NOT ALWAYS A DREAM VACATION
Who could resist the promise of a sure way to have a yearly vacation? While buying a vacation home may not be an option for you, perhaps you’re looking at timeshare properties as an alternative. Before you go to a sales presentation for a timeshare or seriously consider purchasing one, please do some research and get all the facts.
What Is a Timeshare?
A timeshare is typically a condominium property that is split up and sold as separate estates, whose use is shared among a number of owners.
A deeded timeshare allows you to use a particular unit at a specific time every year. You are also allowed to rent, sell or exchange your allotted time. This type of timeshare is your own property and can be passed on to your heirs. Once you have purchased the timeshare, you are responsible for the annual maintenance fee and taxes.
A right-to-use timeshare is a leased property. You are purchasing the right to use the property for a set number of years, determined by your contract. Unlike the deeded timeshare, you might not stay in the same unit every year. Instead, you are purchasing intervals (weeks or points) to be used as specified by the developer. The types of intervals are:
- Fixed: You purchase the right to use during a specific week of the year.
- Floating/Flex (based on a rotation of all the owners): You can request a certain week within your specified range during the year. This is typically on a first-come first-serve basis and requires advance planning.
- Biennial: You purchase the right to use for a fixed week every other year.
- Fractional: You purchase a large block of use, instead of one interval per year.
- Point-based: You purchase points at a specific resort that may also be used at other locations. Each vacation would vary in point value, depending on the location, the length of your stay, and the season.
The Costs of Ownership
You will incur costs for the initial purchase of the property and for annual maintenance fees. The annual fees are determined by the owner of the resort property and can vary according to location, size and amenities. The fees go toward the upkeep of the property (onsite management, unit maintenance, utilities, real estate taxes) and any improvements or upgrades that may be needed, such as replacement appliances. Maintenance fees can increase at any time and must be paid whether or not you use the property. There could also be additional fee assessments for unexpected repair costs at the resort, such as hurricane damage if you are in a vulnerable location such as Florida.
Use Sound Judgment
You may be offered a great prize just to go and hear the sales presentation. Find out whether the prize is what it’s claimed to be (is that “free boat” just a toy?) and whether you are asked to pay a fee to receive it. Never sign a contract under pressure. Always get everything in writing to look over at home first.
If you decide to purchase, ask about your ability to cancel the contract after purchase (this is sometimes referred to as a “right of rescission.”) While many states require by law that you be given a right of rescission, the short amount of time you have to cancel the deal once you’ve entered into a contract may vary between three and seven days. Each state law is different and you should be aware of your rights before you sign any contract for purchase. If a right of rescission is not required by your state law, negotiate for one to be included in your written contract. If you decide to cancel the purchase, under the terms offered to you either through your contract or by state law, cancel it in writing and follow the cancellation requirements exactly. Send your letter by certified mail, return receipt requested, so you can document the date the seller received your cancellation. Keep copies of your letter and any enclosures.
Georgia residents often look southward to Florida with their vacation fantasies. If this describes you, you should be aware that the Florida Vacation and Timesharing Act sets out specific requirements for inclusion in any timeshare purchase contract, including resale purchase agreements. These include a ten-day cancellation period and certain financial disclosures that must be made by the seller. If the timeshare is in Florida or the seller is a Florida company, you may contact the Department of Business and Professional Regulation Division of Florida Condominiums, Timeshares, and Mobile Homes at 850-488-1122 for additional information.
Selling Your Timeshare
Trying to sell your timeshare later may be difficult and will most probably result in financial loss. You may receive only half (or less) of your original purchase price when you decide to sell. There are many more people trying to resell than to buy, yet developers routinely hold sales presentations to sell new timeshares to consumers who are unaware of the lower-priced resale market.
The best place to start when seeking a buyer is with the resort from whom you bought your timeshare. Many resort properties include a clause in their contract called the “Right to First Refusal,” which states that they will buy back your week. Although this is likely to be for less than you paid, it is generally more than you would receive if you sold it yourself.
If there is no Right to First Refusal clause, you can attempt to sell your timeshare yourself. Online outlets include RedWeek.com, Tug2.net, eBay and others, where you will have to pay a small listing fee. To set a fair asking price, check the resale market to gauge prices for timeshares similar to your own.
Another option would be to list the timeshare with a licensed real estate agent. The most reputable real estate brokers charge a commission only after the sale.
If you are unable to sell your timeshare, as a last resort you might explore donating it to a charity. This option has become less viable in recent years due to the struggling economy, the decreased value of timeshare properties and the large number of timeshares for sale; in fact, many charities will not accept timeshare properties through donation. However, if the charity does accept your donation, you would not only dispose of the property, but you also might be eligible for a tax deduction.
Be cautious if a company should approach you with an offer to sell the timeshare on your behalf, and never pay an advance fee. Consumers desperate to be relieved of the financial burden of a timeshare are constantly being scammed by outfits which claim that they can sell the timeshare and charge a hefty fee for an appraisal or for “marketing purposes.” Once it becomes apparent that the company is unable to resell your timeshare, it is often difficult to recoup monies already paid. Be proactive; before doing business with a company, check the reputation of the business with the Better Business Bureau where the company is located, and ask whether there are any complaints against them.
Points to Ponder
- A timeshare is only beneficial if you use it.
- Compare your annual vacation costs to the costs of a timeshare to see whether it would save any money.
- Rewards and prizes for purchasing are of little value in comparison to the cost of the timeshare.
- Don’t feel pressured to buy or sign anything on the spot.
- You have to pay the annual maintenance fees even if you don’t use your timeshare, and these can go up.
- Timeshares are not financial investments; you will probably end up losing money if you sell it.
- Be wary of offers to buy timeshares or vacation plans in foreign countries. If you sign a contract outside the U.S. for a timeshare or vacation plan in another country, you will not be protected by U.S. laws.
- Beware of any company that proposes to sell your timeshare for an upfront fee (other than a modest listing charge).
- And, as always—when the sales pitch sounds too good to be true, it probably is. Read the fine print!
- 22.7% of U.S. timeshares are in Florida.
- 3.9 million households in the U.S. own timeshares.
- The average price of a timeshare for one week (or the equivalent in points) is $15,789.
- The Federal Trade Commission stated in 2010 that the number of complaints related to fraudulent timeshare resales has more than tripled over the past three years, as more consumers have attempted to sell their timeshares.
Press Release: Carr Warns Consumers about Timeshare Resale Scam