Why pay for a hotel when you can own your own vacation home or condo? That’s the promise of a timeshare. The pitch comes when you least expect it: when you’re on vacation and your guard is down.
But you can survive a timeshare presentation. And if you don’t — if you already own a timeshare — well, there’s a way out, even if you’re legally under contract. (Reprint)
The timeshare dynamic has changed dramatically since the pandemic. Many owners, unable to make payments on mortgages, have been looking for a legal way out of their timeshare obligations. The timeshare industry’s answer seems to be: Buy even more timeshares! Of course, that doesn’t work for most owners, which is fueling the growth of the timeshare exit services industry. But even during a pandemic, there’s a way out of a timeshare without incurring huge expenses.
What’s a timeshare?
A timeshare is a resort property — usually condominium units — in which multiple parties hold rights to use the property. Each owner has a period of time, usually one or more weeks a year, to use the property. You can trade weeks with other timeshare owners through an exchange company. Timeshares are often also referred to as fractional ownerships, but they both are essentially the same thing. I’ll explain the differences in a minute.
When should you consider a timeshare?
Owning a timeshare may make sense for you if:
- You spend a lot of time vacationing in a popular vacation destination where there are timeshare units or places where you can exchange your timeshare unit for accommodations, including hotel rooms.
- You require the extra space and amenities a timeshare unit can offer, particularly if you travel in a large group.
- You tend to go back to the same place to vacation every year or like having the ability to swap for a stay in thousands of locations around the world.
When should you not consider a timeshare?
Here’s when you should avoid a timeshare:
- You take irregular vacations and go for many months or even years without staying at a popular vacation destination.
- You usually stay in a hotel, and you like it.
- You prefer to evaluate your long-term vacation lodging options on your own without the pressure inherent in a direct sales approach.
What kind of timeshares can I buy?
Here are the differences between the major types of timeshares:
- Deeded. A deeded vacation ownership is the traditional real estate timeshare. You buy a weeklong increment and it’s yours to rent, trade, or give away. You can resell a deeded vacation ownership, or leave it to your heirs.
- Right to use. A right to use property, as the name suggests, gives you the right to use the property for a specific period of time through a legal contract, but you do not receive an interest in the real estate. Why limit it? Because in some countries, outright ownership by foreigners is restricted. At the end of the period, the property reverts to the original owner.
- Points. Think of points as a representation of your reservation power. They can come as either a deeded or right-to-use interest. As part of your purchase, the developer may assign several points to your timeshare interest (your deed, leasehold, or right to use interest), which will depend on many factors such as unit type and season in which you own. In turn, those points are then used to make a reservation in a timeshare unit. The concept was made popular by Disney Vacation Club in the 1990s, and has since been adopted by other companies, including Hilton and Wyndham.
If you haven’t already noticed, timeshares can be extraordinarily complicated. A timeshare purchase decision needs to be made carefully, after much research, and in consultation with other knowledgeable people. Take all the time you need.
What are the biggest timeshare pitfalls?
As a consumer advocate, I don’t get many questions about whether, for example, a fixed-week or a floating week is better to buy. Those are best left to a timeshare consultant who is not paid on commission, and therefore can offer objective recommendations. Rather, the complaints fall into three broad categories:
- The initial pitch. The come-ons and promises with which timeshare resort representatives try to lure you into a tour and sales presentation.
- The sales process. The presentation, which is often high-pressure, can leave you signing away your life savings. Literally.
- Buyer’s remorse. The morning after your timeshare purchase, you realize that you didn’t get what you paid for — and you want out. Fortunately, the vast majority of states in the U.S. provide a legally mandated rescission period (3-10 days).
What’s the difference between a sales pitch and a contract?
Talk may be cheap, but it could end up costing you a lot if you’re buying a timeshare and you rely on a salesman’s verbal promises. Even timeshare insiders will warn you that understanding the difference between a sales pitch and a contract, which spells out exactly what is being provided, is the key to a satisfying timeshare experience. If a sales representative says you can exchange your unit within the resort group, look for the precise wording in the contract to see which terms apply. The paperwork trumps everything.
A timeshare is not an investment. It isn’t backed by many of the consumer protections afforded to homeowners. That’s why it’s so important to understand the difference between a sales pitch — what someone is promising you verbally — and a contract, which spells out what you are actually getting.
What’s an OPC and how do I avoid one?
Off-property consultants, or OPCs, are some of the most aggressive salespeople in the world, and they happen to sell timeshares — or more specifically, they sell the opportunity to buy a timeshare. If you’ve ever been approached on Orlando’s International Drive or on the beach in Cancun, Mexico, with offers of “free” theme park tickets, or a helicopter tour, then you’ve come into contact with an OPC.
I covered OPCs in my last book, Scammed, because, well, they can be very scammy. OPCs collect anywhere from $10 to more than $100 per head as referral fees, and since you’re on vacation, they’ll never see you again. But remember what I said about taking your time to consider a timeshare purchase? OPCs are not about that. They want to herd you into a presentation now, and turn you into a buyer.
