California Timeshare Foreclosure and Right to Cancel Laws

Learn about California timeshare foreclosure laws, right to cancel laws, and other timeshare laws.

If you've purchased or are considering buying a timeshare in California—or are facing a timeshare foreclosure—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.

Right to Cancel a Timeshare in California

In California, you have the right to rescind a timeshare contract and receive a refund within seven calendar days , or a longer period as provided in the contract, 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).

Public Report

Before 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, like:

  • 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 because there's 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 isn't 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 buy an interest in a deeded timeshare and fail to make your timeshare mortgage payments or keep up with the assessments, you'll 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." To learn more, see 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 through the state court system, while nonjudicial foreclosures have no court supervision and are handled by a trustee. (Learn more about the California foreclosure process.)

Timeshare Deficiency Judgments

In a foreclosure, the total debt that the borrower owes sometimes exceeds the foreclosure sale price. The difference between the total debt and the sale price is called a deficiency. In some states, the lender may then get a personal judgment, called a deficiency judgment, against the borrower. Whether or not you'll face a deficiency judgment after a timeshare foreclosure depends on state law.

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.

Talk to an Attorney

If you have questions about timeshare laws in California or want to learn about foreclosure, consider talking to a real estate attorney or a foreclosure attorney.

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