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Timeshares and travel vacation clubs: What to know before you join one

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Stephanie Patterson

Travel columnist

Buyer’s remorse. That describes too many consumers who get talked into spending thousands of dollars on a timeshare or travel vacation club, only to find that it is not right for them. They are now locked into a long-term commitment of ever-increasing fees and need help figuring out what to do.

This article will help you determine if a timeshare or travel vacation club is right for you and how to weigh the benefits and risks of membership. And if you are a timeshare owner wanting to get out of your contractual agreement, we have some suggestions.

Fraudulent companies targeting the timeshare resale market have multiplied over the last several years. We’ll help you recognize what is a scam and what is legitimate.

What’s the difference between a timeshare and a vacation club?

A timeshare is a type of vacation property where the owner shares the costs with other owners. The timeshare rules are specified in an agreement. A timeshare typically gives the owner a specific number of weeks per year to use. Owners cannot modify the timeshare or use it whenever they desire.

Timeshares are usually spacious and well-maintained condos, hotels, villas, or apartments on a resort property. The concept originated when the condominium industry needed to get rid of excess inventory. Amenities often include golf courses, tennis courts, pools, gyms, beach access, and more. 

A travel vacation club is also a type of timeshare. Many hotel chains and resorts tried to set themselves apart from the stigma attached to timeshares by calling their timeshares travel vacation clubs. 

Resorts such as Disney Vacation Club, Club Wyndham, Hilton Grand Vacations, and the Marriott Vacation Club consider the owners of their timeshares as travel vacation club members. Members are guaranteed an annual vacation at one of the network resorts throughout the U.S. and abroad.

Timeshares have expanded to luxury campsites, single-family homes, lodges, private jets, and yurts. 

It’s important to note that a timeshare is not an investment, and you do not own the property. It is an illiquid asset that will continue to lose value.  (I’ll explain this in a minute.)

The average cost of a timeshare/travel vacation club

When you buy a timeshare, you pay a specific amount for the initial purchase and are then responsible for recurring annual fees. According to the American Resort Development Association (ARDA), the average price of a timeshare is $24,140. You’ll also have to pay closing costs.

Timeshare resales often sell for substantially less than the original purchase price. They are likely to continue to decrease in value from the date of purchase.

Annual dues/maintenance fees

Along with the upfront cost of a timeshare, you’ll have to pay recurring annual dues/maintenance fees. These dues cover the cost of maintenance, which typically includes operating expenses, repairs, insurance premiums, and a percentage of real estate taxes. The amount of dues is determined by the size of the unit and the location. The average dues/maintenance fees are currently around $1,000 per year and they continue to escalate.  

If the property requires an upgrade or unexpected repairs, the timeshare owners may get charged a special assessment fee.

Financing a timeshare/travel vacation club

If you plan to finance your timeshare through your bank or the property owner, you could pay extremely high-interest rates (as high as 20% or so) along with closing costs. You will not qualify for a conventional mortgage because there is no collateral – you do not own the property. 

It is not a good idea to finance the dues/maintenance fees. Only buy a timeshare if you can afford to pay these fees. Remember that you will continue paying annual fees as long as you own the timeshare.

How to survive a timeshare/travel club presentation – without signing a contract

Unfortunately, some timeshare companies have given the industry a bad reputation through their hard-sell tactics and lack of transparency.

Timeshare companies entice potential buyers by offering a free vacation, cruise, or some other type of incentive and often push participants into signing the contract before they leave. They may use guilt or other dishonorable practices to accomplish this task.

Many participants feel pressured into buying a timeshare or travel club and later feel trapped.

It’s important to note that there are reputable timeshare companies with professional presentations that are transparent about what they offer. These companies do not strong-arm participants into buying, so read reviews of the timeshare company you’re considering before taking the plunge.

