Texas 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 cancel a timeshare contract if you act quickly, usually within three to ten days. In Texas, you may cancel a purchase contract before the sixth day after the date you sign and receive a copy of the purchase contract or receive the required timeshare disclosure statement, whichever is later.

Also, Texas law provides consumers with several protections regarding timeshare transactions. For instance, state law prohibits timeshare developers or salespeople from engaging in deceptive trade practices.

Even though Texas law provides several 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 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.)

What Is the Texas Timeshare Act?

You can find the timeshare laws for Texas in Chapter 221 (the Texas Timeshare Act) of Title 12 of the Texas Property Code.

How Long Do I Get to Cancel a Texas Timeshare?

Again, in Texas, you have the right to cancel a timeshare contract so long as you do it before the sixth day after the latter of:

• the date you sign and receive a copy of the purchase contract or
• when you receive the required timeshare disclosure statement. (Tex. Prop. Code § 221.041).

The right to cancel can't be waived. The contract is voidable if it contains a waiver of this right. (Tex. Prop. Code § 221.041).

What Is a Timeshare Disclosure Statement?

The developer must provide a timeshare disclosure statement to you before you sign the timeshare agreement. The timeshare developer must also get you to sign an acknowledgment that you received the timeshare disclosure statement. (Tex. Prop. Code § 221.032).

The timeshare disclosure statement must include, among other things:

• the type of timeshare plan offered
• a description of the duration and operation of the timeshare plan
• a description of the existing or proposed accommodations
• a description of any existing or proposed amenities of the timeshare plan
• a description of the method by which you will be able to schedule your use of the timeshare
• a description of the method and timing for performing maintenance of the timeshare property
• the projected common expense liability, and
• copies of the declaration, bylaws, and articles of incorporation. (Tex. Prop. Code § 221.032).

How to Cancel a Texas Timeshare Contract

To cancel a timeshare purchase contract in Texas, you may:

• hand-deliver a notice of cancellation to the developer
• mail notice by prepaid United States mail to the developer or to the developer's agent for service of process, or
• overnight your cancellation notice by common carrier delivery service to the developer or the developer's agent for service of process. (Tex. Prop. Code § 221.042).

Can I Cancel My Texas Timeshare and Get a Refund?

If you decide to cancel the contract, the developer must refund all payments you made before the cancellation:

• on or before the 30th day after the date on which the developer receives a timely notice of cancellation, or
• on or before the fifth day after the date the developer receives good funds from you (whichever of these events occurs later). (Tex. Prop. Code § 221.042).

Other Protections for Timeshare Purchasers in Texas

Timeshare salespeople are known for using hard-sell tactics and misrepresentations to get you to make a snap decision about buying a timeshare. Texas law protects timeshare buyers by prohibiting certain deceptive acts in practices in timeshare sales, including:

• failing to disclose important information concerning a timeshare interest
• making false or misleading statements of fact concerning the characteristics of accommodations or amenities available to a consumer
• predicting specific or immediate increases in the value of a timeshare interest without a reasonable basis for such predictions
• making false or misleading statements of fact concerning the duration that accommodations or amenities will be available to a consumer
• making false or misleading statements of fact concerning the conditions under which a purchaser of a timeshare interest may exchange the right to occupy a unit for the right to occupy a unit in the same or another timeshare property, and
• representing that a prize, gift, or other benefit will be awarded in connection with a promotion with the intent not to award that prize, gift, or benefit in the manner represented. (Tex. Prop. Code § 221.071).

How Do Timeshare Foreclosures in Texas Work?

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 called "assessments." You might also face a foreclosure if you fall behind in the timeshare assessments.

In Texas, a foreclosure can be either judicial or nonjudicial.

Ways to Avoid a Timeshare Foreclosure in Texas

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

• paying what you owe in full
• negotiating 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").

Be aware that you might have trouble selling or donating the timeshare or completing a deedback. These options are usually difficult to complete or are at the discretion of the developer. You might have better luck working out a settlement. Talk to an attorney to learn more or get assistance in working out a resolution to avoid a timeshare foreclosure.

Learn More About Texas Timeshares

The Federal Trade Commission (FTC) website provides good information on timeshares and how to avoid timeshare scams. You can report timeshare sales and timeshare resale scams to the FTC, the Texas Office of the Attorney General, and the Better Business Bureau.

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.