Timeshares are created when a developer purchases or builds one or more condominium type units and then completes the required legal steps to be allowed to sell brief time-period stays (usually weekly) in these units. Some states consider some timeshare arrangements to be actual pieces of real estate, making other real estate laws applicable to timeshare agreements.
In a deeded timeshare, the timeshare owner purchases an ownership interest in a particular piece of real estate. Usually, the buyer purchases a particular unit and a particular week in the year. That owner will always stay in that same unit on the same week of every year, unless an exchange is made through an exchange company. This arrangement is usually called Fixed Time or Fixed Unit.
In a non-deed timeshare, the timeshare owner purchases a lease, license, or club membership to use the property for a specific amount of time each year for a stated number of years. This is sometimes called a Floating Time arrangement. The purchaser has to contact the resort to make reservations for the exact week required. Some resorts have limitations on how early units can be reserved. Seasonal Floating is the same as Floating Time, except that the owner can only reserve time within a particular season.
Numerous factors should be taken into account prior to purchasing a timeshare. A review of the background of the seller, developer, and management company, along with a review of the current maintenance budget, will assist the prospective seller in making an informed decision.
Most states now regulate time-sharing, either under existing state land sale laws or under laws that were specifically enacted for time-sharing. Many state laws on time-sharing carry specific protections for buyers and rights to cancellation of purchase. The regulating authority is usually the Real Estate Commission in the state where the timeshare property is located. See State Regulation of Timeshares.