Planning your next vacation? Perhaps timesharing – the use
of a vacation home or campground for a limited, preplanned time – is on your
list of options. Timesharing may be a popular way to take a vacation, but
problems can occur.
Timeshare sellers offer gifts to get you to listen to a
sales presentation. Many giveaways are of little or no value. Free airline
tickets may be tied to the purchase of expensive hotel accommodations. Other
vacation "awards" are often of questionable value.
Timeshares can cost as much as $15,000, based on location,
amenities, season, length, and type of ownership. Annual maintenance fees
averaging $500 may also apply. In addition, buyers may be responsible for major
What some consumers realize too late is that renting may:
be a lot cheaper,
allow more flexibility and variety in vacations,
prevent being locked into yearly maintenance fees until
death or bankruptcy.
Unhappy timeshare owners cannot simply quit
Some resorts refuse to “take back” unwanted memberships.
This is because the income generated by annual maintenance
fees may be more valuable than the member’s title to real estate. Some
Wisconsin timeshare/campground members state they have been unable to even give
away their membership, much less being able to find a buyer.
Timeshare owners who stop using the resort facilities must
continue to pay their annual maintenance fees and any special assessments. If
the member refuses to pay annual dues, the condominium association may sue and
recover back dues, interest, and attorney fees. Some members say they feel
trapped for life.
Never consider a timeshare purchase as an investment
The Federal Trade Commission found only 3.3 percent of
owners reported reselling their timeshares during the last 20 years. You may
face competition from the original seller. Or local real estate agents may not
want to include the timeshare unit in their listings.
Some resorts have a resale office to try to assist the
owners of unwanted timeshares. In addition, some resorts will allow an unhappy
timeshare owner to give back their interest in the resort, but rarely will a
resort guarantee that they will buy it back.
Be wary of offers from timeshare resale companies
Some desperate timeshare owners report paying resale
companies $500 to list a timeshare, but promised buyers never materialized.
These consumers report the loss not only of the original
purchase price of the timeshare, but also the money paid to timeshare resale
Consider whether you will be able to use a timeshare
facility year after year. Are your vacation plans sometimes subject to last
minute changes or do they vary in length and season from year to year? Does the
property have flexible use plans? Are you – and will you be – in good enough
physical and financial health to travel to your timeshare?
The total cost of your timeshare includes mortgage payments
and expenses, such as travel costs, annual maintenance fees and taxes, closing
costs, broker commissions, and finance charges.
Annual maintenance fees can average $500. Since these fees
can rise at rates that equal or exceed inflation, it is important to ask if
there is a fee cap for your plan. Keep in mind that these fees must be paid
whether or not you use the unit.
To help evaluate the purchase, compare your total timeshare
costs with rental costs for similar accommodations and amenities for the same
time and in the same location.
Do not act on impulse or under pressure. Take the documents
home to review. Ask a professional or someone familiar with timesharing to
review the paperwork before you buy.
If the seller will not let you take the documents, perhaps
this is not the deal for you. A good offer today usually will be a good offer
tomorrow. Legitimate businesses do not expect you to make snap decisions.
Find out if the contract provides a "cooling-off"
period during which you can cancel and get a refund. If not, ask to include
Most states where timeshares are located require a
cooling-off period. Wisconsin has a 5-day cooling off period. If there is no
cooling-off period, be sure you understand all aspects of the purchase and
carefully review all materials before you sign.
Make certain all promises made by the salesperson are
written into the contract.
Programs that allow you to arrange trades with other resort
units in different locations for an additional fee usually cannot be
There also may be some limits on exchange opportunities. For
example, you may need to make your request far in advance. Or, even at an
additional cost, you may not be able to "trade up" to a better unit
at peak time in an exotic location.
When you trade, expect a unit of approximately the same
value as your own.
Your resort will be a good place to vacation only if it is
run properly. Research the track record of the seller, developer, and the
management company before you buy.
Ask for a copy of the current maintenance budget. Learn what
will be done to manage and repair the property, replace furnishings as needed,
and provide promised services.
Will these arrangements be adequate? Will they extend over a
long period of time, or just the near future?
Visit the facilities and talk to current owners about their
experiences. Local real estate agents, Better Business Bureaus, and Consumer
Protection Offices also are good sources of information.
Purchasing an undeveloped property is extremely risky. But
if you decide to do so, commit money to an escrow account. This protects your
financial investment if the developer defaults. Also get a written commitment
from the seller that the facilities will be finished as promised.
Learn your rights if the builder or management company has
financial problems or defaults. Plus, check to see if your contract includes
two clauses concerning "non-disturbance" and
A non-disturbance provision clause should ensure that you
will continue to have use of your unit in the event of default and subsequent
third party claims against the developer or management firm.
A non-performance protection clause should allow you to keep
your rights of ownership, even if a third party is required to buy out your
contract. Contact an attorney who can provide you with more information about
Be especially wary of offers to purchase timeshares or
vacation club memberships in foreign countries. If you sign a contract outside
the United States for a timeshare located in another country, U.S. federal or
state contract property laws generally will not protect you.
State law protects consumers
In Wisconsin, a state law prohibits deceptive advertising
and sales practices in the promotion and sale of timeshares, including:
Misrepresenting the investment or resale value of
Using phony discounts to induce customers to sign contracts
on their first visit.
Failing to clearly disclose in printed advertising and mail
solicitations the identity of the seller and that the purpose is to sell
Additional protections include:
Free gift solicitations must disclose all conditions
Sellers must provide buyers with a disclosure statement,
purchase contracts, and a right-to-cancel notice within five business days.
Fifty percent of a consumer’s payments toward an incomplete
project must be escrowed or otherwise protected until the project is completed.
Timeshare and campground membership salespersons must be
licensed by the state. Information is available at:
Department of Safety & Professional Services
If you are interested in a timeshare located in another
state, find out what laws exist about timeshare transactions in that state.