What does a timeshare sales pitch usually involve?

Timeshare sellers are notorious for offering a new camera, a half-price parasail ride, a free day's rental car, a free hotel stay, a free gourmet meal—you name it—to get you to attend a sales pitch. The presentations vary, but most include high-pressure sales pitches that drone on for hours and leave visitors desperate to get out. Timeshare salespeople frequently go over the advertised time allotted for their presentation and are not responsive if you complain. They sometimes refuse to give the promised gift or discount if you don't buy. Although it might be illegal to not give you the gift or discount, few consumers complain—they just want out.

If you go to a timeshare presentation, you’ll likely hear about the money you’ll save over the years by buying a timeshare instead of paying for hotel rooms. The salesperson probably will probably downplay how much the timeshare will actually cost you, including the purchase price, special assessments, and annual maintenance fees (which are already expensive) that might—and probably will—go up.

How do timeshares work?

If you’re thinking about buying a timeshare, you should understand exactly how they work.

Some timeshares are “deeded” while others are “right to use.” With a deeded timeshare, you actually own an interest in the timeshare—typically a percentage of a timeshare unit—along with other people who purchased interests. You’ll get a deed that lays out your ownership rights, and your interest is legally considered real property. If you purchase a right-to-use timeshare interest, though, you don’t get a legal interest in real property. Instead, as you might expect, you’re buying the right to use the property. Right-to-use timeshares often expire after a certain number of years, like 20 or 99 years, and at the end of this time, your right to use the timeshare ends.

Week-based system vs. points-based system. With both deeded and right-to-use timeshares, the methods commonly used to allocate the property’s use are by weeks or points. In a week-based system, the timeshares—both deeded and right to use—are sold in one-week intervals, which are normally numbered 1 to 52 (because there are 52 weeks in a year). You can purchase as many weeks as you want, which are fixed, floating, or rotating. With a fixed week schedule, your week to use the timeshare is at the same time each year. With a floating week schedule, your week to use the timeshare varies from year to year. In a rotating schedule, your week also changes from year to year, but it rotates based on a fixed schedule. For example, if you are on a three-year rotating week schedule, you might get week 11 the first year, while the next year you get week 28, and the following year you get week 45. Then in the fourth year the schedule restarts and you get week 11 again.

Deeded and right-to-use timeshares are also sometimes point-based. A points-based timeshare generally appeals to purchasers who are interested in staying perhaps not only at the main property, but also at other places. With a deeded points-based timeshare, you get an ownership interest at one location—normally called your “home resort”—and you get a deed to that property. Your interest in the property is also worth a certain amount of points each year, which you may use to either visit your home resort or to visit a different resort associated with the same development. The number of different locations you can choose from varies widely among timeshare developments.

Timeshare trusts. Sometimes, points-based plans don’t have home resort. Rather than purchasing an ownership interest in a home resort, you buy into a timeshare trust. This is a right-to-use point-based system, which is sometimes called a vacation club or vacation plan. You won’t receive a deed. Basically, you buy a certain number of points, and exchange them for time at different resorts.

Can I lose my timeshare to foreclosure?

Yes. 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. (Learn how a timeshare foreclosure will affect your credit score and other consequences of a timeshare foreclosure. Also, read about ways to avoid a timeshare foreclosure.)

Also, timeshare owners typically have to pay annual maintenance fees and special assessments to their homeowners’ association (HOA.) If, as an owner, you don’t pay the fees and assessments, the HOA may sue you for money or foreclose your timeshare. (Learn more about timeshare foreclosures for nonpayment of fees or assessments.)

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 repossessed, which is a different legal process than a foreclosure.

I just bought a timeshare, but now I have cold feet. Can I cancel the deal?

Maybe. Most states have "cooling-off" laws; these let you get out of a timeshare contract if you act within a few days after signing, usually within three to ten days, depending on the state. If there is no cooling-off period, or if you change your mind after the time has passed, your only recourse might be a formal lawsuit. Timeshare sellers are accustomed to handling claims from unhappy buyers and are unlikely to refund your money unless they're forced to do so. (Learn more about cancelling a timeshare purchase.)

Can I sue the timeshare operator if I'm the victim of a timeshare scam?

There are several types of claims you might bring against a slippery timeshare seller. The first, breach of contract, involves promises explicitly made and set forth in the sales agreements. If the size, location, condition, or some other important fact about the timeshare is materially different from what you agreed to in the sales contract, you may have a basis for claiming breach of the contract. But beware: these contracts are carefully drawn up by the timeshare sellers' attorneys and are likely to cover almost any contingency—scrutinize carefully before signing.

You may also bring claims based on tactics used and promises made before you agreed to purchase your timeshare. These claims may be covered under state laws prohibiting unfair business practices or those designed to prevent fraudulent inducement. In both cases, the idea is that the seller used unfair sales tactics—or outright lies—to get you to buy the timeshare. You will have to show:

• what the seller said or did
• why it was misleading
• that you wouldn't have bought the timeshare if the seller hadn't used the misleading tactics or promises, and
• that you suffered some monetary loss because of the purchase.

Timeshare sales contracts usually include clauses that disclaim any promises made during the sales pitch. The contract you sign will ask you to agree that you are making the purchase only on the basis of the representations in that contract. Prospective purchasers who notice differences between what is in the contract and what was promised by the salesperson are likely to be told that the contract is only legal jargon. This is not true. If a timeshare salesperson won’t put a promise in writing, don't go through with the sale. You will be forced to argue afterwards that you relied on that promise, even though you signed a contract that explicitly says you did not rely on any promises.

Getting Help

If you need more information about timeshare laws, how to cancel a timeshare purchase, whether you should sue a timeshare operator, or your options if you’re facing a timeshare foreclosure, consider talking to a local foreclosure attorney or timeshare attorney.