Timeshare Paradise or Timeshare Hell?

Timeshare Paradise or Timeshare Hell?

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By Rod Davis, CEO BBB Serving Southeast Florida and the Caribbean

Our sister BBB in St. Louis recently conducted an in-depth study into timeshares and their findings provide insight into the pitfalls to avoid. Unlike most major purchases, a home, a car or even deciding which college to attend, most consumers polled in the study indicated they had not planned on making a purchase and were only attending for the vacation or other incentive provided as the trade for sitting through a timeshare presentation. As a result, most consumers had not researched the issue and were not prepared to make an informed decision.

One of the factors we see contributing to consumer complaints coming to BBB is a lack of understanding about some aspect of a purchase. For example, in the moving industry, consumers don’t know how their move will be priced, the difference between a binding and non-binding offer and that without additional coverage, any damaged goods will only be reimbursed at 60 cents on the pound. The very best moving companies include a thorough education process for consumers during their initial discussions to make sure consumers are active and informed partners with the mover and avoid potential misunderstandings. 

The St. Louis BBB report recommends the following for consumers:

  • Do your research before making a purchase
  • Don’t give in to high pressure sales pitches
  • Take your time to make any decision
  • Fully understand the total cost of a purchase (e.g. initial purchase price, closing costs, annual fees). Additionally, if you plan to be part of a network exchange program include the cost of the annual membership fee for the network. 
  • Compare the cost with other options (e.g. what you would spend for a similar vacation package each year, buying a timeshare on a secondary resale market, etc.)
  • If you have second thoughts act quickly. Each state and country will have different terms to negate a purchase and make certain you know the law where a purchase is made. 

The Federal Trade Commission also provides great background information that helps consumers understand what they are buying when they purchase a timeshare:

Two basic vacation ownership options are available: timeshares and vacation interval plans. The value of these options is in their use as vacation destinations, not as investments. Because so many timeshares and vacation interval plans are available, the resale value of yours is likely to be a good deal lower than what you paid. Both a timeshare and a vacation interval plan require you to pay an initial purchase price and periodic maintenance fees. The initial purchase price may be paid all at once or over time; periodic maintenance fees are likely to increase every year.

Deeded Timeshare Ownership. In a timeshare, you either own your vacation unit for the rest of your life, for the number of years spelled out in your purchase contract, or until you sell it. Your interest is legally considered real property. You buy the right to use a specific unit at a specific time every year, and you may rent, sell, exchange, or bequeath your specific timeshare unit. You and the other timeshare owners collectively own the resort property.

Unless you’ve bought the timeshare outright for cash, you are responsible for paying the monthly mortgage. Regardless of how you bought the timeshare, you also are responsible for paying an annual maintenance fee; property taxes may be extra. 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. Timeshare owners elect officers and control the expenses, the upkeep of the resort property, and the selection of the resort management company.

“Right to Use” Vacation Interval Option. In this option, a developer owns the resort, which is made up of condominiums or units. Each condo or unit is divided into “intervals” — either by weeks or the equivalent in points. You purchase the right to use an interval at the resort for a specific number of years — typically between 10 and 50 years. The interest you own is legally considered personal property. The specific unit you use at the resort may not be the same each year. In addition to the price for the right to use an interval, you pay an annual maintenance fee that is likely to increase each year.

Within the “right to use” option, several plans can affect your ability to use a unit:


  • Fixed or Floating Time. In a fixed time option, you buy the unit for use during a specific week of the year. In a floating time option, you use the unit within a certain season of the year, reserving the time you want in advance; confirmation typically is provided on a first-come, first-served basis.
  • Fractional Ownership. Rather than an annual week, you buy a large share of vacation ownership time, usually up to 26 weeks.
  • Biennial Ownership. You use a resort unit every other year.
  • Lockoff or Lockout. You occupy a portion of the unit and offer the remaining space for rental or exchange. These units typically have two to three bedrooms and baths.
  • Points-Based Vacation Plans. You buy a certain number of points, and exchange them for the right to use an interval at one or more resorts. In a points-based vacation plan (sometimes called a vacation club), the number of points you need to use an interval varies according to the length of the stay, size of the unit, location of the resort, and when you want to use it.

Now that you know a little bit about what you don’t know, I hope you (and all consumers) will take time to research and only make informed decisions when confronted with a timeshare opportunity. If you can’t walk away from the deal the day it is presented and get the same deal the next day or a week later, then the business is relying on pressure rather than the true value of a product to make the sale.