A timeshare is a type of interest in property. In a timeshare, an owner owns a right to the use of real property for a limited period of time at a specific time of the year. Other owners also own a right to the use of the same property at other designated times of the year.
In most cases, properties owned as timeshares are condos, ski resorts, or living spaces in popular vacation spots, e.g., beach resorts. A timeshare owner basically has the right to use the property at specific times throughout the year.
For example, a timeshare owner may choose to pay for three weeks in August at a property near a beach. Most people invest in timeshares because they believe that it helps them save money on the cost of vacation housing. They may believe that it is a good investment as well, one on which they could make a profit if they decide to sell it at some point in the future. Unfortunately, this aspect of a timeshare deal may not ever materialize.
It is important to keep a few facts in mind when purchasing a timeshare. A person does not actually own any specific property outright when they purchase a timeshare. What they buy is a right to occupy a property for an interval of time. It is only a right to use a property again for a specific and limited period of time.
Basically, what a person gets when they buy a timeshare is simply the right to go on a vacation at a certain place every year. In some cases, a person might be able to trade one location for another, but not necessarily in all timeshares. A person assumes an obligation to pay for that vacation annually, even if they do not make use of it.
So, What Do I Own in a Timeshare?
What a person actually owns in a timeshare depends on the type of timeshare it is. It can get complicated. Timeshares exist in various shapes and sizes, but the vast majority fall into two categories: deeded or non-deeded.
- Deeded timeshare: A deeded timeshare provides the buyer with a stake or interest in real estate. However, these are becoming less common;
- Non-deeded timeshare: People who buy a non-deeded timeshare obtain only a lease, license, or membership that allows them to use a property for a set time.
A buyer should carefully assess what exactly they are buying when they are deciding whether to buy a timeshare. Consulting a real estate lawyer can be helpful in understanding what exactly a person would have if they were to buy a particular timeshare. Timeshare lawyers can also help.
It is important to keep a few facts in mind when thinking about a timeshare. A person does not actually own any specific property interest outright when they purchase a timeshare. What they buy is a right to occupy a property for an interval of time. It is only a right to use a property, or a group of properties, again for a specific and limited period of time every year.
So, a person usually does not have the right to modify a timeshare or lease it to someone else. A buyer might not even have the right to resell it as one can do with an ownership interest in real property. Usually, a timeshare seller does attempt to make this clear. They may refer to what a person buys as a “vacation ownership,” but buyers may fail to understand the significance of these phrases.
What a person gets when they buy a timeshare is simply the right to go on a vacation at a certain place every year. In some cases, a person might be able to trade one location for another, but not necessarily in all timeshares. A person assumes an obligation to pay for that vacation annually, even if they do not make use of it.
What Are Some Factors to Consider When Dealing With a Timeshare?
When a person owns a timeshare, they are sharing a property with many other people. Any person who has ever shared their housing with other people, e.g., renting an apartment with roommates, knows that there can be substantial problems.
Among the problems that can arise is the transfer of occupancy from one occupant to another. One occupant might depart in a tardy manner to the inconvenience of the other, who may not have any recourse.
An occupant might leave the property in a less-than-ideal condition, in need of repairs, maintenance, or cleaning that has not been reported and addressed.
Getting into a dispute over a person’s use of their timeshare may not be a rewarding experience.
As noted above, a person may find that they cannot use their timeshare at the prescribed time, but they cannot change the time either. They simply miss out on their period of occupancy.
It is important to think clearly about the cost of a timeshare. A person cannot finance the purchase of a timeshare with a mortgage loan because the buyer would not end up with ownership of an interest in real property to serve as collateral for a mortgage loan.
The options for financing a timeshare are:
- Financing offered by the timeshare company;
- Taking out a personal loan;
- Using a credit card;
- Possibly getting a home equity loan on a person’s residence if the person’s equity permits this.
In addition, the person does not end up with any property tax or investment tax deductions for owning a timeshare.
Who Pays for the Maintenance and Upkeep of the Property?
All owners of shares in a timeshare property share:
- Management fees;
- The costs of repairs;
- Maintenance;
- Renovation and replacement;
- Cleaning and costs to maintain the common areas like pools, tennis courts, and lounges as well.
Fees will vary and should be disclosed to a person when they buy their share.
As in a homeowners’ association or a condominium association, the fees and costs are subject to change. They are likely to increase over time. A person must be prepared for this financially.
What Types of Ownership Agreements Are Used in Timeshares?
- Fixed Unit, Fixed Week, Deeded Agreement: The deed indicates that a person owns a specific timeshare at a specific time each year;
- Floating Time Agreement: Here, the time period when the owner may use the timeshare facility is flexible. Reservations are often on a first-come, first-serve basis;
- Right to Use Plan: In this type of timeshare, a person has a lease agreement that provides for a right to use a property at a specific time. The lease agreement has a set termination date. After that date, a person no longer has any rights to the property.
What Are Resort Timeshares?
Resort timeshares are similar to other timeshares, except they are located in resort areas. Common examples of these are timeshares located in a ski resort condominium unit, at a mountain cabin lodging, or at a resort near a lake.
Such timeshare arrangements may have special requirements and laws associated with them. Some of them have requirements and rules that have to do with pollution and protection of the environment.
Can I Legally Get Out of a Timeshare Contract?
There is always a way to get out of a timeshare, but it may not be easy, and it may not result in a profit. In fact, it may result in a net loss. The exact method that a person would use depends on the nature of the interest they have. The purchase agreement may specify conditions for getting out of the agreement.
Some timeshare programs have a limited time frame during which a person can cancel a recent purchase. The purchase agreement may state this.
Also, some timeshare investments can be defaulted on, although the person canceling the deal may be penalized.
Most timeshares do not increase in value; in fact, they rarely even retain their value. If a person wants to sell their timeshare on the secondary market, they may find that another timeshare owner is practically giving a timeshare away. Reportedly, according to an independent timeshare advocacy group, there is a secondary market for timeshares where millions of them are available.
A person should also not expect to lease their timeshare for a profit to anyone else. As with selling, they could compete with thousands of other timeshare owners who also want to lease out their timeshares. Some owners have reported finding that they want to rent out their timeshare, but the going price would be less than the price of a cheap hotel in the same area.
If a person’s contract allows renting, a person may be able to get compensated for some of the expense of owning the timeshare. However, that can take some work and advanced planning.
Keep in mind that if a person financed their timeshare purchase and is paying off a loan, they must deal with this loan when they want to exit the timeshare. With a home mortgage loan, a person might be able to negotiate to turn the property over to the lender to satisfy the loan, but with a timeshare, that is not an option. It may be more complicated to escape a timeshare loan.
Walking away from a loan might have a negative effect on a person’s credit.
Should I Hire a Lawyer for Help With a Timeshare?
If you have a timeshare about which you have questions, including how you might get out of it, you need to consult an experienced real estate lawyer. LegalMatch.com can connect you to a lawyer who can review the purchase agreement and any other documents related to the timeshare and help you figure out your options, including an exit strategy.
Of course, before buying is the best time to talk to a lawyer about a timeshare opportunity. Your lawyer will review the purchase agreement and other relevant documents and clearly explain to you what you are getting, how it will work, and how you can exit if you should decide to do that. It is always best to enter into major purchases with a clear understanding of what you are getting. Your real estate lawyer can provide you with that.
