Your Vacation and Timeshares
You are on vacation and have just been offered the opportunity to own your very own ‘piece of paradise’ in the form of a vacation timeshare. This offer might come from the vacation resort itself or from a ‘reseller’.
Follow the advice of the Federal Trade Commission and take the time to do your due diligence. From the government website: www.consumer.ftc.gov about timeshare –
Before you sign a contract with a reseller, get the details of the terms and conditions of the contract. It should include the services the reseller will perform; the fees, commissions, and other costs you must pay and when; whether you can rent or sell the timeshare on your own at the same time the reseller is trying to sell your unit; the length or term of the contract to sell your timeshare; and who is responsible for documenting and closing the sale.
If the deal isn’t what you expected or wanted, don’t sign the contract. Negotiate changes or find another reseller.”
Also from the government website there is an excellent Resale Checklist, including the caution to “check with the resort to determine restrictions, limits or fees that could affect ability to resell or transfer”.
Learn More: To learn more about vacation ownership, contact the American Resort Development Association. That Association represents the vacation ownership and resort development industries.
On their website: www.arda.org offers a brochure-Understanding Vacation Ownership.
Use Caution: A caution from the brochure: “ Include a careful due diligence process on your target resort to ensure satisfaction. Get a copy of the resort’s annual budget; determine if the current year’s maintenance fee has been paid for your week; find out when the next available use period is (this year or next); talk to other owners or the resort manager.”
I would add to that list that it is imperative to find out the most you can about special assessments that might affect your timeshare in the future. Just to give one example: if the resort does not carry adequate insurance for “acts of God” events like hurricanes, then the ‘rebuilding’ of the timeshare resort could fall upon the individual timeshare owners.
As another example, if portions of any aging infrastructure (pools; beach area; clubhouses; gym; tennis/golf facilities; restaurants) need to be renovated and adequate funds have not been set aside, then the renovation costs would be divided among the timeshare owners.
Also, check the local surroundings of the timeshare resort. Is the area “on the rise”? Stable? or is there some local economic ‘recession’ that would impact the resort and your investment. Check the crime rates for the area.
Buying into a timeshare is similar to buying your own home – use due diligence to make sure it is an environment you want to use, now and into the future.
Lastly, can your timeshare be passed on to your heirs?
Foreign Property: If the property is located outside of the continental United States you would be advised to use an attorney with considerable experience in overseas investments and to have them review not only the contract but also the local government rules about foreign ownership. In some countries it is difficult for anyone who is not a resident of the country to legally own any kind of property. (In such cases there is an intermediary who actually holds the ‘deeds’ for the property)
FINALLY: When on vacation, if you feel pressured to make a quick decision to ‘buy into’ an idyllic “piece of paradise”…take time to reflect and get all the facts before signing any legal documents.
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