Friday, November 11, 2005


Looking Out For Timeshare Traps

Timeshare properties represent for many Americans an opportunity to own a piece of the good life. It's like owning a summer cottage in your dream destination, except that you don't have to assume the financial responsibility of a mortgage, utility bills and maintenance hassles. Major timeshare corporations such as Resort Condominiums International (RCI) have enjoyed tremendous success. Consumers who invest in reputable timeshare properties literally have the world at their fingertips; they enjoy the option of trading out their timeshare for other properties in every corner of the world.

Timeshare properties are offered to consumers in two different forms: deeded and non-deeded. Deeded timeshare requires that you purchase ownership interest in a piece of residential real estate property. Non-deeded timeshare requires owners to purchase a club membership, license or lease that gives them access to a property for a specific amount of weeks each year for a predetermined number of years. How much you pay depends on how many weeks you want to spend in your timeshare property, as well as the time of year during which you want to use it. Choose the season heaviest for tourism in any region, and you're going to pay more for the privilege of using your timeshare property. And yet, a well-managed timeshare property offers owners the flexibility of swapping weeks according to their schedules, the option of dining in their own home while on vacation (a money-saver), and a more comfortable, relaxed atmosphere for their vacations (especially if children are present).

Sound too good to be true? That depends. There are, indeed, pros and cons to timeshare ownership. Before you sign on the dotted line, you'll want to consider the following guidelines as recommended by the Federal Trade Commission.

As with any purchase that costs thousands of dollars, you should understand what you are getting before you sign any papers or pay any fees. The general information here should be accompanied by careful analysis and possibly professional advice concerning all aspects of a particular timeshare purchase.

The Federal Trade Commission suggests that you consider several points before you purchase any type of timeshare:

Are you able to plan your vacations several months in advance without risk of cancellation due to last-minute changes? Because you're sharing your property with many other owners, you must secure your preferred weeks well ahead of time. If you tend to travel at the same time each year, timeshare is better-suited for your lifestyle. But if your vacations vary in length and in season from one year to the next -- and are subject to 11th-hour changes that could drastically alter your plans -- you may want to think twice before signing a timeshare contract. Even if you plan to use your timeshare in a single location -- for example, in the mountains of Colorado -- find out where the timeshare company maintains other properties. You should have the flexibility of using your membership in other locales. Ask how many units the management company has at each location. While the company may speak highly of its geographic diversity, if you consistently find yourself shut out because of a shortage of units, that diversity is hardly an advantage.

Demand all costs in writing. Sure, timeshare sounds like a deal -- and it often is -- but you may be surprised at how high your "expenses" are. As a part-owner, you're required to foot the bill (along with the other owners) for maintenance. Maintenance fees average anywhere from $300 to $500 per year and up, and can increase according to fluctuations in the economy, or as the exclusivity of the area in which you own your timeshare increases. Before you commit to a timeshare property, ask if the management company has placed a cap on maintenance fee increases. Ask for a detailed report of exactly what services your maintenance fee covers. If any of these services aren't performed to your satisfaction or they're not performed at all, what will the management company do to correct the problem? You may also wish to compare the costs of investing in a timeshare property in your preferred vacation spot with the cost of simply renting a property in the same destination and the same season for the duration of time you'll be on vacation.

With all of the information floating around on the Internet, consumers have a near-limitless amount of data at their fingertips. Consumer protection sites are growing in number on the World Wide Web, and the Better Business Bureau holds a wealth of eye-opening information. Use this to your advantage, and investigate the performance record of your prospective management company -- as well as the property developer -- before you commit to a timeshare property. Even if you hear glowing reports about the property, don't commit to ownership sight unseen, if you can help it. Visit the property, walk around and talk to owners. Ask them about the responsiveness of management to maintenance requests.

If the property is still under construction, obtain a written document from the timeshare seller that the facilities will be completed by the date promised to you, in the condition promised to you, and with all of the amenities promised to you. According to the FTC, consumers who are considering purchasing timeshare in an unfinished property should allocate a percentage of their money for escrow, which could offer them some protection in the event that the developer defaults on the property.

Don't give in to pressure. Any representative who presses you to sign on the dotted line quickly is worthy of your suspicion. If, ultimately, you decide to sign, ask your representative if you have a grace period during which you can cancel the contract, should you have second thoughts. According to the FTC, most states in which timeshare properties are present have instituted "cooling off" periods for consumers which guarantee a refund if a consumer changes his or her mind within a specified period. If management representative tells you that there is no grace period, you don't necessarily have to run in the other direction; just be aware of the permanence of the commitment you're preparing to make. And read every last term of the contract before you sign it. If the representative has made any verbal promises to you, get them in writing; some of those "carrots" may contradict the terms of the contract, and therefore wouldn't hold weight in the event of a dispute.

Find out your rights as an owner if either the builder or management company defaults for any reason. Read your contract carefully for one of two key terms: "non-performance" or "non-disturbance." A non-performance clause allows a consumer to retain all ownership rights in the event of default. Your rights to ownership stand even in the event that a bank or other third party must buy out your contract. A non-disturbance clause guarantees that you will continue to have access to your timeshare property after a default, and even if a third party makes claims against the developer or management firm responsible for your property.
When purchased wisely, timeshare properties open a world of opportunity to aspiring second-homeowners. One of the easiest ways to determine with whom to place your trust remains talking to family and friends who have invested in timeshare. Take your time in your decision, and you'll choose a well-managed property that will create a pleasant vacation for you and your family will enjoy for many years. And you'll have the assurance that if you trade your weeks for a property in another region of the world, your experience will be much the same.

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