California Timeshare Foreclosure and Right to Cancel Laws
Learn about California timeshare foreclosure laws, right to cancel laws, and other timeshare contract laws.
If you have purchased or are thinking of purchasing a timeshare in California, it’s important to learn the answers to the following questions:
- How do I cancel a timeshare purchase in California?
- What disclosures are required in a timeshare purchase?
- What are the timeshare resale laws?
- If I stop making payments, what is the most common type of timeshare foreclosure procedure (judicial or nonjudicial)?
- Will I be liable for a deficiency judgment after a timeshare foreclosure?
Read on to find out some of the most important features of California timeshare law.
(Be sure to check out Nolo’s Buying or Selling a Timeshare and Timeshare Foreclosures topic areas where you can find information about selling or donating your timeshare, timeshare foreclosures, options to avoid a timeshare foreclosure, and consequences of a timeshare foreclosure.)
Right to Cancel a Timeshare in California
In California, you have the right to rescind a timehsare contract and receive a refund within seven calendar days after:
- the receipt of the public report (see below to learn what this is), or
- the execution (signing) of the purchase contract, whichever is later (Ca. Business and Professions Code § 11238).
(Learn more about cancelling a timeshare purchase in Nolo’s article How Do I Cancel a Timeshare Contract?)
Prior to marketing or selling timeshare interests in a timeshare plan in California, a developer must obtain a public report issued by the California Bureau of Real Estate that discloses many important aspects of the timeshare property, such as:
- the covenants, conditions, and restrictions which govern the use of property
- the costs and assessments for maintaining homeowners' associations and common areas, and
- other material disclosures.
The public report must be given to each prospective purchaser (Ca. Business and Professions Code § 11239).
Information about how to cancel the purchase and receive a refund must be attached to the face page of the public report (Ca. Business and Professions Code § 11239).
California Timeshare Resale Protection Laws
Owners often find it extremely difficult to sell their timeshares since there is virtually no after-market for timeshares. As a result, scam artists have popped up who will falsely tell a timeshare owner that there is a ready and willing buyer for the timeshare -- but the timeshare owner must pay hundreds or thousands of dollars in upfront fees to process the transaction. After the timeshare owner pays the fees, the scammer often disappears. California law provides protections to shield consumers from this type of resale scam.
Real estate license required. In California, only licensed real estate brokers (or salespersons employed and supervised by the brokers) may list and sell timeshares for resale.
Advance fees are prohibited, except in certain circumstances. A real estate broker may lawfully collect advance fees for resale services only in cases where:
- a written advance fee agreement has been submitted to and reviewed by the California Real Estate Commissioner/Department of Real Estate
- a “no objection” letter has been issued by the department to the broker, and
- the advance fees are properly handled and accounted for as trust funds that belong to timeshare owners.
Advance fees are allowed for pure advertising services. A real estate license is not required for pure advertising services, which consists of placing an advertisement that the timeshare is available. (This is comparable to paying a newspaper or Internet website for advertising services.) Advance fees can be collected under these circumstances.
Timeshare Foreclosure Procedure
If you take out a loan to purchase an interest in a deeded timeshare and fail to make your timeshare mortgage payments or keep up with the assessments, you will likely face foreclosure. (In addition to monthly mortgage payments, timeshare owners are ordinarily responsible for maintenance fees, special assessments, utilities, and taxes, collectively referred to as “assessments.” Find out more in Nolo’s article Can a Timeshare Be Foreclosed for Nonpayment of Fees or Assessments?)
In California, the foreclosure can be either judicial or nonjudicial. Judicial foreclosures are administered though the state court system, while nonjudicial foreclosures have no court supervision and are handled by a trustee. (Learn more about the California foreclosure process.)
(To learn more about the difference between judicial and nonjudicial foreclosure, and the procedures for each, visit Nolo's Judicial v. Nonjudicial Foreclosure page.)
Timeshare Deficiency Judgments
When a lender forecloses on a mortgage, the total debt owed by the borrowers to the lender can exceed the foreclosure sale price. The difference between the sale price and the total debt is called a deficiency.
Example. Say the total debt owed for a timeshare is $15,000, but it only sells for $10,000 at the foreclosure sale. The deficiency is $5,000.
According to the California Department of Real Estate, California’s anti-deficiency judgment provisions of the Code of Civil Procedure are applicable to sales of timeshare interests. (In California, most foreclosures are nonjudicial so the lender cannot receive a deficiency judgment after the sale of the property. Learn more about California deficiency judgments.)
(To learn more about deficiency judgments, see our Deficiency Judgments After Foreclosure area.)
California Timeshare Laws
Timeshares that are sold in California, whether located in California or in any other state in the U.S., are regulated under The Vacation Ownership and Time-Share Act of 2004, which is found in the California Business & Professions Code §§ 11210 through 11288.
You can access the California statutes by going to www.leginfo.ca.gov and clicking on “California Law.” Then check the box labeled “Business and Professions Code” and click on “Search.”
(For general articles on foreclosure in California, visit our California Foreclosure Law Center.)