Timeshare Basics

Since consumers continue to attend timeshare presentations having done no research and timeshare owners sometimes forget the basics, I thought it would be good to go over some basic information. 

What is timeshare?

In the most basic terms, timeshare is buying and owning your vacation accommodations, as opposed to renting a hotel room, resort room or vacation home.  The difference between timeshare and whole ownership of a vacation or second home is that you only purchase and own the amount of time that you plan on using each year.  

 

How do I buy a timeshare?

Timeshares can be purchased on the primary market, i.e. from the developer, or on the secondary market from an existing owner.  Developer sales are generally onsite at the resort, while secondary market sales can occur online between consumers, via a licensed broker, or in some cases through the developer.

 

Can I sell my timeshare?

In most cases, the legal answer is “yes.”  Although the value of the timeshare maybe far less than what you originally paid (see below) and some timeshares sell easier and faster than others. Timeshares can be sold if you no longer want/use it.

 

Why is the resale value of my timeshare so much less than what I paid for it?

Timeshares purchased on the primary market, e.g. from the developer, include the cost of building plus the cost to sell plus the profit margin, just as with any other product. Combine that with the fact that there are millions of timeshare units for sale on the secondary market and the fact that many developers are restricting the rights and benefits to secondary market purchasers, the value of most timeshare is considerably lower than most owners realize. It is simply supply vs. demand vs. benefit.

 

Is timeshare a real estate investment?

The short answer is NO.  Even if a timeshare is backed by physical real estates (and many timeshares are not), a timeshare should not be thought of as a real estate investment as a house, condo or other types of general real estate may be. A timeshare can be thought of as an investment in your future vacations.  You pay upfront now so that you can have vacations later.

 

What is the difference between timeshare weeks and timeshare points?

Timeshare weeks are the standard and are the simplest to understand and use.  Owners have the right to use 8 days 7 nights, consecutively per year, at a home resort or at another affiliated resort.  Point systems vary from developer to developer and from exchange company to exchange company, but all operate under the same premise; owners use their points as the currency to make accommodations and other reservations.

 

Can I donate my timeshare to a charity?

No charity will accept a timeshare due to the ongoing annual fees involved.  If you receive a call from anyone saying otherwise, promptly hang up. 

 

What happens if I stop paying my annual maintenance fees?

As mentioned above, timeshare ownership carries with it benefits and responsibilities.  One of those responsibilities is to pay your share of the annual maintenance fees levied by the resort.  Failure to pay these fees may result in losing your ownership rights and in many cases lead to a foreclosure, which can have a significant negative affect on your credit and your ability to purchase a major item or even obtain employment in the future.

 

What is an HOA and what does it do?

Your HOA or Home Owners’ Association is in charge of the management of the resort or in some cases, responsible for the hiring of the management company of the resort.  HOA duties include assessment of annual fees, budget, and/or special assessments, the day-to-day operations, determination of expenditures or improvements and staffing of the resort with the exception of the marketing and sales departments.  Individual owners are encouraged to get involved in their HOAs.

 

Is a timeshare the same as a vacation or travel club?

No.  While vacation and travel clubs differ, they are both are distinct from timeshare in that a vacation or travel club involve a membership vs. ownership rights.  If you are considering a purchase of a timeshare, vacation club or travel club and are unsure of the differences, do your research before committing to anything.

 

I just received a call saying that someone wants to buy my timeshare…what should I do?

Hang up. It’s undoubtedly a scam. 

Is Your Timeshare Worth More Than A Box Of Hotel Receipts?

Many, many, many years ago when I was a struggling timeshare salesperson, blissfully ignorant of anything but what my sales trainers had drilled into my head, I was often met with this question from my clients: “Can I sell the timeshare if I don’t want it anymore and for how much?”

The answer was always the same: “Yes, you can sell it. Let me ask you this, how much can you sell 25 years of hotel receipts for when you’re done vacationing?”

The first part of the answer was, and remains true. The right to sell your timeshare interests is part of the full bundle of rights. As to the so-called resale value of the timeshare, I never presented the timeshare as an investment and since resale value is based on many things, including supply and demand at any given time, I could not and did not provide a number, but rather reframed the consumer’s question. 

20 years later, it strikes me that both the industry and the owners have forgotten about my reframing question about hotel receipts. I think it’s high time we get back to looking at the truth. 

No matter what you pay for a hotel room over the years and no matter if there’s any inflation in that rate, the fact of the matter is that if you vacation and stay in hotel rooms, the cost of those accommodations is money spent not to be recouped. None of it. 

