timeshare Issues? Contact a Real Estate Attorney
Timeshare ownership comes with many strings attached. You may end up paying hefty maintenance fees for an indefinite period of time. You might also feel you've been dragged into an arrangement that wasn't properly explained to you. To understand your rights and resolve these issues, start by contacting a real estate attorney.
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