When you think of timeshares, do “high-pressure sales tactics,” “sky-high maintenance fees,” “unavailability for actual use,” and “inability to resell without incurring a high, non-tax-deductible loss” come to mind?
Maybe they should.
A recent editorial notes that sales of timeshares, or “plans in which persons share ownership or rental costs of a vacation home, especially a condominium, entitling each participant to use the residence for a specified time each year,” are on the rise again.
And along with the rise in sales volume are the notoriously intense hard-sell tactics that cause many would-be owners to throw up their hands (and drive a great deal of visitors to this site).
Fortunately, there are ways to avoid these come-ons, including knowing exactly what you’re buying (in actual and legal terms), knowing what your rights are, and reading all the fine print before you sign anything connected with a timeshare.
One of the biggest issues with timeshares, notes timeshare website RedWeek, is that timeshare purchasers have little legal recourse against timeshare developers when their salespeople make promises during sales presentations that are not kept by the developers — often the exact promises that drive buyers to agree to purchase the timeshares.
Under the laws of many states, the legally controlling document that spells out the obligations of owners, developers and HOAs (homeowner associations) involved in real estate transactions, such as timeshares, is the Public Offering Statement (POS). Timeshare associations must first file their POSs with the state or country in which they are situated and, on approval, share them with owners when signing contracts.
But if an approved POS is silent on any issue, including any promise made by a timeshare salesperson or developer to a potential owner, the owner is basically out of luck if the developer doesn’t keep the promise. In many states, the developer can’t be sued for misleading or inaccurate statements made by its salespeople unless the statements were deliberately misleading and deceptive — which can be hard (and expensive) to prove in court.
And according to Michael Finn, an attorney in Largo, Fla., who specializes in legal situations involving timeshares, “every timeshare contract includes wording that is designed to legally protect salespeople (and their sponsor/developer) who overstate the attractions, amenities and future development of a resort.”
Another issue with timeshare ownership is the nature of what owners actually purchase. In the past, owners received actual deeds to the properties they purchased. But the industry has moved to “point systems,” where the buyers receive “points” they can use for time and amenities, rather than deeds. They are still legally responsible for maintenance fees and taxes on the properties.
Two lawsuits are pending against Diamond Resorts International, a timeshare company that is noted for particularly aggressive sales tactics. The plaintiffs are purchasers who were pressured into buying “upgrades” in exchange for lower maintenance fees. The upgrades consisted of “points” at other Diamond timeshare properties, which turned out to be unusable. And the maintenance fees actually went up.
There’s also the issue of unloading timeshares that owners don’t want to keep. Timeshares can be hard to sell, especially in areas with glutted markets or other problems, like earthquakes, flooding or political issues. Timeshares in foreign countries are subject to laws and restrictions that are not always friendly to owners (and U.S. laws offer no protection). For example, timeshares in Mexico are not “ownerships” but “right-to-use” contracts.