A timeshare, also known as vacation ownership, is a lifetime commitment to pay for annual trips to the same resort or family of resorts. you pay up front or finance a lump sum up front plus annual maintenance fees. upgrade or change fees come into play if you want to stay in a different place than you originally paid for. the typical trip is one week.
how timeshares work
There are two types of timeshare contracts available, which will describe who owns the property and how it works for you to visit their timeshare.
shared deeded contract
A deeded timeshare contract divides ownership between you and everyone else who owns the timeshare. Usually, each person is designated a specific week or set of weeks in which they can use it. A deed of stock also gives you the right to transfer ownership by sale, gift, or bequest.
shared rental or right of use contract
A timeshare or right-of-use lease divides the use of a property between you and everyone else who pays for the timeshare. The lease agreement entitles you to use the timeshare for a certain number of years. does not give you the right to sell or rent your timeshare or give you any real estate interest; does not give you any ownership rights.
types of timeshares
The timeshare industry began in the mid-1970s as a way to get rid of glut of condominiums, according to the American Tourism Development Association (ARDA). The types of timeshares have evolved over the 50-year history of the industry.
fixed week timeshare
fixed week timeshares are the original timeshare. this type guarantees you specific dates in a specific place (and sometimes even a specific drive) every year. it is less flexible but good for people who like routine and stability. a fixed week timeshare means you won’t have to fill in for your desired date or location with other travelers.
floating week timeshare
This type of timeshare emerged in the early 1980s to offer timeshare owners more options. It allows owners to use their timeshares for a week during a given season, or possibly at any time of the year. however, desired weeks may be more difficult to book with this system.
It is possible to be a biennial owner of a weekly timeshare, which means you own a week that you use every two years.
points system timesharing
Introduced in the mid-1970s, the points system gives timeshare owners a certain number of points per year, or every two years, which they can redeem for stays at certain properties each year. Just like frequent flyer miles or hotel points, the number of timeshare points you’ll need to redeem for a stay depends on the resort you want to stay at, its location, the size of your room, and the dates of your stay. . whatever is most in demand will cost you more points.
You’ll buy a certain number of points in advance based on how many you think you’ll use each year. each point costs a certain amount, which varies with different timeshare companies, so your cost will depend on how many points you buy and where you buy your points.
how much does a timeshare cost?
answering this question is like answering the question “how much does a hotel room cost?” or “how much does a plane ticket cost?” Many factors go into the price. One of the most important factors is who you buy your timeshare from: the resort developer himself (direct purchase) or an existing owner (resale purchase).
arda says the median sale price for a one-week timeshare was $22,942 in 2019. However, in a survey the association released in 2017, 47% of timeshare owners said they had spent less than $10,000 on your timeshare. so timeshare prices may vary. Of course, the surveyed owners also purchased their timeshares in different years. financing the purchase will also increase the cost.
The resale price of a timeshare can be as low as $1, because people want to get rid of them when they tire of their vacation options or ongoing fees. If you get a timeshare for $1, then you are potentially saving $10,000 or more. so what’s the problem?
First, you should be extremely cautious about who you buy from and whether ownership passes to you. timeshare scams are big business. Second, you need to understand what use restrictions the resort places on resale buyers. You may not enjoy the same benefits as a timeshare owner who buys outright; however, the savings may be worth it.
All timeshares come with annual fees, which may also be called maintenance fees, homeowners association (HOA) fees or dues. These fees cover property taxes, property insurance, property management, landscaping, and upkeep and improvement of rooms, common areas, and grounds.
In 2018, timeshare maintenance fees averaged $1,000 per year, according to arda. over the last decade, they have increased by 5% a year, on average, which is about twice the rate of inflation. rates are lower for studios and higher for three-bedroom units.
In addition to predictable annual fees, you may be liable for unpredictable special assessments. If the resort incurs an unusually large property expense (from a hurricane or flood, for example) and does not have the reserves to cover it with the owners’ annual dues, it will divide that expense among all owners according to an equitable model such as number of points they have. the more points you have, the higher your special evaluation.
Some timeshare owners have received a special assessment or an increase in annual fees due to covid-19.
If you want to change your usual timeshare for something else, like a different location or a different type of vacation (in an RV instead of a condo, for example), you may have to pay an additional fee.
calculating the long-term cost of a timeshare
Before you buy any timeshare, you need to calculate your long-term ownership costs. then divide that by the number of vacation nights you are purchasing. the actual cost per night may not seem like a bargain in the end.
here is an example without financing or factoring in price increases and inflation:
- startup cost: $25,000 cash
- annual fees: $1,000
- closing costs: $700
- holiday nights per year: seven
- number of years: 30
- total cost: $25,000 + $30,000 + $700 = $55,700
- total holiday nights: 210
- Total cost per vacation night: 55,070 usd / 210 = 265.23 usd
- You may be guaranteed time at your home resort each year, depending on the timeshare you purchase.
