Tennessee Timeshare Foreclosure and Right to Cancel Laws

If you buy a timeshare and regret it, most states have "cooling-off" laws. These laws let you get out of a timeshare contract if you act quickly, usually within three to ten days. In Tennessee, the cooling-off period is 10 or 15 days after you sign the contract, depending on the circumstances.

Also, Tennessee law provides consumers with several protections regarding timeshare transactions. For instance, state law prohibits the timeshare developer from using false or misleading advertisements to entice you to buy a timeshare, regulates prize and gift promotions when used to sell timeshares, and provides protections if you want to resell a timeshare.

Even though Tennessee law provides several protections for timeshare purchasers, you still need to be cautious when buying a timeshare. And you should understand that if you take out a mortgage loan to buy a deeded timeshare and stop making the payments, the lender, usually the resort developer, will probably foreclose.

In addition, timeshare owners typically must pay annual maintenance fees and special assessments. If, as an owner, you don't pay the fees and assessments, you might face a lawsuit for a money judgment or a foreclosure of your timeshare. (With a right-to-use timeshare, people generally sign a contract and agree to make monthly payments. While a developer may foreclose a deeded timeshare, a right-to-use timeshare is typically repossessed, which is a different legal process than a foreclosure.)

Can I Legally Cancel My Tennessee Timeshare?

In Tennessee, a timeshare contract can be canceled within:

• ten days from the date you signed the contract if you made an on-site inspection of the timeshare project or any component site before signing the contract, or
• fifteen days after you sign the contract if you didn't make an on-site inspection of the timeshare project or any component site before you signed the contract. (Tenn. Code Ann. § 66-32-114(a).)

Under Tennessee law, the right to cancel can't be waived. (Tenn. Code Ann. § 66-32-114(c).)

Contract Is Also Voidable Until You Receive the Public Offering Statement

A public offering statement contains general information about the timeshare development. In a Tennessee timeshare sale, the timeshare developer must provide the purchaser with a copy of the public offering statement before transferring the timeshare and no later than the sales contract date. A timeshare contract is also voidable until you receive the public offering statement. (Tenn. Code Ann. § 66-32-114(a).)

The public offering statement must disclose important information about the timeshare, including the developer's name and principal address, a general description of the timeshare units, any financing the developer offers, and information about canceling the contract. (Tenn. Code Ann. § 66-32-112.)

How to Cancel a Tennessee Timeshare Contract

To cancel the timeshare purchase, you may:

• hand-deliver written notice to the developer
• mail your cancellation notice by prepaid United States mail, postmarked anytime within the cancellation period, or
• send notice of cancellation via electronic mail, time-stamped within the cancellation period. (Tenn. Code Ann. § 66-32-114(c).)

Getting a Timeshare Refund in Tennessee

If you cancel, the seller (usually the developer) can't charge a penalty and has to refund the money you paid within 30 days of receiving your cancellation notice. (Tenn. Code Ann. § 66-32-114(a).)

Other Protections for Timeshare Purchasers in Tennessee

Timeshare salespeople are known for using hard-sell tactics and misrepresentations to get you to make a snap decision about buying a timeshare. Tennessee law protects timeshare buyers by:

• requiring timeshare sellers to use an escrow account in timeshare transactions
• regulating timeshare ads
• and prohibiting certain actions if a seller offers a gift or prize to get you to buy a timeshare.

Escrow Account Required in Tennessee Timeshare Transactions

In Tennessee, when you purchase a timeshare, the developer must put any money you pay in connection with the purchase into an escrow account. (Tenn. Code Ann. § 66-32-113.)

The funds will be released:

• to you, if you cancel the contract
• to the developer if you default in performing an obligation under the purchase contract, or
• to the developer after the cancellation period expires. (Tenn. Code Ann. § 66-32-113.)

The point of the escrow requirement is to protect your right to a refund if you cancel the sales agreement during the cancellation period.

False or Misleading Timeshare Advertisements Aren't Allowed

Tennessee law prohibits timeshare salespersons from using false or misleading statements when advertising timeshare sales. (Tenn. Code Ann. § 66-32-131.)

So, for instance, a timeshare seller can't advertise the profit potential of the timeshare (unless the statement isn't false or misleading), make a prediction that the timeshare will increase in value, or misrepresent the characteristics of the timeshare, among other things. (Tenn. Code Ann. § 66-32-132.)

Timeshare Sellers in Tennessee Can't Mislead You About Gifts and Prizes

Sometimes, timeshare sellers offer gifts or prizes to potential buyers to get them to attend a sales presentation. Tennessee law regulates promotional offers in several ways. For instance, timeshare sellers can't:

• lead you to believe that you are (or could be) the winner of a prize or gift if you haven't won or aren't eligible to win
• lead you to believe that you've been "selected" or are part of a special group receiving a timeshare offer, if not true, and
• tell you that you've won or could win a prize or get a gift (or that you've been selected or are eligible to win a prize or get a gift) if you must listen to or observe a timeshare sales presentation or make a purchase to get the prize or gift unless the seller clearly and conspicuously discloses, at the time of the initial offer, contact, or notification of the prize or gift that they're trying to sell you a timeshare. (Tenn. Code Ann. § 66-32-133.)

Protections If You Want to Resell Your Timeshare

Timeshare owners can find it extremely difficult to sell their timeshares. So, scam artists sometimes falsely tell a timeshare owner that the company has a ready and willing buyer.

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, or the buyer never materializes.

Tennessee law protects consumers from this type of resale scam in different ways. For example, state law requires a timeshare resale agreement to be in writing and prohibits the reseller from accepting an advance fee before actually selling the timeshare. Resellers must also disclose that there's no guarantee that a timeshare can be sold at any particular price or within any particular amount of time. (Tenn. Code Ann. § 66-32-137.)

Timeshare Foreclosures in Tennessee

In Tennessee, if you take out a loan to purchase an interest in a deeded timeshare and fail to make your mortgage payments, the lender (again, typically, the developer) might foreclose.

In addition to monthly mortgage payments, timeshare owners are ordinarily responsible for maintenance fees, special assessments, utilities, and taxes, collectively called "assessments." In Tennessee, you might also face a foreclosure if you fall behind in the timeshare assessments.

Ways to Avoid a Timeshare Foreclosure

A few of the various options to avoid a timeshare foreclosure include:

• paying what you owe in full
• negotiating a reduction in the amount you owe
• selling the timeshare
• donating the timeshare to a charity (not all charities will take a timeshare, but some might, and you'll have to get current on payments first)
• arranging a repayment plan, or
• working out a deal to give the timeshare back to the resort (called a "deed in lieu of foreclosure" or "deedback").

Talk to a Lawyer

If you want more information about timeshare laws in your state or need assistance canceling a timeshare, consider talking to a real estate attorney. Contact a foreclosure attorney if you're facing a timeshare foreclosure and have questions about the process or your options.