North Carolina Timeshare Foreclosure and Right to Cancel Laws

With the signing of House Bill 531 into law on October 6, 2021, North Carolina updated its laws covering timeshares. The revised North Carolina Timeshare Act provides consumers with several protections regarding timeshare transactions.

For instance, in North Carolina, you get the right to cancel a timeshare deal within five calendar days after you sign the contract (or when you receive the public offering statement, which contains important information to consider before you buy a timeshare interest, and all other required documents). Also, should you decide to try to sell your timeshare, North Carolina law protects you against resale scams.

Even though North Carolina 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.

Also, timeshare owners usually 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 Long Do I Get to Cancel a North Carolina Timeshare?

In North Carolina, you get the right to cancel the contract of sale until midnight of the fifth day after the later of the following events:

• when you execute (sign) the contract of sale or
• when you receive the public offering statement (see below) and all other required documents. (N.C. Gen. Stat. § 93A-45.)

You Can't Waive the Right to Cancel

A timeshare purchaser can't waive the right of cancellation. Any oral or written declaration or instrument that purports to waive this right of cancellation is void. Also, if the contract of sale doesn't include a cancellation notice (see below), you can void the contract and you're entitled to 10% of the sales price, but not more than $3,000, in addition to any damages or other relief to which you're entitled. (N.C. Gen. Stat. § 93A-45.)

How Do I Cancel a North Carolina Timeshare?

Your cancellation is considered given on the date postmarked if mailed, or when transmitted if delivered by electronic means, so long as the developer actually receives the notice. If given by means of a writing transmitted other than by mail, your notice of cancellation is considered given at the time of delivery at the place for receipt of notice that the developer provides. (N.C. Gen. Stat. § 93A-45.)

Getting a Refund If You Cancel Your North Carolina Timeshare

You can cancel a North Carolina timeshare deal without penalty, and the developer must refund your money within 20 days after you cancel or within five days after receiving cleared funds from you, whichever is later. (N.C. Gen. Stat. § 93A-45.)

The Contract of Sale and Public Offering Statement

Timeshare developers in North Carolina must give purchasers a copy of the sales contract and public offering statement. The contract must include certain information, including:

• the name and address of the developer
• the name and address of the timeshare program being offered
• an identification or legal description of the timeshare being sold, including whether any interest in real property or personal property is being conveyed and the number of years constituting the term of the timeshare program or the timeshare if less than the term of the timeshare program
• the initial purchase price and all additional charges, such as financing and the current year's annual assessment or any initial or special fee together with a description of the purpose of such initial or special fee
• a statement disclosing the amount of the periodic assessments currently assessed against or collected from owners who own similar types of timeshares in that timeshare program, and
• a statement about the right to cancel the contract of sale before midnight five days after the date you sign the contract of sale or receive the required public offering statement and all documents required to be delivered to you (like a timeshare declaration and the timeshare rules and regulations), whichever is later. (N.C. Gen. Stat. § 93A-44.)

The developer must provide a copy of the public offering statement to you before you sign the contract. (N.C. Gen. Stat. § 93A-44.) The public offering statement must include information about acquiring the timeshare like:

• a description of the method by which you can reserve, use, and occupy the timeshare unit
• whether and under what circumstances you could lose the right to reserve, use, or occupy a timeshare unit without being provided with a substitute reservation, use, or occupancy
• the rules governing the making, canceling, or transferring of reservations
• if the development or multisite timeshare program has a timeshare owners' association, whether owners are members of the association, together with a general description of members' rights and responsibilities, and
• a description of the method for calculating and apportioning assessments among owners, together with a description of the consequences to you if you don't timely pay the assessments.

Escrow Account Required in North Carolina Timeshare Transactions

In North Carolina, when you purchase a timeshare, the developer must put any money you pay in connection with the purchase into an escrow account with an independent escrow agent. (N.C. Gen. Stat. § 93A-45.) The point of the escrow requirement is to protect your right to a refund if you cancel the sales agreement during the cancellation period.

North Carolina Timeshare Resale Protection Laws

Timeshare owners often find it extremely difficult to sell their timeshares after buying them. So, scammers sometimes mislead timeshare owners into thinking that there's someone waiting in the wings to buy the timeshare.

But the timeshare owner must pay hundreds or thousands of dollars in upfront fees. Once the fees are paid, the scam artists claim that they were simply offering advertising services for the upfront money paid, and no buyer ever materializes. Or the scammers disappear with the money.

North Carolina law regulates timeshare resale and exit company activities to protect timeshare owners. The state's timeshare law makes violations of its provisions unfair or deceptive acts or practices that North Carolina's Attorney General can enforce. For example, among other things, North Carolina law prohibits timeshare resellers from saying or implying that they have a person interested in buying or renting the timeshare resale interest without providing the name, address, and telephone number of the represented interested resale purchaser. (N.C. Gen. Stat. § 93A-67.)

Timeshare Foreclosures in North Carolina

North Carolina law also states that deeded timeshares are considered an interest in real estate and governed by state laws relating to real estate. (N.C. Gen. Stat. § 93A-42.) So, if you don't make your timeshare mortgage payments, the timeshare is subject to foreclosure, just like other types of real estate.

How Can I 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. If you're facing a timeshare foreclosure and have questions about the process or your options, contact a foreclosure attorney.