Timeshare Contracts: What to Watch Out For

Considering buying a timeshare? Learn how to protect yourself from scams and bad deals.

If you are thinking about buying a timeshare, or don't want a timeshare but plan on attending a presentation in order to get a free hotel stay or another gift, you should go into the timeshare tour with your eyes open. If you are signing a timeshare contract, you must be even more vigilant.

Read on to learn more about how to prepare for the timeshare sales presentation and what to watch out for in the presentation itself, as well as in the timeshare purchase contract.

(Learn more about timeshares in our Buying or Selling a Timeshare and Timeshare Foreclosures topic areas.)

The Timeshare Hard Sell

When you think about timeshares, it may conjure up the image of a shifty, fast-talking salesperson that pressures you relentlessly to make a purchase. But maybe you're willing to put up with the presentation to get a free night at a hotel or another prize. On the other hand, maybe you visualize having a yearly vacation at an upscale resort in a tropical location.

Many people who attend timeshare sales presentations walk out as timeshare owners whether they intended to buy one or not. To avoid this, you should go into the presentation fully prepared so that you can make a rational decision about whether purchasing a timeshare is right for you.

Evaluate the Timeshare Resort Before Attending the Meeting

If you are thinking about purchasing a timeshare in a particular resort, you should evaluate the resort developer prior to walking into the presentation. (Even if you think you won’t be tempted to purchase a timeshare at the presentation, it is a good idea to investigate the timeshare developer ahead of time. You never know, it’s possible that you may change your mind during the presentation and decide that a timeshare sounds like a pretty good idea.)

Look Online

Check the Better Business Bureau website (www.bbb.org) and run a Google search to find out if there are complaints against the timeshare developer. Timeshare owners who have difficulty dealing with the resort after purchasing a timeshare often post their experiences and warnings online. Local real estate agents can also be helpful resources for information about the resort and developer.

Visit the Resort

Take some time to look around the grounds, visit the facilities (the pool, tennis courts, clubhouse, etc.), and speak with current timeshare owners about their experiences. Ask current owners about how easy (or difficult) it is to book time at the resort, find out about maintenance, and ask about resale value.

The Presentation: What to Watch Out For

Timeshare salespeople may use hard-sell tactics and misrepresentations to get you to make a snap decision about buying a timeshare. Here are some claims a salesperson might make that you should be on the lookout for:

“The sales presentation is only about 60 to 90 minutes.”

The presentation will probably be at least two hours, more if you ask questions (which you should do if you’re interested in making a purchase.) By the end of the presentation, most people feel pressured and worn down by the sales pitch. As a result, you may be tempted to sign a timeshare purchase contract even though you had no intention of buying a timeshare when you first walked into the meeting.

“Purchasing a timeshare is a great investment. You can always resell it later (at a profit!) if you decide you don’t want it anymore.”

In reality, timeshares have little to no resale value. Even if you find a buyer, you’ll probably lose money on the deal. And, if you can’t find a buyer, not only are you stuck with a timeshare you don’t want, but you’re on the hook for mortgage payments (if you took out a loan to purchase the timeshare) and yearly maintenance fees, even if you don’t use the timeshare.

Additionally, if you eventually decide that you do want to resell your timeshare, you’ll need to watch out for scammers who will try to take advantage of your situation. (Learn more in Nolo’s article Timeshare Resale Scams.)

“Paying for a hotel costs more than having a timeshare.”

When comparing hotel costs vs. purchasing a timeshare, getting a hotel room may initially appear to be more expensive. However, most of the time when salespeople make this comparison they are not including yearly maintenance costs or taxes in the comparison. When you evaluate the total cost of owning a timeshare, your analysis should include:

  • mortgage payments
  • purchase costs (including closing costs, broker commissions, and finance charges)
  • annual maintenance fees, and
  • taxes.

These costs can add up quickly and can easiily exceed the cost of staying in a hotel with similar amenities in the same location at the same time of year. In addition, if at some point you fall behind in timeshare payments or assessments, you could face a foreclosure. (Learn more in Nolo’s article Timeshare Foreclosures and Consequences of a Timeshare Foreclosure.)

“You can rent out the timeshare if you don’t use it.”

While this is technically true in most cases, renting out a timeshare can be difficult. Often, there’s a large supply of timeshares for rent and not that many people who are interested in renting one. Also, different timeshares have different rules and conditions when it comes to renting out the property. (If you are thinking of purchasing a timeshare with the intention of renting it out, be sure to read the rules carefully because any violation could result in penalties.)

“This special price is only good today. If you come back tomorrow, you’ll have to pay more for the same timeshare.”

This type of statement is designed to scare you into making a quick purchase. In the vast majority of cases, if you come back the next day or the next week, you’ll still be able to purchase the timeshare for the same price.

Reviewing the Documents: What to Watch Out for in the Contract

The salesperson may pressure you to sign off on the deal immediately after the presentation (and maybe even offer you a purchase incentive), but you have a right to take your time and think about the decision before making a purchase.

Here’s what you should do before finalizing the purchase:

Read all of the documents before you sign. Do not sign the purchase contract at the presentation. Along with a purchase contract, timeshare purchasers often receive some type of required disclosure, usually called a public offering statement. (The public offering statement is a very detailed history of the project that contains important matters to consider when buying a timeshare interest, such as an explanation of how common expenses are apportioned and information about covenants/restrictions.)

Take the documents with you when you leave the meeting so you can spend some time reading the fine print before you sign. If the timeshare developer won’t allow you take the documents with you, that’s a sure sign that something shady may be going on.

Find out if the contract permits you to cancel and get a refund. Even if the purchase contract does not include a cancellation period, most states that have large numbers of timeshares require a rescission (or “cooling-off”) period during which time you can cancel the deal and get your money back. For example, in Florida, you can cancel the contract up until midnight of the tenth calendar day following the date you sign the contract or the day on which you received the last of all required documents, whichever occurs later (Fla. Stat. Ann. § 721.10). (Learn more about Florida Timeshare Foreclosure and Right to Cancel Laws.)

If state law does not require a right of rescission, ask that it be included in your contract. (Learn more about cancelling a timeshare contract in Nolo's article Timeshare Cancellations: Can I Cancel a Timeshare Purchase?)

Verify the oral promises. If certain promises were made about the timeshare during the presentation, make sure those promises are written into the contract. If they are not, negotiate changes to the contract or walk away from the deal.

Hiring Counsel

If you are thinking about purchasing a timeshare and need clarification about any of the terms or conditions of the deal, it is recommended that you contact an attorney familiar with timeshares who can review the contract and go over the public offering statement with you before you complete the transaction.

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