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Timeshares, also known as vacation ownerships, are a controversial subject these days.
While vacation companies tout the benefits of purchasing them, consumers who want to get rid of their timeshares can go through a considerable amount of stress in trying to do so. This is especially true for consumers who purchased timeshares from small companies, long before the big hospitality companies got into the market roughly thirty years ago.
Timeshares themselves are not always a bad thing, but people too often agree to contracts quickly, without actually knowing exactly what they’re signing up for.
The problem is often in the way timeshares are sold. Consumers can be lured in with promises of free dinners or a gift, and sales representatives know how to push the right buttons to make the sale. After being wined, dined, and told how important it is to go on nice vacations with your children before they grow up, the next thing you know you’ve signed a contract for something you didn’t even know you wanted.
For some people, buyer’s remorse kicks in as soon as they get home. For others, it comes after years of paying maintenance fees for a property that they no longer want.
Timeshares owned by reputable companies like Marriott Vacations Worldwide Corporation, Walt Disney Corporation, and Starwood Hotels & Resorts Worldwide Inc. are more likely to be able to assist customers who want to get out of their contracts, but it’s not always guaranteed.
So what can you do to get out of that contract? As many timeshare owners have discovered the hard way, the answer isn’t a simple one.
If ending the contract is not an option, you may be forced to sell your timeshare at a low cost in order to be free of it. “I wouldn’t speak with the timeshare management and say you want to get out of the contract, because they can say it’s a breach of contract”—Newton Wong, lawyer
Make use of the cooling-down period
If you recently signed the contract, you may be able to cancel it without penalty. In Ontario, theConsumer Protection Act gives you the right to a 10-day cooling-off period, in which you can cancel without any reason.
Similarly, British Columbia’s Real Estate Development Marketing Act states that you can back out of the contract by cancelling within 7 days. However, those rights are only in effect if you signed the contract in those provinces.
“You have to look at the jurisdiction in which you sign that agreement,” says Newton Wong, a Toronto-based lawyer. “There are different rules for different places where these timeshares are signed.”
This means that if you purchased a timeshare in Florida, you will need to find out what rights and cancellation policies are in effect in that state.
If you’ve had your timeshare for quite some time, it may not be easy to get out or your contract. Especially because not all timeshares are the same.
Types of timeshares
There are three main types of timeshares: deeded, right-to-use and point systems. Each type has it’s own rules and restrictions, which differ between companies, so it’s important to determine which one you have.
Deeded timeshares, also known as fee-simple timeshares, allow you to buy a property for a week (or consecutive weeks) and it’s yours forever. With this kind of product you own a portion of a particular unit, it’s deeded to you, and filed with the courts as a portion of real estate. You can hand this timeshare down to your children, or sell it.
Right-to-use timeshares are similar to deeded timeshares, but you only have it for a particular length of time (i.e. 50 years). Your right to use that timeshare goes away once that duration has surpassed, at which point it reverts back to the landowner.
Point systems are a newer form of timeshare, and are becoming popular due to their flexibility. Instead of purchasing a week in a certain place, points can be redeemed for vacations in a variety of places. With points, you don’t own a real estate deeded product. Instead, you own a portion that’s held in a trust
With all types of timeshares, you are probably going to have to pay a maintenance fee. How much you pay depends on what you’ve bought, but the fees are your portions of maintaining the upkeep of the property.
Ways to get out of your timeshare contract
Once you’ve determined the jurisdiction of your contract, and the type of timeshare you own, you can begin to look into your options for getting rid of one.
Your best-case scenario is being able to sell your timeshare back to the company you bought it from.
“We actually have a buyback program for certain types of products,” said Ed Kinney, Vice President of Corporate Affairs and Public Relations at Marriott Vacations Worldwide Corporation. “We actively go out and ask people ‘you’ve had it for 25 years, would you like us to buy it back from you?’ and we’ll actually buy that back from them.”
Kinney says that this is not an uncommon business practice, because it’s advantageous for a company to purchase back existing inventory rather than build new inventory.
However, buyback programs don’t apply to all timeshare products.
“We currently don’t offer a buyback program for points, because it’s fairly new,” said Kinney. “For properties that are already sold-out, we typically have that service available to people. But if we’re in a brand new property, we wouldn’t compete with ourselves.”
While buyback programs differ from company to company, the basic idea is that they will sell the timeshare on your behalf and transfer the usage rights to the new purchaser.
If selling the timeshare back to the original company is not an available option, you will have to do some research to find other ways to get rid of it.
“I wouldn’t speak with the timeshare management and say you want to get out of the contract, because they can say it’s a breach of contract,” said Wong, who added that his recommendations are for information purposes only, and are not legal advice. “It’s really important to get a lawyer to review the agreement first and then figure out what the best strategy is. You may be able to negotiate some kind of release.”
If ending the contract is not an option, you may be forced to sell your timeshare at a low cost in order to be free of it. Wong recommends doing your research to avoid any problems that could occur with selling your timeshare independently.
The worst option, which seems to be highly recommended in Internet forums, is to simply stop making your maintenance payments. While some people have found temporarily relief from doing this, it is possible for the timeshare company to take you to court for defaulting on your payments.
Are timeshares ever worth it?
Although timeshares have a bad reputation, there is one main benefit to them.
“It’s one of the most cost effective ways to go on vacation with a family or with friends,” said Kinney. “It’s cheaper to pay the maintenance fee on that property than it is to go and rent something equivalent.”
While they shouldn’t be looked at as a financial investment due to fluctuating market rates, they can be a worthwhile personal investment if you go on vacation every year.
Before you commit to purchasing a timeshare, it’s important to learn about what’s available so you can buy something that suits your needs. Kinney recommends that customers visitVacationBetter.org, a website run by the American Resort Development Association, to learn about the timeshare industry and figure out what questions they should ask before signing the dotted line.