Arkansas Timeshare Foreclosure and Right to Cancel Laws

Learn about Arkansas timeshare laws, including how to cancel a timeshare deal and under what circumstances your timeshare might get foreclosed.

By , Attorney

If you buy a timeshare and regret it, most states have a "cooling-off" law. These laws let you get out of a timeshare contract if you act quickly, usually within three to ten days. In Arkansas, the cooling-off period is five days after you sign the sale contract or until you get a copy of the public offering statement.

Also, the state provides some protections for timeshare purchasers. For instance, Arkansas law requires escrow accounts for timeshare transactions and prohibits timeshare sellers from making misleading or deceptive advertisements to get you to buy a timeshare.

But 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.)

How Do I Cancel an Arkansas Timeshare?

Again, in Arkansas, you can cancel a timeshare contract without penalty:

  • within five days after signing the contract of sale, or
  • up until you receive the public offering statement. (Ark. Code Ann. § 18-14-409(a)(2),(3).)

Steps to Cancel a Timeshare Deal in Arkansas

To cancel your timeshare purchase, you must:

  • hand-deliver the notice to the developer, or
  • mail the notice by regular mail to the developer or the developer's agent for service of process. Notice is considered given when you deposit the cancellation in the mail. (Ark. Code Ann. § 18-14-409(c).)

All payments you made before canceling the deal must be refunded within a reasonable time after the developer receives your cancellation notice. (Ark. Code Ann. § 18-14-409(b).)

Other Protections for Timeshare Purchasers in Arkansas

Timeshare salespeople are known for using hard-sell tactics and misrepresentations to get you to make a quick decision about buying a timeshare. Arkansas law protects timeshare buyers by requiring timeshare to use an escrow account, prohibiting false and misleading statements, and regulating the use of prizes and gifts in timeshare sales.

Escrow Account Required in Arkansas Timeshare Transactions

In most cases, the timeshare developer must put any money you pay in connection with a timeshare purchase into an escrow account. (Ark. Code Ann. § 18-14-407.)

It must release the funds:

  • to you, if you cancel the agreement
  • to the developer, if you default in performing an obligation under the sales agreement, or
  • to the developer after the cancellation period ends. (Ark. Code Ann. § 18-14-407.)

The purpose of the escrow account requirement is to protect your right to a refund if you decide to cancel the agreement.

Misleading and Deceptive Advertising Statements are Illegal in Arkansas Timeshare Sales

Arkansas law prohibits misleading or deceptive timeshare advertisements. (Ark. Code Ann. § 18-14-502, § 18-14-503.)

Regulations on Prizes and Gifts Used in Arkansas Timeshare Sales

It's illegal for a timeshare seller to offer a prize or gift to induce someone to buy a timeshare without also disclosing in a clear and unequivocal way that you have to attend a sales presentation to get the prize or gift. The timeshare seller also has to provide information about the prize or gift, like the retail value. (Ark. Code Ann. § 18-14-504.)

Timeshare Foreclosures in Arkansas

In Arkansas, 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 referred to as "assessments." You might also face a foreclosure in Arkansas 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 with the developer to reduce 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.

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