It’s time to end the timeshare hard-sell tactics

By | January 27th, 2016

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.

Related story:   No, Starbucks, I'm not falling for your new loyalty program. Here's why.

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.

Related story:   Murphy's unfortunate stay in an AirBNB apartment

And many timeshare companies, including Diamond, won’t repurchase timeshare holdings from owners who are looking to sell them — even those who can no longer afford them. Not only that, the contracts often indicate that “buyers generally do not have the right to terminate their memberships.” So they can be stuck paying HOA fees forever on properties they don’t want to own.

Does all this mean that timeshares aren’t good buys?

As with all purchases, it does mean caveat emptor. Timeshare purchases have been going up because “many timeshare buyers say they like being assured time at a resort they enjoy without the hassle of owning a second home.”

“They can guarantee you vacation time since they often come with fixed annual dates for right-of-use,” notes financial website MarketWatch. “On top of that, timeshare resorts typically offer more in-room amenities, such as kitchens and washing machines, than a hotel room.”

So, know what you’re buying or selling when it comes to timeshares. Check industry offerings against timeshares available on websites such as RedWeek and Timeshare Users Group, where you might find better deals. Go over those contracts with fine-toothed combs, check out applicable laws (if necessary, with professional help from a knowledgeable attorney), and read all the fine print before you sign.

Also, don’t purchase a timeshare as a “real estate investment,” advises Howard Nussbaum, president of the American Resort Development Association (ARDA). “The only investment timeshare owners are making is good vacation memories,” states MarketWatch.

If the scales seem tipped too far in favor of the timeshare industry, the outcry of customers is raising hope that the Consumer Financial Protection Bureau might rewrite the industry rules to address these practices, which in turn is driving down the companies’ stock prices. Diamond’s shares are down 37 percent since their high of March 2015.

Related story:   Wacky package price blamed on "anomaly" in program

So a timeshare might be a good way to enjoy a vacation each year — if you know what you are buying, and from whom.

Are timeshares worth owning for vacation purposes?

View Results

Loading ... Loading ...

We want your feedback. Your opinion is important to us. Here's how you can share your thoughts:
  • Send us a letter to the editor. We'll publish your most thoughtful missives in our daily newsletter or in an upcoming post.
  • Leave a message on one of our social networks. We have an active Facebook page, a LinkedIn presence and a Twitter account. Every story on this site is posted on those channels. The conversation ranges from completely unmoderated (Twitter) to moderated (Facebook and LinkedIn).
  • Post a question to our help forums or ask our advocates for a hand through our assistance intake form. Please note that our help forum is not a place for debate. It's there primarily to assist readers with a consumer problem.
  • If you have a news tip or want to report an error or omission, you can email the site publisher directly. You may also contact the post's author directly. Contact information is in the author tagline.