If you attend a presentation and have an interest in buying a timeshare, take the contract home and read it thoroughly. Check the accuracy of the figures given and compare those costs to what you plan to spend on vacations over the next several years. 

It is not a good idea to sign the contract at the presentation, no matter how much pressure you receive. If the so-called great deal is legit, it will still be there when you are ready to sign later. If the timeshare company isn’t willing to extend the deal so you can do a thorough review, view that as a warning sign.

Signing a timeshare contract is a long-term, perhaps lifelong financial commitment.

What if you sign the contract and then have buyer’s remorse?

According to the Federal Trade Commission (FTC), most states provide a mandated rescission period (usually around three to ten days). If you purchase a timeshare at a presentation and then decide you made a mistake, you can get out of the contract within the allowable time frame of that state. The rescission option only applies to timeshares that are sold in the U.S. There are no rescission periods in most other countries.

At Consumer Rescue, we emphasize the importance of reading the entire contract before you sign (See: Why you should never report a credit card transaction as fraudulent when it isn’t).

Do not rely on the words of the salesperson. The contract always trumps the spoken word.

Check the contract for a cancellation clause. A fair contract often provides 24 hours to a week for buyers to change their minds.  

If you decide to cancel within the cancellation period, notify the property owner immediately by phone. Follow up with an email and a written cancellation sent via certified mail with a return receipt request. You may need proof of the date that you canceled.

Leased timeshare/travel vacation club (right to use)

There are two types of timeshares: leased timeshares and deeded timeshares.

Leased timeshare

One of the more common timeshares is where you lease the right to use a property or a group of properties for a specified length of time each year – typically for a week.

  • The contract could be for a fixed week each year or a floating week that allows you to change your vacation dates annually.
  • The developer holds the deed, and resales may be more restrictive.
  • Many contracts have an expiration date of anywhere between 20 and 99 years. Once the contract expires, you lose your right to use the timeshare.
  • Leased timeshare owners are responsible for the annual dues/maintenance fees.
  • Some timeshares offer extended stay options beyond a week.

It’s important to understand that you don’t own the property and will not have any say in fees or management decisions. If the property owner goes bankrupt, you will likely lose your right to stay at your timeshare.

Shared deeded ownership timeshare

A deeded timeshare is a real estate purchase where you own a percentage of the property according to the time allotment (number of weeks) purchased. 

  • You receive a deed for your share of the property with no contractual end date.
  • Ownership is for life and you can pass it down to your heirs. 
  • You may receive some tax advantages, such as deducting the interest paid for financing and the portion you pay for property taxes.
  • A deeded timeshare usually comes with member voting rights.
  • Deeded timeshare owners are responsible for the annual dues/maintenance fees.

Contract options of a timeshare/travel vacation club

Timeshares offer different contract options. Many of these contracts come with an expiration date of between 20 and 99 years. The timeshare reverts to the property owner – not you – upon expiration. Deeded timeshares do not have an expiration date.

Point system contract

The point system is one of the more popular contract options. The points represent timeshare ownership.

Many resort timeshares/travel vacation clubs operate on a point system. This option provides added flexibility for the members (owners) by allowing them to stay at resorts within the network by paying with points.

To become a member (owner) of a timeshare/travel vacation club, you make an initial payment that buys you a specified number of points. The resort determines the cost of the points, and it is subject to change. 

For example, Disney Vacation Club says on its website, “To become a member, you’ll purchase a real estate interest in a Disney Vacation Club Resort, which is represented by an annual allotment of vacation points. You’ll use your vacation points to book accommodations at Disney Vacation Club Resorts–or enjoy thousands of other vacation properties around the world–for decades to come.”

Disney’s purchase price for a travel vacation club starts at $32,550 for 150 vacation points. Closing costs are based on the resort and will cost upwards of $631. The lowest annual dues/maintenance fees start at around $1,104.

Members (owners) can redeem points at vacation properties within the network or exchange them for cruises, guided tours, and other adventure travel options. The number of points required for a stay is based on the resort’s location, the travel dates, the length of stay, and the location and type of resort. 

