Purchasing a Timeshare
By FindLaw Staff | Legally reviewed by Robert Rafii, Esq. | Last reviewed November 19, 2021
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Timeshares can be a great way to vacation in beautiful spots around the world. For those who don't want to spend the money for a second home in Miami Beach or Acapulco, buying into a timeshare vacation home can be just the ticket. You'll get a week on the beach or a ski trip to the mountains without all the worry of homeownership.
But the old slogan “buyer beware" has never been truer than when purchasing a timeshare. Both in terms of knowing what you are buying, and the buying experience itself, timeshares can be uniquely problematic.
And yet millions of people holiday in a timeshare every year. So, what can you do to make an informed decision on a timeshare purchase? How do you avoid a bad experience and even outright fraud?
This article provides tips on buying into a timeshare.
The High-Pressure Sales Pitch
One of the biggest turnoffs for many people who might consider buying into a timeshare is the high-pressure sales tactics agents are known to use.
The typical 90-minute sales pitch starts out innocently enough, with a friendly chat over a beverage and snacks. You'll find that you have a lot in common with that nice sales rep. They understand that you're not going to buy today and …
Now they move on to the script. They explain what you will be talking about today and assure you that if it doesn't fit your needs, you can always leave. They will ask what you are looking for in a timeshare, but what they are actually listening for is clues on how to make a successful sales pitch to you.
- What motivates you? What's important to you?
- How would you like your vacation experiences to improve? What problems have you had in the past?
- How do you feel about timeshares?
They'll repeat back what they've heard so you know they are finding just the right timeshare solution for you.
Now they will show you the timeshare, in person or on video. They'll explain how the club works and how easy it is. They'll share stories of people just like you, with similar desires and problems, who found that it was the perfect solution for them. It could be for you, too. Don't you agree?
“Is there anything besides price that would stop you from becoming a member today?"
Now a sales manager steps in to crunch the numbers. They will have a variety of incentives – only available today – that they can offer to get you to sign now. If you do sign without taking the time to properly considering the offer, you can end up regretting it.
Resist the Pitch: Take Time to Make a Decision
At the end of this well-crafted sales pitch, you end up with a (hopefully lovely) vacation home. Was it the best price you could have gotten? Are the maintenance fees reasonable? Can you get on the schedule for the time of year you want to visit? Is it well managed?
That's the problem of making a costly decision without having time to do your research. Don't get pushed into a quick decision. Go home and think about it.
- Write down what you want.
- Then look realistically at what you can afford. Not just the initial purchase price, but also the many fees involved, and travel costs.
- Imagine what could go wrong and add that to your list.
- What happens if this doesn't work out? How do you get out?
Now you're ready to go back to the sales manager with a list of questions that need to be answered before you even think about handing over your credit card.
What Are the Total Costs?
Total costs for timeshares include mortgage payments, closing costs, broker commissions, finance charges, annual maintenance fees, and taxes. And don't forget the cost to travel to your timeshare.
Annual timeshare maintenance fees can be high, from several hundred dollars to more than $1,000 a year, depending on the amenities of the resort. The larger and more upscale the resort, the higher the fees. These fees can and do rise over time.
Will It Continue to Meet Your Needs?
Right now you want a 3-bedroom condo on the golf course with busy nightlife just 12 floors down. Is that what you will want every year? Is that what you will want in 10 years? Some timeshare clubs have timeshares in multiple locations and you can exchange your unit for one in another location, with enough notice.
There are different types of timeshare ownership: deeded timeshares and non-deeded timeshares. Non-deeded timeshares are also known as "right to use" timeshares if the developer still owns the property. Be sure you understand the difference and what exactly you are buying. Are you purchasing a fixed time, a fixed unit, or a floating time arrangement?
A timeshare is a purchase contract that typically makes no provisions for changing situations like poor health or a job loss. How long of a commitment are you willing to make?
This is one way in which a timeshare is definitely not the same as a vacation home. Timeshares tend to be difficult to sell and when a buyer is ready to sell, they may sell at a loss. Renting can also be difficult and many timeshare owners pay fees to a rental agency to help them find a renter for a given timeframe.
Timeshares are typically not considered a good investment vehicle.
Timeshares and vacation club memberships in foreign countries are subject to the laws of the country in which the timeshare is located. Consumer protections and contractual protects provided under U. S. federal and state real estate contract laws may not apply in that nation.
You may want to research the experiences of other timeshare owners in the area where you are considering buying a property. How have property disputes been resolved?
Buying An As-Yet Unbuilt Property
Getting in on the ground floor of a new vacation property can be exciting, but it comes with additional risks. While many reputable builders do exist, it will be critical to research the seller, developer, and management company.
- Are they trustworthy and financially responsible?
- Do they do good work?
- Do they meet deadlines?
Check out their track record, if possible. Local real estate agents and the Better Business Bureau, or a similar agency, may be able to provide information.
One way a purchaser can protect themselves is to hold money in an escrow account in case the developer defaults. The commitment from the seller that the facilities will be finished as promised should be written into the purchase contract with a date certain.
Protect Yourself with a Thorough Legal Document Review
Purchase documents for any type of real estate transaction are binding legal contracts and should be reviewed by a real estate attorney.
A real estate contract in the U.S. may provide for — and some states require — a "cooling-off" period (also called a rescission period). During this time, a timeshare purchaser can cancel the contract and obtain a refund. This is usually just a few days.
The contract may include a non-disturbance clause. This ensures continued use of the unit by the buyer should the resort default and a third party bring a claim against the developer or management firm.
The contract may include a non-performance protection clause that allows the purchaser to retain ownership rights, even if a third party is required to buy out the developer's contract.
All promises made by the salesperson should be written into the contract. If not, such provisions will almost certainly be unenforceable in a court of law unless the promise is implied by state law.
You Don’t Have To Solve This on Your Own – Get a Lawyer’s Help
Meeting with a lawyer can help you understand your options and how to best protect your rights. Visit our attorney directory to find a lawyer near you who can help.
Contact a qualified real estate attorney to help you navigate issues relating to home ownership.