- Stay away from OPC territory. Timeshare OPCs lurk in touristy areas. If you want to avoid being pitched, steer clear of places like the Vegas Strip or a Waikiki beach. If you go, be prepared for a possible confrontation with an aggressive salesperson who may not take “no” for an answer (at least not your first “no”).
- Have a ready answer. A comeback like, “I’m leaving tomorrow,” or “I’ve already been to a timeshare presentation” might work. “We have a timeshare we’re trying to sell” can do the trick, too. And if that doesn’t work, try, “I have to check with my parole officer to see if I’m allowed to buy timeshares.”
- Slow down. Compelling sales pitches often rely on momentum — visit now! Buy now! Ask to see the fine print on that “free” dinner or Vegas show they’re offering, and the OPC might just walk away. Customers like you — the kind who think for themselves — are not good for business.
- Just say “no.” I’ve counseled many heartbroken vacationers who were enjoying margaritas on the beach one minute and writing a check for $25,000 the next, thanks to an aggressive sales pitch. A simple “no” could have saved them a world of hurt.
Should you go to a timeshare presentation?
You know the saying, “Know thyself”? There’s no travel purchase for which that is more appropriate than timeshares. If you can’t exercise self-control, it’s best to avoid a presentation where you’ll feel tempted by the gifts, dinners and weekends away. If you think you might say “yes,” then it’s best to consider the benefits of a timeshare away from the pressure and gimmicks of a presentation.
How do I survive a timeshare tour and sales presentation?
If you take the bait by accepting the “free” theme park tickets or dinner vouchers, then you’ve just agreed to take a “90-minute” tour and presentation of a property. Don’t worry. There’s a subset of vacationers who attend these presentations for the freebies, and escape without buying anything. (An ethically troublesome thing.)
- Remember what I mentioned before? A vacation is hardly the time to buy real estate, or make major financial decisions. You are either doing this to look at the property up close, but more likely, you’re doing it for the free tickets. Either way, you want to get through the process without buying a timeshare. If you’re going to buy a timeshare, you can always do it later.
- Repeat after me: “I’m here for the free tickets.” If you did it for the tickets, be honest. Tell them. Actually, you’ll want to use this line often, without being rude. If someone asks how you’re doing, tell them you’re just here for the tickets. If they want to know how many kids you have, you’re only here for the tickets. What’s your annual income? “I’m just here for the tickets.” If possible, secure the tickets, prizes, or dinner vouchers before the presentation begins. You don’t want to forfeit them when you have to leave in a hurry, which, hopefully, you won’t have to.
- Leave your wallet at home. One surefire way to avoid making a purchase is to leave the tools necessary to buy a timeshare in your hotel room. Your credit card, debit card, and of course, your checkbook. Leave ’em in the safe. Note: You may be asked for a credit card and ID when you pick up your tickets. I recommend a debit card with a low spending limit. No need to tempt fate.
- Don’t ask too many questions. Timeshare presentations are legendary for eating up an entire morning of your vacation, and sometimes more. You’re better off planning to attend a presentation where there’s a hard stop (just before dinner, or when the facility closes) to ensure you’ll leave on time. Don’t ask too many questions — they’ll needlessly prolong the presentation. Also, questions will make your sales associate think you’re interested in buying today, which you are not.
- Brace yourself for the sales team. Most timeshare sales teams consist of at least three levels: A sales associate who makes a presentation, which always ends with an offer to buy a timeshare. Many prospects say “no” or, if you’ve been paying attention, “I’m just here for the tickets.” A sales associate may refer you to a manager, who will offer to dramatically cut your rate, if you buy now. If all else fails, they’ll send you to a closer, who can make more promises and reduce your timeshare rate further. The closer is the most sophisticated seller, highly trained in the art of persuasion, and able to turn almost any “no” into a “yes.”
- Just say “no.” Practice in the mirror now. “No.” See, that wasn’t so difficult. Maybe you just wanted the tickets. Maybe you are interested, but you know that long-term vacation options aren’t an impulse buy. Note: Your “no” should always be polite and professional. These salespeople are used to rejection, and if they’re professionals, they’ll appreciate your firm and polite rejection.
Help, I’m tempted to say “yes.”
If you’re sitting in a presentation with a sudden urge to buy, do this: Pull out your smartphone and run a search on the timeshare along with the keyword “complaints” or “scam” and see what pops up. That’s usually enough to give you second thoughts. Check out the Timeshare Users Group and see if there are any resales on the same unit you’re considering. It’s not unusual to find units that cost $1 (maintenance fees not included, of course). If that doesn’t convince you to walk away, chances are nothing will.
How do I research my timeshare developer?
A quick internet search will inevitably reveal problems with a timeshare developer. You’d be surprised by how many people (because, you know, they’re on vacation) leave their smartphones in the room when they attend a timeshare presentation. Dumb move. A quick internet search can reveal a lot.
Search for reviews of the timeshare development online. Use keywords like “scam” or “trying to sell” or “contract” to see if other customers have run into trouble with this developer.