Club members can purchase more points for more expensive locations or longer trips. They can also borrow points from their future years to fund a vacation. Unused points can carry over to the following year. Depending on the contract, points can expire if there is minimal to no travel activity in a specified period (such as two years).

Fixed week contract

You are given exclusive rights to use the same unit during a designated week each year. For example, you may choose the first week of June to be your annual week.

You may have the option to trade weeks with other property owners through an exchange company. This process may sound simple enough, but it often becomes complicated. You’ll have to plan about a year ahead if you hope to swap dates with another owner. There will also be additional fees when trading dates.

If you prefer to go to the same place at the same time every year, a fixed week contract may suit you. 

Floating week contract

You have flexibility in choosing the week (within a predetermined period or season) when you want to use the timeshare. These dates can change annually. Reservations are typically on a first-come, first-served basis, so planning a year ahead is recommended. Traveling during a high-demand season or around holidays will increase the cost of the contract.

Reserving the time slot you prefer may take some work on your end. There are a lot of other timeshare owners that may be vying for the exact location at the same time.

Pros and cons of buying a timeshare/travel vacation club

Before you take the plunge and sign the contract – research thoroughly. It bears repeating that the contract is a long-term agreement. You will limit your vacation plans to a specific resort for the next 20 to 99 years (except for deeded timeshares with no expiration date). It will also be an expensive outlay of cash initially and every year after that – whether you use it or not. 

The timeshare sales presentation will try to make you believe that you will save thousands of dollars on vacations over the next several years. Put their figures to the test by compiling a cost comparison analysis yourself. 

Include realistic amounts of what you plan to spend on vacations over the next several years, including airfare, food, car rentals, tours, miscellaneous expenses, and lodging. Compare those figures with the cost of owning a timeshare (breaking the costs down annually) and include all other travel expenses (minus lodging). You might be surprised.

According to the Federal Trade Commission, you’ll usually find a timeshare is more expensive overall than the average vacation.

The exciting thing about the future is that it is a mystery. That vacation spot or resort property you love visiting now may become less enticing in a few years. 

If you want to avoid the commitment of a timeshare, and there’s a particular destination you enjoy going to every year, consider renting a vacation home. If you find a rental home you like, book it annually. 

Pros of buying a timeshare

  • The resort properties are typically well-maintained and offer spacious accommodations, including a kitchen, one or more bedrooms, and a washer and dryer. You can expect quality lodging.
  • You’ll be guaranteed a spot if you like to have your vacation at the same time and place every year.
  • You can diversify your travels by visiting different resort properties in the network throughout the U.S. and abroad, if the contract allows.

Cons of buying a timeshare

  • There are high upfront costs, and the annual maintenance fees will continue to increase. The interest rates for financing the initial outlay will be high.
  • Timeshares decrease in value. If you decide you no longer want it, you may experience a loss if you try to sell it. There’s often no return on your investment. 
  • Your vacations will be limited to the properties within the resort’s network.
  • A timeshare may not include room service and housekeeping unless you are staying at one of the hotels in the network.
  • A timeshare is not for you if you like to travel several times a year and take a vacation for a few days at different places.
  • A timeshare will not allow for a spontaneous vacation.

How to get out from under a timeshare/travel vacation club

If you no longer want to use your timeshare or cannot afford it, options are available.

Ways to get rid of a timeshare:

  • Sell your timeshare through a reputable online source.
  • Give the timeshare away to another person. You would lose your initial investment but could get out from under the annual dues/maintenance fees. Make sure the transfer is in writing.
  • Ask a licensed real estate broker to list the timeshare.
  • Rent the timeshare (if the contract allows). Your timeshare resort may offer rentals and may allow you to include your property.  You can also list it on a vacation home site or with a reputable timeshare resale company that offers rentals.
  • Contact the resort owner or developer and ask if you can return the timeshare. Generally, the owners will take the timeshare back if you are current with your payments and the timeshare is paid in full. They will not pay you for the timeshare, but you will no longer have to pay the dues/maintenance fees. You may be charged a transfer fee.