If you instead choose to purchase a timeshare, depending on many factors including what type/brand involved, you have a choice to sell it when you’re “done” with it and possibly recoup a minimal amount. What is a minimal amount?  Let’s use $1,500 as an example. 

If you purchase the right timeshare for your needs, you’ll probably have nicer/better/roomier/more luxurious accommodations than a typical hotel room you’d normally stay at. The resorts will probably have more amenities and if you’re smart enough to avoid the oh so incorrectly named “concierge” people pestering you for a sales pitch, oh sorry a resort overview, every time you check in, your stay will be better than a hotel in the area. 

Don’t get me wrong...you will pay for this. You’ll probably pay more than you would for a hotel. That’s your choice. If you believe the money saving pitch your salesperson plied you with without doing any research, that’s your fault. Generally speaking, you pay more for nicer things. 

But here’s the thing; I don’t know where or when the price you could sell your timeshare after 20 years became such a big deal. So what if you paid $20,000 for it and could only sell it for $1,500. I assure you that box of hotel receipts can not be sold for $1,500. 

There are much bigger issues to deal with...the restrictions that developers place on secondary market purchases comes to mind.  More on that in a future post. 

Why So Many Rules And Restrictions For A Vacation?

These are the actual terms and conditions of a vacation package requiring a timeshare sales pitch. I’ve redacted the name of the resort as I’m fairly certain most of them have similar language. 

If the terms and conditions of a simple mini-vac require such arduous language, it’s no wonder the average purchaser can’t understand the language in a sales contract. 

Get some popcorn...this is a doozy. 

TERMS AND CONDITIONS

The vacation package being offered is provided by REDACTED (“Sponsor”), a Delaware limited liability company whose address is REDACTED. Sponsor is the developer and seller of REDACTED, a multi-site timeshare plan. 

You must attend a 90-minute minimum timeshare sales presentation about the benefits of being a member of REDACTED. If applicable, you must attend this presentation with your spouse or domestic partner. More time may be necessary if you choose to purchase. 

This offer is designed for individuals who are at least 30 years of age or older. Purchaser, and their spouse or domestic partner, if combining income, (hereinafter “Purchaser”) each party must present a valid state-issued driver's license (with the same mailing address) and a valid credit card (not attached to a debit account) at check-in for incidentals/security deposit.

Purchaser must have a gross annual household income of at least $70,000 and have a minimum credit score as established by this Sponsor. Purchaser may not have filed for bankruptcy or been adjudicated bankrupt or insolvent within the past 7 years. Only married couples and domestic partners attending a sales presentation at a REDACTED resort location (and who provide proof of cohabitation through government-issued identifications showing an identical home address) may combine their income, and, if married or in a domestic partnership, both spouses and domestic partners must attend the tour together. 

Employees of Sponsor and persons having attended a sales presentation with Sponsor within the last 12 months are ineligible to participate purchase a vacation package. 

Only one vacation package per household.

If applicable, REDACTED Owner Participation Requirement:

To be eligible for selected reservations and package use, ALL OWNERS on the Account are required to travel and attend the minimum 60-minute Owner Update together. The scheduled times of Owners Update depend on the property location of update. Failure of all parties on the Account to travel and attend the required presentation will result in forfeiture of the package and associated gift(s).

REDACTED  property owners' accounts cannot be in Collections, Bankruptcy nor have an active Loan Modification. REDACTED Owners/Members may not travel on a promotional package within 6 months of their most recent stay/tour.

This vacation package is designed for families and for recreational and vacation purposes, not to exceed a maximum of four (4) people per offer (four (4) person max (based on accommodations type). There is no obligation to purchase a timeshare interest. 

If you fail to attend the sales presentation or meet the requirements set forth in these Terms and Conditions, you understand that you will be charged the full retail value for the accommodations and any gift(s) received less the purchase price of the vacation package and will not receive any promotional gifts described herein. Promotional gifts, if included in the selected package, will be provided upon completion of the timeshare sales presentation and tour during the vacation, or sooner if required by law.

Purchaser must not be scheduled to attend any other timeshare sales presentation(s) at the destination region while staying or touring on any vacation package sponsored by REDACTED. 

Owners having attended a sales presentation with Sponsor within the last 6-months are ineligible to participate purchase a vacation package. Only one vacation package per household.

Group travel on this vacation package is not permitted. Group travel is defined as traveling with friends or family on separately purchased packages, to the same destination during overlapping travel dates.

Purchaser cannot attend the timeshare sales presentation on the date of arrival or date of departure. If attendance at a sales presentation is made under an exception on the date of departure, the guest must first check out of their accommodations and their flight must not depart within or less than 7 hours after scheduled tour time. Purchasers living within a 50-mile radius of the resort in the vacation package do not qualify to participate in this offer, but may qualify to participate in an offer at an alternative resort destination. This vacation package may NOT be used in combination with any other promotional offer or used in conjunction with any other vacation ownership interest. Two or more vacation packages may NOT be used at the same time to extend your travel dates.

