Do your homework on timeshares
Have you ever thought about owning your own vacation home, but have been put off by the amount of time and work you will have to put into it, year round, to enjoy your two-week vacation? Millions of people have solved this problem by buying a timeshare or vacation plan. If you are considering purchasing a timeshare or vacation plan, do your homework before the purchase.
Have you ever thought about owning your own vacation home, but have been put off by the amount of time and work you will have to put into it, year round, to enjoy your two-week vacation? Millions of people have solved this problem by buying a timeshare or vacation plan. If you are considering purchasing a timeshare or vacation plan, do your homework before the purchase.
There are two basic options available to you: timeshares and vacation interval plans. Remember, these options should not be viewed as investments but as vacation destinations. Resale value of a timeshare or vacation interval plan may not be as high as what you paid for the plan in the first place as there are so many options available today.
Both timeshare and vacation plans require you to pay an initial purchase price and periodic maintenance fees. The initial purchase price may be made all at once, or over time; periodic maintenance fees are likely to increase every year.
When you buy a timeshare, you’re purchasing the right to use a specific unit for a specific time every year, and you may rent, sell, exchange, or bequeath your specific timeshare unit. You and other timeshare owners collectively own the resort. You can return that same week each year, or you may be able to exchange it and stay at a different resort at another destination. Owners share in the use and upkeep of the units and of the common grounds of the resort property. A homeowners’ association usually handles management of the resort. The total cost of your timeshare includes your mortgage payments, annual maintenance fees, taxes, travel costs, and other miscellaneous costs.
“Right to use” vacation interval options are a little different. The developer owns the resort and each unit is divided into intervals either by week or equivalent in points. You purchase the right to use an interval at the resort for a specified number of years, usually between 10 and 50 years. The specific unit you use at the resort may not be the same each year. You will also have to pay an annual maintenance fee that is likely to increase each year.
Here are some tips on how to avoid timeshare scams:
* Don’t ever buy (or sell) on the spot. Take the time to evaluate the deal and sleep on it if necessary.
* If you are offered a free gift or free tickets, be aware that most timeshare offers include a lengthy sales presentation to qualify for the gifts. If the presentation is too high pressure, leave. You have the right to leave whenever you wish. Don’t let them argue with you. Excuse yourself and leave.
* Read the contract and have it reviewed by an attorney. All promises made to you by the salesperson should be in the contract. If not, don’t rely on those promises as they won’t be enforceable. (Timeshare sales contracts often include clauses that disclaim any promises made during the sales pitch.) Make sure the contract includes clauses concerning both “non-disturbance” and “non-performance.” A non-disturbance clause ensures that you will be able to use your unit or interval if the developer or management firm goes bankrupt or defaults. A non-performance clause lets you keep your rights, even if your contract is bought by a third party.
*Ask for references and follow through by calling them.
* Research and educate yourself on the market and the value before making a purchase. Check the track record of the seller, development, and management company.
* Ask about your ability to cancel the contract or the right to cancel. Each state has specific right-to-cancel laws, so depending on where the sales presentation/purchase is made, you should check on that state’s laws.
* Use an escrow account if you are buying an undeveloped property. Get a written commitment from the seller that the facilities will be finished as promised.
* Keep in mind — cancellation issues, disputes and other potential legal issues may not be subject to North Dakota law if the property is not located in North Dakota or the transaction or agreement occurred out of state.
* Be wary of timeshares or vacation plans in foreign countries. If you sign a contract outside the U.S. for a timeshare or vacation plan in another country, you will not be protected by U.S. laws.
To learn more about timeshares and vacation interval plans, you may wish to contact the American Resort Development Association. However, be aware it represents the vacation ownership and resort development industries. You may reach them by calling 202-371-6700 or by visiting its Web site at www.arda.org.
The Attorney General’s Consumer Protection Division investigates allegations of fraud in the marketplace. Investigators also mediate individual complaints against businesses. If you have a consumer problem or question, call the Consumer Protection Division at 328-3404, toll-free at 1-800-472-2600, or 1-800-366-6888 (w/TTY). This article and other consumer information is located on our Web site at www.ag.nd.gov.
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