Run a search on the developers. If there’s been a lawsuit, the developers are often named. You can find out a lot about the property by investigating the people behind it.
Membership in the American Resort Development Association (ARDA), the trade group for timeshares, can be a good sign. But it is by no means a guarantee. I’ve seen ARDA allow all kinds of questionable behavior among its members.
Actually, ARDA eloquently describes what a reputable timeshare developer should do when selling units. It’s all in the ARDA code of ethics. Its rules require the developer to:
- Follow all applicable laws.
- Provide fair, meaningful, and effective disclosure regarding the timeshare.
- Disclose all the material terms and conditions of all other products offered with the timeshare.
- Represent that the purchase of a timeshare should be based upon its value as a vacation experience, or for spending leisure time, and not considered for purposes of acquiring an appreciating investment, or with an expectation it may be resold for profit.
If your salesperson is not doing any of the above, odds are he’s not entirely honest. Run away! Quickly!
How do I get out of a timeshare I shouldn’t have bought?
A legitimate timeshare has a rescission period — anywhere from 24 hours to more than a week — during which time you can get out of your contract. Rescission periods may also be set by state law. Consult the state or country’s applicable timeshare laws for details.
There are three ways to get out of a timeshare after your rescission period:
Sell it or give it back
A site like ARDA’s Responsibleexit.com can connect you with timeshare developers who have free or low-cost exit options or professional licensed real estate brokers who specialize in timeshares. (Note: Some of our readers have reported that this site is unresponsive.) You can list your timeshare on a website like the Timeshare Users Group. Or you can also contact a timeshare reseller, although that can be complicated.
Negotiate your way out
Most timeshare companies don’t want unhappy owners. You can engage with your timeshare company and ask about exit options. Note: You may incur additional expenses when you exit.
Hire an attorney or timeshare exit company
An attorney may be necessary if you’re outside the rescission period and believe you have a legal cause of action against your developer. But make sure you consult with the attorney and understand exactly what you’re getting. Is the firm going to fight for you, or just have paralegals send form letters on your behalf? A less expensive option may be a timeshare exit company. But you need to screen those even more carefully (see the section on screening a timeshare company for more tips).
Bottom line: Once you sign your name, the clock is ticking. You may have days — or hours — before you are stuck with your purchase. Ask the deeding or verification officer to show you the rescission portion of the paperwork, and make sure you understand exactly what needs to be done for you to rescind officially.
How do I get out of my timeshare during a pandemic?
After the COVID-19 outbreak, many timeshare owners couldn’t pay their monthly maintenance fees or mortgage. They needed to get out of their timeshare — quickly.
Unfortunately, you can’t just walk away from a timeshare. That’s because it often comes with an obligation to pay maintenance fees for as long as you own it. If you don’t stay current on your maintenance fees or your loan payment, the timeshare company or timeshare association could report you to a collection agency and ding your credit score.
Even in good times, owners sometimes struggle with being on the hook for a timeshare. They wonder how the contracts that bind them to a timeshare for life are even legal.
Avoid these pandemic timeshare exit mistakes
One thing about getting rid of a timeshare hasn’t changed. There are some ways you should not try to exit. The Federal Trade Commission issued a recent warning against timeshare resellers, noting that some prey on seniors by taking money up front and then failing to sell the timeshare.
The situation has gotten worse during the pandemic. There are so many new entrants in the timeshare exit space, and many are not reputable, according to experts.
How do you know if a timeshare exit company is legit? You should ask three questions about any company you’re thinking of hiring:
- Has the company been in business for at least five years?
- Does it have a history of positive reviews online?
- What kind of guarantees does it offer, and how can it back up the promise?
What if I stop paying my fees?
Some owners just stop paying their fees during hard times, hoping they can get rid of their timeshare. Experts are divided on this strategy. Timeshare companies will report you to a credit bureau for failing to pay your fees. That can damage your credit. But if you don’t care about your credit rating, walking away from a timeshare may be a viable exit strategy.
I recently heard from one reader who stopped paying for her timeshare in Southern California. She started by calling her company every month, asking for a voluntary surrender, essentially offering to give up the timeshare. A representative always declined, explaining that her timeshare was her responsibility for the rest of her life.
Finally, she ignored the timeshare company’s threats to “ruin” her credit rating and simply stopped paying her maintenance fees. A month later, her timeshare company relented, agreeing to release her from the contract.
Are timeshare contracts fair?
How did it even come to this? Who allowed these contracts that keep timeshare owners tied to a property they don’t want — or can’t afford? And is there a way to make these agreements fairer to owners, particularly at a time like this?
Short of federal legislation to correct the problem — and override the state timeshare laws, which were heavily influenced by timeshare lobbyists — there’s no way to fix this problem. A federal law would also need to address the contracts retroactively, allowing owners a fair and reasonable way to exit. That’s highly unlikely.
Indeed, timeshare contracts are profoundly unfair to most customers. All the more reason to think twice before signing one.