This offer is non-refundable and non- transferable except as described herein or as required by law. Failure to comply with the rescheduling policy, attend the sales presentation, or meet the eligibility requirements will result in forfeiture of the package price and benefits of the package. You may cancel and request a refund at any time within thirty (30) days following the date that you purchased your vacation package, and the refund amount will be the purchase price of the vacation package less the retail value of any gift(s) and/or accommodations received. If you have used any of the days or nights accompanying this vacation package, you are ineligible to receive a refund. REDACTED reserves the right to cancel any reservations and issue a full refund for any reason until 3 days prior to scheduled check-in, whereas fees are 100% nonrefundable.

If a travel date was not selected when the vacation package is purchased, Purchaser must travel within 12 months from the date of purchase. Because the Sponsor subsidizes the cost of this vacation package in order to offer it to you at a discounted price, the Sponsor has instituted this Late Cancellation/No-Show Policy. Full pre-payment using a major credit card or debit card with the VISA or MC logo is required. Subject to any applicable statutory cancellation rights, this is a non-refundable, non-transferable advance purchase package. Purchaser may reschedule a reservation one time at no charge. A $65.00 charge applies to each reservation change thereafter. Any change made within 72 hours prior to check in or vacation no shows will be charged $90.00 if your accommodations were in a hotel or studio unit; $120.00 for a one-bedroom unit; and $150.00 for a two-bedroom unit. By purchasing a vacation package, you are agreeing to this policy.

Pets are not permitted in REDACTED properties. However, service animals as defined by the ADA are permitted. Emotional support animals are not recognized by the ADA as service animals. Thus, they are not permitted.

Sponsor and its direct and indirect parents, subsidiaries and affiliates, and each of their respective employees, officers, directors, shareholders, affiliates, and agents are not responsible for any printing or typographical errors contained herein. Sponsor is not responsible for any Acts of God, personal travel interruption, transportation costs, taxes, fees or personal illnesses preventing purchaser from using the vacation package within the provided time period. Medical, personal, physical or economic issues are the sole responsibility of the purchaser and do not provide a reason(s) for cancellation of package purchase outside of the provided period.

This promotion is intended to solicit purchasers of timeshare interests in REDACTED . The price range of the intervals is $8,200 to $40,075, plus annual dues. Prices subject to change. 

Void where prohibited by law. The verifiable retail value of this offer is from $595.00 to $1,500.00.

Notwithstanding any current or prior election to opt-in or opt-out of receiving telemarketing calls or SMS messages (including text messages), by entering my contact information, including my telephone number, I am giving REDACTED, its direct and indirect parents, subsidiaries, and affiliates (“REDACTED”) permission to contact me about this and future offers, at the telephone number, or physical or electronic address I have provided including SMS messages (including text messages), telephone calls using prerecorded messages or artificial voice, and calls and messages delivered using auto telephone dialing system or an automatic texting system. 

I understand that this permission overrides my listing on any state or federal Do Not Call list and any prior listing on the company Do Not Call list of REDACTED. I can opt-out of future calls at any time by requesting to be placed on the company Do Not Call list of REDACTED by calling REDACTED.

ADDITIONAL DISCLOSURES

RIGHT TO CANCEL OR MODIFY PROMOTIONS AND TERMS AND CONDITIONS. Sponsor, in its sole discretion, reserves the right to cancel, terminate, modify, or suspend the Promotion in any way as deemed necessary by operational procedures and/or as otherwise mandated by State or Federal Laws.

Sponsor shall have no liability for any failure to comply with any provision of these Terms and Conditions due to occurrences beyond the Sponsor's control, including events that delay, hinder, or otherwise prevent the performance of any act required by Sponsor or in any way necessary to support the Promotion, including, without limitation, war (whether or not declared), revolution, riot, insurrection, strike, labor troubles, inability to procure materials or services necessary for performance, restrictive governmental laws or regulations, invasion, armed conflict, hostile act of foreign enemy, acts of terrorism (foreign or domestic), sabotage, radiation or chemical contamination, ionizing radiation, acts of nature (including without limitation, hurricane, tornado, flood, storm, tempest, wildfires, or earthquake), explosions, plague or other serious epidemics, public health emergencies, communicable disease outbreaks, or pandemics. If the product purchased becomes no longer valid due to associated changes then use of the package offer will be restricted, voided, forfeited, loss, or replaced with option of accommodations provision only. 