- With points-based timeshares, you can have the flexibility to deposit or borrow points when you want to skip a year or splurge.
- You may be able to visit partner resorts if you don’t want to go to your home resort every year.
- properties often offer resort amenities such as spacious rooms, luxurious pools, in-room laundry, and fully equipped kitchens. over 60% of timeshare rooms are two-bedroom units averaging 1,140 square feet.
- For traditional timeshares where you actually stay in the same unit each visit, you can enjoy the benefits of vacation home ownership with far fewer responsibilities (but also less control over ownership).
- You can receive discounts on attractions, restaurants and shopping while visiting your timeshare.
- You are not necessarily guaranteed specific dates at your home resort each year, and chosen dates can be booked quickly.
- The dates you book can affect the number of points it costs to use your timeshare, and you may have purchased too many or too few points to take your ideal annual vacation.
- During the sales process, it may not be clear how much the timeshare costs and what you will get for your money.
- timeshares are hard to sell.
- maintenance fees tend to increase every year.
- You can lose money if you need to reschedule your timeshare vacation and can’t rebook within a year.
- You may lose your annual timeshare allowance if you cancel at the last minute.
- Your destination options are limited to what the timeshare program and its affiliate exchange program offer.
- A timeshare can become part of your estate when you pass away, creating a headache and financial burden for heirs who don’t want it.
- give them back their property and get rid of their obligation in as little as 60 days
- get out of your contract and take three more years of vacation without maintenance fees
- selling their timeshare with your help
- transfer your property to an immediate family member free of charge
In the example above, where you pay cash for your timeshare, it may be a reasonable use of your money. only you know what you typically spend per night on accommodation when you travel. If you’re really going to vacation at the resort every year and can’t get enough of it, buying a timeshare could be worth it eventually. A 2016 estimate by Consumer Reports found that owning a timeshare would begin to pay off after 13 years.
Alternatively, you can enjoy the benefits of a timeshare without the obligations of renting someone else’s timeshare. this way, you won’t be bound by a lifetime of annual fees and destination limitations.
right to cancel
Through what is called the right of rescission, you have three to ten days to cancel after purchasing a timeshare if you change your mind. the number of days varies by state. Consumer Reports recommends canceling in writing and sending the letter by certified mail, return receipt requested.
One thing you should check during this period, if you didn’t before you buy, is if there have been any lawsuits filed against the timeshare company. Any indication that the company is misleading current or potential owners, defrauding timeshare owners, or facing financial problems should be a red flag.
pros and cons of timeshares
pros of timeshares
cons of timeshares
how to get rid of a timeshare
Here are four possibilities you might consider if you’re thinking about getting rid of a timeshare. learn which options are most viable and what to look for.
have the timeshare company remove it
Timeshare companies want you to contact them directly to get out of your timeshare. The Coalition for Responsible Exit, a division of Arda, provides links to a web page on each of the major timeshare resort developer sites with information on exiting your timeshare. there is also a search tool if you want to find a property by name.
It is very likely that your timeshare company will offer you different options to try to convince you to stay, such as moving to a lower points level that will cost less, taking advantage of a timeshare exchange program or banking points to a future year. .
According to the Wyndham Certified Exit website, options for exiting your timeshare include:
If you give your timeshare to a family member or someone else, you must be willing to take on the annual fees.
While technically not a way to get rid of your timeshare, renting it can relieve you of some of the costs of timeshare ownership. You may be able to rent your timeshare through your timeshare resort company or through a third party rental company. expect to pay a fee to use the rental service. rental restrictions vary by developer.
hire someone to bail you out
The timeshare disposal team says it can help owners get rid of their timeshares. the fee can be several thousand dollars and the process can take years, according to their website.
However, the Washington State Attorney General filed a complaint against this company in February 2020 for unfair and deceptive practices. the company “has contracted to provide 38,000 timeshare departures. of those, 17,000 are still pending, more than 8,000 for two years or more, and more than 4,600 for three years or more,” according to the state’s news release about the filing. however, in 2016, the company claimed to have a 99% success rate.
Other timeshare cancellation companies that were sued in 2020 for allegedly defrauding consumers include vacation consulting services llc, vcs communications, llc, the transfer group, llc, and real travel llc.
See the Resort Owners Coalition press releases for more information on formal complaints against timeshare removal companies. be careful who you consider hiring and check their reputation thoroughly using the better business bureau (bbb), timeshare message boards and other sources.
arda may not be a neutral party, but they care about the reputation of the timeshare industry. encourage timeshare owners to use the Resort Owners Coalition’s Advertising and Resale Vendor Directory, which lists only timeshares, loyalty resales, red week, and various other vendors.