Buying a Timeshare? Read the Fine Print
Shell-shocked from a “hard sell” and still in the middle of vacation mode, many timeshare purchasers are reluctant to dive into the mountain of paperwork that comes after a today only “see and sell” timeshare transaction.
Similarly, the intense pressure and expectations that come with a roomful of salespeople render many timeshare buyers too sheepish to analyze the documents that are presented to them to sign at closing. However, it’s indescribably vital that would-be timeshare owners do their research before, during, and after their sale. The “fine print” and legalese that comes printed in that dense thicket of paperwork will massively impact their lives, possibly for years to come. Why comb through your paperwork with an eagle eye – and, perhaps, the assistance of an attorney? Because:
There May Be Use Restrictions
Broadly speaking, timeshare interests are closely controlled by resort developers. There may be many limitations on how you’re able to use, exchange, and redeem your points that may not be made clear at the closing, including restrictions on how you rent out your timeshare, or regarding whether or not you can resell your interest on the secondary market.
Tales abound of consumers also facing plenty of red tape when it comes to the day-to-day of using their timeshare points, including strict limits on the number of guests allowed in a unit and separate fees for certain exchanges, such as for international travel. And these “fine print” documents, to borrow a phrase, also contain the legal language on maintenance fees, assessments, dues, and property owners’ associations. This information is particularly important to research and know upfront, as some 66% of timeshare owners in a recent survey cited “too high” maintenance fees as a reason for wanting to exit their timeshare contract, with 46% identifying maintenance fees as their “most important” reason for leaving.
You May Not Be Getting the Product You Expected
In many cases, timeshare sales agents are freed up by what our firm describes as the “salesman’s license to lie clause,” a common clause included in the mountain of paperwork assigned at closing that states that the purchasers did not rely on any oral representations when making their timeshare purchase decision. This can lead to a situation in which what one legally agrees to via their signature and what they were told they were contracting for are often diametrically different from one another in comparison.
At the end of the process, many consumers are left with the false impression that more attributes were being purchased than what were actually legally acquired – including an impression of inherent resale value, inheritability, and investment potential that, in the case of timeshares, typically don’t exist.
How do resorts do this? By advertising their wares as real estate, perhaps by using sales materials that feature pictures of suburban houses or the “SOLD!” signs so often used by real estate brokerage. Indeed, it is not unheard of for developers to draw up and record actual deeds – complete with transfer fees and property tax implications – that, when scrutinized, actually don’t convey any legal ownership of property to the consumer. Instead, the legalese ultimately amounts to little more than the right to reserve a unit and/or an increment of time, despite whatever impressions of lasting value were left on the consumer.
In short, some less-than scrupulous resort companies are actively cultivating the impression of real estate ownership without passing any of the attendant value on to the consumer – even going so far as to saddle consumers with a binding deed.
You May Not Have Enough Time to Make an Informed Decision
As our own Michael Finn recently wrote in his article “Are There Adequate Statutory Protections in Place For Timeshare Purchasers?,” there are essentially two major consumer protection devices in play for timeshare buyers today:
1.) The statutory rescission period, which varies by state from five to ten days,
2.) The buyer’s receipt of a state filed copy of a Public Offering Statement (POS) or Prospectus. Either document contains all of the facts, figures, limitations and disclaimers that the state requires be disclosed to a prospective timeshare buyer.
However, in ways large and small, the system is stacked to prevent buyers from getting the full benefits of these devices. In virtually all states that permit timeshares to be sold within their borders, buyers must be given a full Prospectus/Public Offering Statement (POS) prior to, or at least contemporaneously with, their purchase.
Timeshares are often marketed as “impulse buys,” and most states have statutes that provide that the rescission period is extended beyond the provided five to ten days, until all of the disclosures provided in the POS have been provided in writing to the buyer. Therefore, the developers make every effort to provide all information required via the POS at the time of closing so as not to extend the rescission date.
At this same time, though, the consumer is typically still reeling from an arduous sales process; is surrounded by sales people and tacitly pressured to sign all of their documents as quickly as possible; and is, more often than not, still in the middle of a vacation! Taken together, these factors hardly create the right conditions for a consumer to do his or her full due diligence on their purchase!
Let’s be honest – by the time the consumer has returned home and is finished wading through their dense packet of paperwork, they may well have exceeded the rescission period already!
Before you become a lifelong timeshare owner, it is absolutely vital that you know your rights and responsibilities as a consumer. Be mindful of what you are being offered and what is actually recorded in writing in contracts, deed, or any other paperwork. If you have any questions about the legitimacy of your timeshare deed or feel that you’ve been deliberately misled or victimized by a resort company, your best course of action may be to consult with a legal professional well-versed in real estate and timeshare law.
Led by Attorney Michael D. Finn with 50 years of experience, the Finn Law Group is a consumer protection firm specializing in timeshare law. Our lawyers understand vacation ownership as well as the many pitfalls of the secondary market of timeshare resales. If you feel you have been victimized by a timeshare company, contact our offices for a free consultation. Know your rights as a consumer and don’t hesitate to drop us a line with any questions or concerns.
Disclosure: This article is for information purposes only and is not intended as legal advice. Always consult with a reputable attorney to assist in understanding a specific and individual matter.