Hawaii 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 Hawaii, the cooling-off period is seven calendar days after the date you sign the contract or receive a timeshare disclosure statement.

Also, Hawaii law provides consumers with several protections when it comes to timeshare transactions. For instance, timeshare salespeople can't use deceptive tactics to get you to buy a timeshare or offer a free gift without first telling you that they're offering it to try to sell you a timeshare. Sellers also have to disclose specific information to you in a timeshare disclosure statement.

Even though Hawaii law provides quite a few 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 have to 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 Can I Cancel a Hawaii Timeshare?

In Hawaii, you can cancel a timeshare contract within seven calendar days after the later of when you:

• sign the contract, or
• receive the timeshare disclosure statement. (Haw. Rev. Stat. § 514E-8).

What Is a Timeshare Disclosure Statement?

The timeshare disclosure statement must contain the following information, among other things:

• the name and address of the developer and of the timeshare units
• a description of the timeshare units, including the developer's schedule for completion of all buildings, units, and amenities and dates of availability
• any restraints on the transfer of your timeshare interest in the timeshare units or plan
• whether the timeshare plan is a timeshare ownership plan or a timeshare use plan, along with a description of the rights and responsibilities under the plan
• a statement that there is a seven-calendar-day cancellation period
• notice of any pending or anticipated suits that are material to the timeshare units or plan
• your total financial obligation, including the initial price and any additional charges, and
• an estimate of the dues, maintenance fees, real property taxes, and similar periodic expenses, and
• the method or formula by which they are derived and apportioned. (Haw. Rev. Stat. § 514E-9).

How to Cancel a Timeshare Contract in Hawaii

You can cancel a Hawaii timeshare contract by:

• personally delivering a notice of the cancellation at the address specified in the contract, or
• mailing the notice to the address specified in the purchase contract. (Haw. Rev. Stat. § 514E-8). If you mail a cancellation notice, you should send it by some method you can track.

The notice is considered given on the date that you hand-deliver or mail the cancellation. (Haw. Rev. Stat. § 514E-8).

The Contract Can't Waive the Right of Cancellation

The timeshare contract can't contain a waiver of your right to cancel. (Haw. Rev. Stat. § 514E-11(7)).

Other Protections for Timeshare Purchasers in Hawaii

Timeshare salespeople are known for using hard-sell tactics and misrepresentations to get you to make a snap decision about buying a timeshare. To protect potential purchasers, Hawaii law requires timeshare sellers to have a license, limits how sellers can use free gifts when trying to sell timeshares, requires sellers to use an escrow account in timeshare sales, and prohibits deceptive sales practices.

Protections When Sellers Offer Promotional Devices

Timeshare sellers often use free items or complimentary recreational activities to get people to attend sales presentations. Hawaii has strict requirements and restrictions on the use of promotional devices, including entertainment, prizes, gifts, food, drinks, games, transportation, luaus, ocean recreational activities, land recreational activities, aerial recreational activities, tours, or other inducements in selling timeshares.

Oral notification is required. In Hawaii, timeshare salespeople can't offer a promotional device without first telling you that the device is being used or offered for the purpose of selling you a timeshare. (Haw. Rev. Stat. § 514E-11(2)).

Written disclosure is also required. If, in order to claim the prize, the prospective purchaser must attend and complete a sales presentation, the timeshare salesperson must provide the following information in writing:

• a full description of the exact prize or gift, including its cash value
• all material terms and conditions attached to the prize or gift
• a statement that you must attend and complete a sales presentation, and
• an identification of the timeshare project to be offered for sale, including the type of ownership and price ranges of the timeshare interests in that project. (Haw. Rev. Stat. § 514E-11(3)).

It's also illegal for a timeshare salesperson to offer any tourist activity, like a helicopter tour or scuba diving trip, at less than the actual cost of the activity to induce you to purchase a timeshare plan or to attend a timeshare marketing event. (Haw. Rev. Stat. § 514E-11(13)).

Deceptive Practices are Prohibited in Timeshare Transactions

Under Hawaii law, among other things, a salesperson may not misrepresent:

• any material fact concerning the timeshare plan or timeshare unit
• that a timeshare interest is an investment, including the value of the interest at resale
• the purchaser's right to cancel or void any contract to purchase a timeshare
• the amount of time or period of time the timeshare unit will be available
• the location or locations of the offered timeshare unit
• the size, nature, extent, qualities, or characteristics of the offered timeshare units, or
• the nature or extent of any services related to the timeshare unit. (Haw. Rev. Stat. § 514E-11(4), (5), Haw. Rev. Stat. § 514E-11.1).

Timeshare sellers must also inform each purchaser orally, and in writing, at the time the purchaser signs the contract, of the seven-day right to cancel the contract to buy the timeshare. (Haw. Rev. Stat. § 514E-11.1).

Timeshare Sellers Must Have a Real Estate License

In Hawaii, only licensed real estate brokers may complete timeshare sales. (Haw. Rev. Stat. § 514E-2.5).

Escrow Account Required in Timeshare Purchases

The timeshare developer must put any money you pay in connection with a timeshare purchase into an escrow account. (Haw. Rev. Stat. § 514E-16).

It must release the funds:

• if you cancel the agreement (the seller must return your money within fifteen days)
• if you or the developer defaults in performing an obligation under the sales agreement, or
• after escrow closes for the sale of the timeshare. (Haw. Rev. Stat. § 514E-17).

Timeshare Foreclosures in Hawaii

In Hawaii, if you take out a loan to purchase an interest in a deeded timeshare and fail to make your mortgage payments, you will likely face a 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." In Hawaii, you might also face a foreclosure if you fall behind in the timeshare assessments. (Haw. Rev. Stat. § 514E-29).

Ways to Avoid a Timeshare Foreclosure

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

• 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)
• negotiating with the resort to reduce the amount you owe
• 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.