Florida Restrictions on Timeshare Resellers
In an attempt to protect timeshare owners from resale fraud, The Florida Timeshare Resale Accountability Act helps protect timeshare owners from resale fraud.
Under Florida law, companies that offer services to assist with timeshare resales and rentals and charge up-front fees for advertising, are called resale service providers. Many operate as telemarketing companies. Florida has enacted strict laws governing their operations and limiting the fees they can charge before they sell or rent your timeshare.
(For more articles on Florida consumer protection laws, visit our Florida Debt Management & Consumer Law Center.)
What Is a Timeshare Under Florida Law?
Under Florida law, a timeshare can be any number of arrangements where you have a right to use and occupy certain accommodations and facilities for regular time periods which are less than a full year.
Timeshares with an ownership interest. If you obtained your time share interest from a developer through a deed, it is generally considered to be real property, giving you the right to use a specific unit for a certain time period each year along with an obligation to pay the costs of ownership and maintenance.
"Right to use" timeshares. There are many other types of non-deed arrangements which give you the right to use accommodations and facilities without necessarily giving you an ownership interest in the real estate. These types of agreements can include fixed week and specific unit arrangements as well as accommodations which require advance reservations, such as floating or flex-time timeshares. The "right to use" arrangements are generally classified as personal property and not as an ownership interests in real estate, but most still fall within the definition of timeshares.
Renting or Selling Your Timeshare Unit
Owners of timeshare units are responsible for paying maintenance costs on a regular basis. Many owners who do not wish to use their timeshares themselves, look to rent their units to offset costs, or to sell them outright. However, finding a buyer or renter is often difficult. There is not a large market for timeshare resales and rentals -- many are available and the purchase price is generally not enough to interest most traditional real estate brokers.
Scam artists have come forward to fill this void, claiming to have waiting buyers and charging high up-front fees, often identified as advertising expenses or closing costs, to list and market your timeshare for sale or rent. In most cases, the units are neither sold nor rented and the contract period expires without any benefit to the owner.
The Timeshare Resale Accountability Act
In an attempt to protect timeshare owners from resale fraud, Florida enacted a law called the Timeshare Resale Accountability Act, restricting the activities of certain timeshare resellers.
Reseller service organizations. The law applies to individuals and businesses that are classified as reseller service organizations or resale service providers. This includes anyone that offers or uses telemarketing, direct mail, email, or other communication in connection with resale brokerage or resale advertising services to consumer timeshare owners. It can also include newspapers, magazines, publishers, or website owners that derive more than 10% of their gross revenue from timeshare resale advertising. It does not apply to brokers who list the property in the traditional manner with no up-front commissions or advertising fees, or to timeshare developers or managers who offer rental or resale services restricted to the timeshares in their own specific development.
Written contract required. The resale service provider must provide a written contract containing various disclosures including the ratio of the number of timeshares listed for sale or rent versus the number actually sold or rented (called the success ratio) for each of the two previous calendar years.
Restrictions on up-front fees. Reseller service organizations are prohibited from collecting any up-front fees for listing, advertising, or closing costs greater than $75 in any 12 month period without first having a signed contract detailing all fees to be charged under the contract by the resale service provider and any third party, and the exact nature of the services to be provided.
Owner’s right to cancel. As an owner, you have a ten-day right to cancel the contract for resale services. Your right to cancel must be disclosed in large print in the contract and, if you cancel within the time allowed, your money must be refunded within 20 days of cancellation or within five days of the resale provider receiving clear funds from a payment by check, whichever is later.
Prohibited acts. In addition to the restrictions on up-front fees, the resale service provider is prohibited from:
- providing brokerage services without holding a valid real estate license
- misrepresenting its resale success rate
- representing that your timeshare has a specific resale value
- representing that it has clients waiting to buy or rent your unit without providing names, addresses, and telephone numbers.
Remedy for violations. If the agreement violates the law by failing to include the required disclosures, the contract is void and you are entitled to a full refund of all money paid. In addition, the state can fine the reseller up to $15,000 per violation.
Re-Selling Your Timeshare on Your Own
You can resell you timeshare on your own, without a reseller or a broker. But even if you find a buyer or renter from an ad you placed on your own or through an owner’s group bulletin board, Florida law requires certain disclosures to be included in the contract. If you fail to include the required disclosures, the contract can be voided (cancelled) by the buyer at any time within a year after the closing of the sale. Florida Statute 721.0167 contains specific language which must be included in the sale contract and required disclosures include the following:
- current amount of any annual assessments
- current amount of any property taxes
- total amount of any delinquent assessments
- outstanding late charges
- first year when buyer may use the timeshare, and
- ten day cancellation period.