This constitutes the entire offer for the Promotion and no other representations, oral or otherwise, will apply.

THIS ADVERTISING MATERIAL IS BEING USED FOR THE PURPOSE OF SOLICITING TIMESHARE SALES. THE COMPLETE OFFERING TERMS ARE CONTAINED IN AN OFFERING PLAN AVAILABLE FROM THE SPONSOR.

This offer is not directed to residents in any state in which a registration of the timeshare plan is required but in which registration requirements have not yet been met.

Insane, isn’t it?  Why is this necessary?  

The Timeshare Industry Is Incapable Of Appreciating Their Own Product

 Yesterday was International Timeshare Appreciation Day, something I created 8 years ago as a way for timeshare owners around the world to celebrate everything that is good about timeshare. 

The industry has had 8 years to get behind this endeavor. No cost. No only one way of participating. 8 years. 

You have to wonder why they haven’t promoted the heck out of the observance , particularly this year when so many are finding it harder to celebrate timesharing. 

8 years. The only logical takeaway is that no one in the industry feels that there’s anything to appreciate about their own product. Disgraceful

Is There Such A Thing As A Good Timeshare?

 A reader writes in:

Hi Lisa,

Came across your blog and wondering if you might be able to provide some input?

My in-laws have a timeshare at the Maui Banyan in Kihei Hawaii that they purchased in 2004, paid off in 2014, they bought it for $20K, but with interest over the term, looks like $40k overall.

The maintenance fees about $900 or so, taxes about $200 per month, so figure on $1200/year, = $100/month. For 2 weeks, bankable (i think) and usable at other destinations.

What's the pros and cons of this type of timeshare? Why buy? Why not?

My response:

It’s a complicated question that I can’t answer comprehensively without knowing much more. 

I’ll say this much, the vast majority of timeshares that the developer is attempting to sell, including what your in-laws purchased, is available on the legitimate secondary market, albeit with some usage restrictions, for a small fraction of what the developer is selling it for. Add to that insult the fact that with rare exceptions, the resorts make inventory open to renters who can then get the benefits without the large buy in price and in some cases less than the annual fees. 

So from a purely financial standpoint, buying from the developer doesn’t seem all that wise. 

In my opinion, the industry has a long way to go before the value proposition of owning is back to what it used to be 20 or 25 years ago. 

And while I used to be a big proponent of timeshare points due to their flexibility, I no longer am. For the most part, they are unwieldy, I’m not 100% certain resorts are not overselling inventory and then there’s the fact that while a week in 2020 was a week in 1990 and will be a week in 2040; most point based timeshares offer no inflation protection leading to constant attempts to up sell the owner. 

Sure, the resorts are almost always nicer than a hotel. But as I pointed out, you don’t have to be an owner to stay at the resorts. 

So, while I’m still pro the concept of timeshare, I feel that in order to stay viable, the industry is going to have to do some serious retooling. 

Thoughts?

Lawyers...Who Needs Them?

 Living in Central Florida, I face a barrage of commercials from lawyers every time I turn on the television. It seems as if the local channels derive 95% of their advertising revenue from a combination of 3 or 4 law firms  

You can understand why I’m not a big fan of law firms. But for every loud mouthed attorney, or their equally loud mouthed clients, there’s a timeshare owner facing a problem that should only be handled by a timeshare savvy attorney. 

Let me explain. 

Timeshares are governed by many laws, most of which are impossible for the average consumer to grasp. It’s that way by design. 40 some years ago when timeshare was a new product, it required new rules and laws. Who writes new rules and laws?  Lawyers of course. If you have any doubts, go grab your timeshare documents and begin reading. I’ll bet you can’t get past Page 3 without throwing your hands up in confusion. Go ahead, I’ll wait. 

Good, you’re back. Now, if this short  exercise taught you anything, it’s that you probably should have had a lawyer, your lawyer, read over the timeshare contract before you purchased, or at the very least, before the legal...there’s that word again...rescission period ended. Sadly, we can’t go back in time to remedy that. But we can look to the present and future with our eyes wide open. 

For some timeshare owners, the time will come where they want “out” of their contract. I’m not speaking of those owners that wish to sell their interest and are able to do so. I’m speaking of the owners who are not paid in full and therefore can’t sell it, or those who feel they were mislead/lied to or that the developer is not holding up their end of the bargain. 

These owners require, yes, legal assistance. Why?  And why not just pay one of the myriad of companies that claim to get you out of your timeshare, some of whom even claim to get you your money back?

It’s simple really. The breaking of a legal, there’s that word again, requires legal action which can only be used by people with a legal standing, e.g. a lawyer. And not just any lawyer. Those ubiquitous lawyers advertising every 10 minutes in Orlando are not the ones to handle these issues. 

