Although buying a timeshare in a resort location can look like a great way to afford the vacation property you long to own, you need to watch for developers hoping to make a fast buck and outright scams. Be a smart buyer and understand the legal and practical details of buying, owning and using a timeshare.
You can buy timeshares for the use of an entire facility or just a condo. Timeshares can be for a specific length of time during the year, and sometimes for a set number of years.
With deed and title purchases - also known as "interval ownership" - you buy a legal deed good for a set number of years. You own the property during this time. Management changes don't alter your ownership.
With "right of use" timeshares, you buy the right to use the property, but don't get a legal deed to the property. Your right to use the property is only as good as the integrity and financial health of the resort management.
You can buy a timeshare for the same time period every year (called a "fixed timeshare") or for the same length of time but at different times each year (called a "floating timeshare").
Do Your Homework
Timeshare developers are notorious for high-pressure sales tactics, offering prizes and discounts if you listen to the sales pitch. Before signing any contracts, get all the facts, including:
- Who owns the timeshare (the developer or an individual seller)?
- Is the property's title clear, without claims for liens or other debts?
- Are there restrictions on your power to transfer ownership?
- Whether you'll receive a deed as proof of ownership
- If the timeshare is for "right of use" only, the time left in the timeshare period
- Who owns the facility when all timeshares are sold
- Timeshare owners' role in property management
- Maintenance fees and other owner expenses such as property taxes
- Restrictions on how you can use the timeshare (usually found in a legal document called "CCRs"- short for "Codes, Covenants and Restrictions")
Visit the timeshare property if the sales office isn't on the actual site. Some developers don't give an accurate representation of a property, or development plans if it's not yet built.
Many states have "cooling off period" laws giving timeshare buyers several days to change their minds and cancel sales contracts without penalty. Contact the state's Attorney General's Office to see if there's a cooling off period that applies to your purchase.
One of the benefits of owning a timeshare is the ability to exchange it for a timeshare in another location, through an exchange company. The value of your timeshare on the exchange market - called exchange "points" - depends on several factors including season, and property location, size and quality. Before using exchange services:
- Read and understand the exchange company contract carefully before you sign. Know how properties are rated and your contract duties
- Find out about membership fees and other expenses
- Know schedules for using the exchange service - sometimes these run a year in advance
- Aim for even exchanges - trading a timeshare in the off-season with a bad location won't net you a popular timeshare in peak season
Do your research before you buy. Using your timeshare can be the relaxing vacation you planned for.
Questions for Your Attorney
- Which state's law controls a timeshare contract? The state where the sale is made or where the property is located?
- Which licensing laws apply to sales agents and brokers selling timeshares?
- Can I expect any consumer disclosures when I'm shopping for a timeshare?