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How To Buy A Time Share

Aug 17, 2007
In calculating the total cost of a timeshare or vacation plan, include mortgage payments and expenses, like travel costs, annual maintenance fees and taxes, closing costs, broker commissions, and finance charges. Maintenance fees can rise at rates that equal or exceed inflation, so ask whether your plan has a fee cap. You must pay fees and taxes, regardless of whether you use the unit.

To help evaluate the purchase, compare these costs with the cost of renting similar accommodations with similar amenities in the same location for the same time period. If you determine that purchasing a timeshare or vacation plan makes sense, comparison shopping is your next step.

Evaluate the location and quality of the resort, as well as the availability of units. Visit the facilities and talk to current timeshare or vacation plan owners about their experiences. Local real estate agents also can be good sources of information. Check for complaints about the resort developer and management company with the state Attorney General, and local Better Business Bureau and consumer protection officials.

Research the track record of the seller, developer, and management company before you buy. Ask for a copy of the current maintenance budget for the property. Investigate the policies on management, repair, and replacement furnishings, and timetables for promised services.

Get a handle on all the obligations and benefits of the timeshare or vacation plan purchase. Is everything the salesperson promises written into the contract? If not, walk away from the sale.

Don't act on impulse or under pressure. Purchase incentives may be offered while you are touring or staying at a resort. While these bonuses may present a good value, the timing of a purchase is your decision. You have the right to get all promises and representations in writing, as well as a public offering statement and other relevant documents.

Study the paperwork outside of the presentation environment and, if possible, ask someone who is knowledgeable about contracts and real estate 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.

Ask about your ability to cancel the contract, sometimes referred to as a "right of rescission." Many states and maybe your contract give you a right of rescission, but the amount of time you have to cancel may vary. State law or your contract also may specify a "cooling-off period" that is, how long you have to cancel the deal once you've signed the papers. If a right of rescission or a cooling-off period aren't required by law, ask that they be included in your contract.

If, for some reason, you decide to cancel the purchase either through your contract or state law cancel it in writing. Send your letter by certified mail, return receipt requested, so you can document what the seller received. Keep copies of your letter and any enclosures. You should receive a prompt refund of any monies you paid, as provided by law.

Use an escrow account if you're buying an undeveloped property, and get a written commitment from the seller that the facilities will be finished as promised. That's one way to help protect your contract rights if the developer defaults. Make sure your contract includes clauses concerning both "non-disturbance" and "non-performance." A non-disturbance clause ensures that you'll be able to use your unit or interval if the developer or management firm goes bankrupt or defaults. A non-performance clause lets you keep your rights, even if your contract is bought by a third party. You may want to contact an attorney who can provide you with more information about these provisions.

Be wary of offers to buy timeshares or vacation plans in foreign countries. If you sign a contract outside the U.S. for a timeshare or vacation plan in another country, you will not be protected by U.S. laws.

Exchange Systems
An exchange allows a timeshare or vacation plan owner to trade units for a discrete time with another owner who has an equivalent unit at an affiliated resort within the system. Here's how it works: A resort developer has a relationship with an exchange company, which administers the service for owners at the resort. Owners become members of the exchange system when they buy their timeshare or vacation plan. At most resorts, the developer pays for each new member's first year of membership in the exchange company, but members pay the exchange company directly after that.

To participate, a member must deposit a unit into the exchange company's inventory of weeks available for exchange. When a member takes a week from the inventory, the exchange company charges a fee.

In a points-based exchange system, the interval is automatically put into the inventory system for a specified period when the member joins. Point values are assigned to units based on length of stay, location, unit size, and seasonality. Members who have enough points to secure the vacation accommodations they want can reserve them on a space-available basis. Members who don't have enough points may want to investigate programs that allow banking of prior-year points, advancing points, or even "renting" extra points to make up differences.

Whether the exchange system works satisfactorily for owners is another issue to research before buying. Keep in mind that, you will pay all fees and taxes in an exchange program no matter whether you use your unit or someone else's.
About the Author
Ameen Kamadia, known as "The Millionaire Loan Officer" offers dozens of free articles about mortgage marketing. Get dozens of great cheap lead generation ideas at his free Mortgage Marketing website.
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