If you financed your timeshare, that’s a contractual obligation. You are still responsible for making the remainder of your payments. These are determining factors that may affect your eligibility to exit your timeshare.

Some owners decide to walk away from the commitment of their timeshare by defaulting on their annual dues/maintenance fees. But breaking the contract will likely hurt their credit score and reduce their chances of getting future credit.

Timeshare resale scams to avoid

The Federal Trade Commission (FTC) warns that numerous companies claim to be consultants or resellers of timeshares but are scam artists. This fraudulent practice grew as many timeshare owners became desperate to get out of their contracts. 

Scammers search the web for owners who are trying to sell a timeshare (and sometimes even those who are not). They tell the owner they can sell their timeshare for a significant profit and ask for a sizable fee in advance. They then disappear with the money.

Other resale scam companies will contact owners and say a buyer is interested in their timeshare. They ask the owner to wire money to move the deal forward. 

To add to the list of fraudulent companies, some present themselves as legal firms. They advertise that they can get owners out of their contracts quickly. The owners are told to stop paying the bank or the property owner and divert those funds to the scammers. The fraudulent “legal firm” makes the owner believe this must occur before they can file a lawsuit against the resort property.

These types of scams may seem obvious and easily avoidable, but many timeshare owners continue to become victims. 

The FTC has a lawsuit against a company that used scare tactics and high-pressure sales to steal money and timeshares from older adults. They would invite timeshare owners to a free dinner and then guilt them into thinking they would be saddling their children and grandchildren with a huge financial burden with their timeshare. 

This company received over 90 million dollars. These unsuspecting consumers believed the company was genuinely looking out for their interests by selling their timeshare. The company gladly took their money – but did nothing.

The FTC warns consumers not to pay any fees in advance to resellers and to check the company’s rating online. 

If you are the victim of fraud, contact the Federal Trade Commission or your state’s Attorney General. You can also contact the Resort Owners’ Coalition with questions you may have on selling your timeshare.

The bottom Line

Timeshares/travel vacation clubs are a big commitment and limit your vacation options. They require a substantial initial investment and ever-increasing annual costs, and there is no return on your investment. 

If you decide later down the road that the timeshare is too expensive to maintain, you’ll have difficulty selling it. You may only get back a small portion of your initial outlay. If you financed the timeshare, you would have paid a substantial amount in interest since the rates are typically high. Getting out from under your contract could result in a significant financial loss.

Conversely, according to the American Resort Development Association’s (ARDA) U.S. Shared Vacation Ownership 2022 Report, 90% of its owners were generally satisfied with their timeshare. ARDA (a trade association for the timeshare industry) stated, “The data in this report was collected via online methodology from March 13, 2022 to March 31, 2022. A total of 1,600 timeshare owners were identified and surveyed.”

If you believe a timeshare is in your future, weigh the benefits and risks and research available options. It may be suitable for your travel style. Check into buying a resale unit through a reputable source to save substantially on your initial expenses. Verify that the current owner has paid the dues and fees in full. You don’t want to be stuck paying any outstanding dues.

As always, we are here for you at Consumer Rescue. We’ll gladly throw you a lifeline if you find yourself in a quandary.  But remember, if you sign a legally binding contract, you might just be out of luck. So be careful! (Stephanie Patterson, Consumer Rescue)

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Stephanie Patterson

Stephanie is a travel columnist at Consumer Rescue. She has authored several books for corporate travelers (available on Amazon and Barnes and Noble) and also publishes an informative website with a focus on promoting smart and safe travel. When Stephanie is not here helping consumers, she's an interior designer who loves to think outside the norm!