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 when it comes to 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 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 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.)
In Tennessee, a timeshare contract can be canceled within:
Under Tennessee law, the right to cancel can't be waived. (Tenn. Code Ann. § 66-32-114(c).)
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 date of the sales contract. 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 offered by the developer, and information about canceling the contract. (Tenn. Code Ann. § 66-32-112.)
To cancel the timeshare purchase, you may:
If you cancel, the seller (usually the developer) can't charge a penalty and has to refund all of the money you paid within 30 days after receiving your notice of cancellation. (Tenn. Code Ann. § 66-32-114(a).)
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 try to get you to buy a timeshare.
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:
The point of the escrow requirement is to protect your right to a refund if you cancel the sales agreement during the cancellation period.
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.)
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:
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 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, 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.)
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 referred to as "assessments." In Tennessee, you might also face a foreclosure if you fall behind in the timeshare assessments.
A few of the various options to avoid a timeshare foreclosure include:
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.