It’s been twelve years since Mexico last updated its national timeshare regulations. On September 24, 2022, Mexico will install a more comprehensive set of timeshare laws providing greater consumer protection to owners and members of timeshare vacation clubs across the country.
The revised law, NOM-029-SE-2021, creates improved standards for the sale and pre-sale of timeshare services, mandatory content and registration of timeshare agreements, and requirements to be contained in timeshare regulations.
It’s a step forward. For years, vacation club developers have attempted to reach a consensus on legislation and regulation for timeshares in North America, as many multi-national timeshare operators manage properties in Mexico, Canada, the United States, and the Caribbean.
These changes supersede what was essentially the 2010 Mexican national timeshare act and will allow purchasers to sell, transfer, or assign their rights arising from a timeshare service agreement. The published Nom 029 update will also permit the promotion and commercialization of international timeshare services. These changes are designed to give vacation club owners more flexibility and peace of mind when it comes to their timeshare.
In addition, the law requires all service providers to be registered with the Federal Consumer Protection Agency (PROFECO) and to have an insurance policy in place in case of damages or accidents. Developers are also required to have a clear and detailed description of all charges and fees for timeshare customers.
Key Updates In Mexican Timeshare Laws
1. Contracts of Adhesion
In timeshare contracts, there is often an imbalance of power between the timeshare company and the consumer. The new law seeks to protect consumers by requiring timeshare companies to use plain language in their timeshare agreements and to make all expenses clear and known to consumers.
If a timeshare contract is terminated within the term specified, the entire initial investment must be returned within 15 business days after notification to the timeshare company. For the first time, penalties and interest would be applicable for non-compliance with the law.
2. Timeshare Reservation Systems
Timeshare companies will be required to have a member reservation system in place and to inform customers of the way to operate said system. While most developers already provide a reservation system to members. This change is minimal.
If the developer is unable to accommodate reservations at their resort or in another comparable location, the developer is responsible for any out-of-pocket expenditures incurred by the timeshare member, such as accommodation and food. This change is important for consumers.
3. Timeshare Fees
The new law requires that timeshare companies determine and publish their fees in accordance with the interim regulations. This will help to ensure that consumers are not charged hidden fees.
Fees must be calculated by taking into account the costs of administration, maintenance, and operation of the timeshare property. In addition, any other charges must be specified in the timeshare agreement.
4. Administration of Timeshare Resort Operations
Timeshare companies will be required to carry out all acts related to the operation, maintenance of facilities and equipment, reservations, and replacement and repair of goods or assets along with inspection and compliance reporting responsibilities.
The Mexican Federal Consumer Protection Law also establishes that the recurrence of violations gives rise to the suspension or cancellation of the timeshare developer or intermediary management operations.
5. Termination of Timeshare
Nom 029 2021 establishes that the reversion of timeshare real estate or termination of a timeshare can only be carried out when there are no longer customers with member rights to enjoy the timeshare service in such real estate.
The new law also requires that timeshare companies have a cancellation policy that is clear and accessible to consumers. The policy must be made available to the consumer at the time of purchase or reservation.
6. Marketing of Timeshare Services Provided Abroad
Promotion and commercialization of international timeshare services are now permitted in Mexico. This change is designed to give timeshare owners more flexibility when it comes to their timeshare. The NOM requires timeshare developers to verify that the foreign real estate is comparable in terms of conditions and features to Mexican real estate.
Timeshares in Mexico are generally sold as a “Right to Use” vacation club memberships and not as deeded units. This is important to know as it may affect your ability to resell or rent your timeshare in the future. The new law does not change this arrangement; however, it does provide enhanced protections for timeshare owners.
If you are considering purchasing a timeshare in Mexico, or if you already own a timeshare in Mexico, it is important that you understand the new regulations and how they may affect you. If you have any questions about the new law, or if you need assistance understanding your timeshare contract, you should consult with a timeshare lawyer who is familiar with timeshare laws and regulations.
This article is intended for informational purposes and is not to be considered legal advice. Led by attorneys Michael D. Finn and J. Andrew Meyer, the Finn Law Group is a consumer protection firm focused on timeshare-related matters. Want to learn more about our Consumer Watch Team? Follow us on Twitter.