Let me give you an example. Let’s say you have a MacBook that’s acting wonky. Do you call a dude who says he is a “computer technician”?  Trick question of course, as MacBooks don’t ever act wonky!  OK, a real example. Let’s say you’re looking to purchase some stocks. Do you use a licensed stockbroker who is legally, again that word, licensed to facilitate the transaction or do you give your $5,000 to Joe down the street who bills himself as “The Stock Buying Team”?

Getting out of a timeshare contract is never as easy or simple as getting into one as you may imagine. As mentioned previously, the industry has had 40+ years of crafting these contracts to favor them. That’s not an indictment of the industry, it’s a fact. While you may indeed have encountered a salesperson who grossly over represented the benefits of the timeshare, that’s not reason enough to be let out of your obligations, which as you may have guessed, are legal obligations. 

Now that I’ve hopefully impressed upon you the need to seek legal counsel from a licensed attorney instead of a company that has no lawyers on staff, let’s turn our attention to those firms that may or may not have attorneys on staff. 

There are any number of firms with huge advertising budgets...you know where huge advertising budgets come from, right...that claim that they can obtain a legal release for you because they have a “team of attorneys.”  But it’s important to understand what these “teams of attorneys” can and can’t do vs. hiring an attorney to work for you. By the way, issuing a a Power of Attorney, known as a POA, is not sufficient in these cases. 

To begin with, at the very least, the attorney you hire to take on your timeshare matter should:

>Hold a current, valid attorney license in the state they practice in

>Have not been disbarred, ever

>Have more than 10 years of timeshare experience 

>Be able to tell you how much their services will cost you and provide that in writing 

>Clearly identify one or more actual attorneys that are working on your case that you have access to, I.e. you’re not being “farmed out” to a nameless, faceless entity

>Do more than provide you with a few letters that require you to send off to the developer 

>Provide you with a factual, honest and thorough evaluation of your case

>Turn down your case if your complaint is nothing more than “we can’t trade our week in a Branson for a week in Hawaii”...a good attorney is not there to bail you out of your poor choices. An attorney will take your case if in fact there has been a state or federal violation. 

You should be able to do due diligence on your attorney. Check their credentials online. This is impossible to do with those “teams of attorneys” because you’re not working with an individual attorney. 

Your attorney will operate under strict confidentiality as it’s part and parcel of any agreement drawn up. 

Your attorney will understand what a judicial foreclosure is and the impact that it has on your credit. Additionally, they’ll understand the significant difference between obtaining a judgement that releases you from your timeshare, I.e. commonly referred to as a cancellation, and a more encompassing judgment relieving you of your timeshare as well as any and all HOA encumbrances. 

In same cases, obtaining a judicial foreclosure will be the best outcome. Those firms with their teams of attorneys will not be able to repair your credit, and your credit will take a significant hit in this instance, which has many, serious implications unless you’re 89 years old and won’t be buying anything on credit for the next 7 years. 

Finally, an attorney will be able to obtain, or at the very least work towards a release on your terms, not the resort’s. You may think you only have one or two options, in much the same way you have one or two options when you return that Size 4 pair of shorts at a Kohl’s only to find out that 4 months of isolation has packed on a few pounds. An attorney will work with the resort’s legal department and slapping together a few boilerplate letters and sending it off to someone at the resort, as these teams of attorneys will do, won’t cut it. 

I’ll leave you with this...in my opinion, 95% of those companies that claim to get you out of your timeshare are outright scams and do more harm than good. That number goes up to 99% when we talk about companies/firms that heavily advertise these services. 

You’ve been warned. Now make good choices. 

Questions?  Email me at lisaschreier617@gmail.com

Who’s There For Timeshare Owners? Almost No One

It seems that there’s a new self-appointed ‘advocate’ for timeshare owners nearly every week. 

That’s right...nearly every week, some new organization pops up on social media either claiming to help timeshare owners, advocate for change, protect timeshare owners, yadda, yadda, yadda. 

Some of these don’t fall into the dangerous category, meaning they just spout a lot of hot air. However, many of these organizations/companies/individuals are dangerous. Dangerous because they’re raising money from hapless owners under some promise of lobbying for change. Others are dangerous because they’re nothing more than fronts promising an easy or quick ‘exit’ from your timeshare. 

I’ve yet to see any industry that has spun off so many of these organizations. It’s clear that the timeshare owner and the prospective timeshare owner do need help, do need a true advocate and do need someone on their side. 

Sadly, those advocates are few and far between. You’ve been warned. Choose wisely.