In the world of hospitality, there are a few different ways to go about vacationing. One of these is a timeshare. Timeshares have been around for decades and it's only recently that it's become known because of the fraud and misrepresentation surrounding the timeshare industry.
When you buy a timeshare most people are unaware of how difficult they can be to get out of if you decide later on that owning a timeshare isn't the right option for you. If you're considering going down this route, read more beforehand so you know what kind of commitment signing a contract entails before you may have regrets.
In this comprehensive guide, we will cover:
1. What is a timeshare
2. Pros and cons of timeshares
3. The benefits of owning a timeshare
4. Why you should read the contract before signing anything
5. How to get out of your timeshare if you want to do so
A timeshare is a fractional ownership interest in real estate property or in a time interval. The term has also begun to cover multi-site vacation ownership interests which are typically sold as points ownerships and do not convey a deed, but rather a right-to-use. Timeshares may be sold in perpetuity (forever) or as lease-type contracts. Confused yet? Don't worry we will break it down so it's easier to understand.
A timeshare owner may be entitled to use the property during the period of the timeshare, also called a vacation interval, or may own a number of points that allow the owner to book a number of resorts in a network (typically managed by the timeshare company).
The usual form of an agreement is that the owner pays an upfront fee plus annual maintenance fee payments for all of the intervals in which they are entitled to use - in exchange for rights to occupancy in their preferred unit during each interval cycle. The terms "timeshare" and "vacation club" are sometimes used interchangeably, although technically timeshare refers to vacation intervals while vacation club provides other services.
Points Ownership (not deeded) - Also known as multisite vacation ownership interests or plans, are typically sold as points packages by the larger timeshare developers. These timeshares are 'right-to-use' and may have restrictions on the lease, sell or transfer. However, a benefit of owning this type of timeshare is the ability to stay at any resort within the developer's network (pending you have enough points to go).
Points Ownership (deeded) - Unlike multisite vacation ownership interests, Undivided Interest Deeded timeshares have a points value, but are tied to one resort usually deemed 'home resort' in timeshare vernacular. These ownerships are real property and are treated as such under the laws affecting real property.
Fixed Week - A fixed week is the right to use a specific week, at a specific time, and for a specific unit. This is the original timesharing model that is still in use today with many timeshare companies. This is also a deeded ownership with full rights and entitlements. The major downside of owning a fixed week is if you decide you do not want to travel to that week one year. The only way to travel elsewhere is through a timeshare exchange program.
Float Week - A floating week gives the timeshare owner a right to use a specific resort for a period of time (float) and is typically aligned with a specific unit type (i.e. a 2 Bedroom unit). This is a deeded type of ownership and came about to give added flexibility for booking vacations.
When it comes to vacationing, there are a few different ways to go about it. You can either stay in a hotel, go camping, or go on a cruise. But did you know that there's another option? You can also buy into a timeshare. Timeshares have been around for decades, but recently timeshares have become infamous for leaving owners with little options if they decide later on they want to get out.
There are pros and cons to consider before making a decision. On the pro side, you're buying into something that already has vacation destinations available in a large number of destinations. What you're usually not told is that each resort usually has specific requirements to book. This means your timeshare may not be eligible to stay where you want, when you want, or get what you want.
Another complexity for traveling with a timeshare is the seasonality of different resorts. Depending on when you book your vacations, the seasons are predefined and make the booking process a bit more competitive. This means if you decide you want a prime season, you may need to book the vacation many months ahead of time to have a chance at securing the room.
A major complaint about timeshares is that booking a vacation is an extensive process and must be planned well in advance. Timeshare owners typically book through their timeshare resort network or through an exchange system, like RCI or Interval International. Booking outside one's own timeshare resort network is even more extensive and complicated because of the way exchange networks function.
The benefits of owning a timeshare are that in theory you're not limited to one size or one location when taking vacations. Timeshares allow you the freedom to use your points whenever you like, albeit with a few restrictions on when, where, or how often you can travel. Owning a timeshare is a perfect solution when you have a vacation spot that you typically travel to every year for the same time. In this instance having a timeshare could be invaluable if you buy a 'weeks' ownership.
One of the most alluring features is that with many timeshares, you have the option not only of being able to use your allotted vacation time more than once, but you can also rent it to someone. However, the timeshare industry is cracking down on renting out timeshares and this may not be as feasible in the future as it was in the past.
Timeshare contracts are notorious for hidden terms and conditions. Boilerplate release clauses make it difficult for buyers to hold timeshare companies accountable for any misleading sales practices. It can be tempting to just want to sign on the dotted line, but if you're not careful, this could have unintended consequences. The best practice is to take your time and make sure you read through what you're signing. Always ask any questions that come up. You don't want to regret your decision later and have made a serious purchase without knowing exactly what you're buying.
This is the number one question our team gets asked every day. Timeshare owners may want to get rid of a timeshare for numerous reasons. Oftentimes, timeshare owners reach a point in life where they no longer travel and wish to discontinue being liable for the thousands of dollars in maintenance fees. In other cases, owners are dissatisfied that they were lied to when they bought. Each situation is unique, but timeshare owners can legally cancel their unwanted timeshare contracts.
The first determining factor for what options you have is whether or not the timeshare is paid off. Paid-off timeshares that are in good standing (maintenance fees paid) are transferable just like any other real estate. However, selling a timeshare is usually a chore because of how many timeshares are available for sale at any given time. The laws of supply and demand are in favor of the buyer, not the seller. Timeshare owners who want to sell their timeshare contracts should expect the process to take many months or even years and should expect to receive very little to no money from the sale. Another component is that regardless of the sales price, a timeshare owner must pay a transfer fee to the timeshare company to officially transfer the title to the new owner. Transfer fees can range from hundreds to thousands of dollars depending on the timeshare developer.
Another option to get out of a paid-off timeshare is to hire a timeshare exit company to transfer the timeshare for you. This process can make it easier and sometimes faster to get out of the contract. However, timeshare owners should avoid any company that charges large upfront fees to cancel timeshare contracts. Upfront fees are never in favor of the timeshare owner and may be a sign of a timeshare scam.
For timeshares with active loans, the process to cancel is a bit more complicated. Usually, to get out of a timeshare contract that is financed it's best to work with a professional. You may hire either a timeshare attorney or timeshare cancellation company that has extensive experience cancelling timeshare contracts. Just like timeshare exit companies, timeshare owners should avoid paying large upfront fees to any company or attorney.
Learn more about how timeshare cancellation works here.