Timeshare agreements heavy with fine print
BY PHIL MULKINS World Action Line Editor
Wednesday, February 27, 2013
2/27/13 at 3:08 AM
Buying timeshares or vacation plans seems like the alternative to owning vacation homes but their year-round responsibilities and expenses often are greater. The Federal Trade Commission says if you're not careful you'll wind up with a timeshare you can't afford and can't sell.
Two ownership options: "Timeshares" and "vacation interval" plans are valuable as vacation destinations but not as investments, warns the FTC website. "As so many of these plans are available, the resale value of yours is likely to be lower than what you paid." Both plans require paying an initial purchase price, then periodic upkeep fees. Initial purchase price is paid once or over time, but periodic maintenance fees increase every year. See "Basics of buying a timeshare" ( tulsaworld.com/FTCTimeshareBasics).
Timeshare: You either own your vacation unit for the rest of your life, for the number of years on your purchase contract or until you sell it. Your interest is legally considered real property. You buy the right to use a specific unit at a specific time every year, and may rent, sell, exchange or bequeath your specific timeshare unit.
Principal, upkeep and taxes: Unless you've bought the timeshare with cash, you are responsible for its monthly mortgage. You also are responsible for an annual maintenance fee and property taxes. Owners share use and upkeep fees for the unit and its common grounds, and a homeowners' association manages the resort. Timeshare owners elect officers, control resort upkeep expenses and select the resort management company.
Vacation interval: With this, a developer owns the resort, made up of condominiums or units. Each is divided into "intervals" - either by weeks or the equivalent in points. You purchase the "right to use" an interval at the resort for a specific number of years - typically 10 to 50 years. The interest you own is legally considered personal property. The resort unit you use might not be the same each year. In addition to the price for the right to use an interval, you pay an annual maintenance fee that is likely to increase each year. Within the "right to use" option, several plans can affect your ability to use a unit.
Fixed or floating time: In a fixed time option, you buy the unit for use during a specific week of the year. In a floating time option, you use the unit within a certain season, reserving the time you; confirmation is typically on a first-come, first-served basis.
Fractional ownership: Rather than an annual week, you buy a large share of vacation ownership time, usually up to 26 weeks.
Biennial ownership: You use a resort unit every other year.
Lock-off or lockout: You occupy a portion of the unit and offer the remaining space for rental or exchange. These units typically have two to three bedrooms and baths.
Points-based plans: You buy a certain number of points and exchange them for the right to use an interval at one or more resorts. In a points-based vacation plan (also called a vacation club), the number of points you need to use an interval varies according to the length of stay, size of unit, location of resort and when you want to use it.
Be smart and prepared before buying into timeshare property
Is "timeshare" really cheaper than "flying to the same area and renting a hotel for a week?" The Federal Trade Commission hopes you do the math and include the timeshare's mortgage payments, travel, annual maintenance, real estate taxes, closing cost, broker commission and financing. Upkeep fees rise yearly at rates exceeding the rate of inflation, so ask if your plan has a fee cap. Fees and taxes are due, regardless of use.
Factor detractors: Evaluate location and resort quality as well as unit availability. Visit the facilities and ask timeshare or vacation plan owners and local real estate agents for their experiences. Check resort complaints on developer and management companies with the state's attorney general and the local Better Business Bureau.
Track record: Check business performance records of seller, developer and management company before buying. Get a copy of the property's maintenance budget and its policies on furnishings management, repair and replacement, and timetables for promised services. Check online complaints. Identify obligations and benefits of the timeshare or vacation plan. Is everything salespeople promised included in the contract? If not, walk away.
Think: Don't act on impulse or under pressure. Purchase incentives are offered while you tour or stay at a resort. Such bonuses present a good value, but the timing of a purchase is your decision. You have the right to get promises and representations in writing, as well as a public offering statement and other relevant documents.
Review contract: Go over the paperwork outside the presentation environment and, if possible, ask someone with contract and real estate smarts to review it before you make a decision. Get the name and phone number of someone at the company who can answer your questions - before, during and after the sales presentation, and after your purchase.
Contract rescission: Ask about your "right of rescission" ability to cancel the contract, also referred to as the "right of rescission." See LegalMatch.com's treatise on this at tulsaworld.com/LegalMRescission The "right of cancellation" is available within a specific time only, usually five to 15 days. Final closing of a timeshare sale usually cannot occur until the "rescission period" is up. State laws provide a set number of days for this: seven days in Hawaii, 10 days in Florida, etc. Contracts can provide longer rescission periods.
Original Print Headline: Fine print key to timeshares
Tulsa World consumer writer Phil Mulkins wants to know which topics interest you. Call 918-699-8888, email your suggestion to email@example.com or mail it to Tulsa World Consumer, P.O. Box 1770, Tulsa, OK 74102-1770.
This 2008 aerial photo shows the Orange Lake Resort timeshare community in Orlando, Fla. The resort includes "1,450 acres of family fun across 4 villages containing 2,478 villas, 7 pools, 4 golf courses and 12 acres of pools, bars & restaurants" — says its website. The one need it does not address is the answer to the question: "What do we do with it when our kids grow up, go off to college and no longer want to frolic in the Florida sun?" Courtesy