Legal Requirements With Owning a Timeshare

Legal Requirements With Owning a Timeshare
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Buying a timeshare can give you the opportunity to enjoy vacations for decades to come or, in some cases, for as long as the building stands. However, it also locks you into a legal contract that saddles you with obligations that you will have to meet, whether or not you feel that it's in your best interest. As such, it's important to carefully review the terms of your timeshare purchase agreement and make sure that you're willing to make a commitment that can be well beyond the length of any loan that you take out to finance your purchase.

Right of Rescission

One of the most important legal obligations that comes with a timeshare isn't incumbent on you -- it applies to the developer that sells you the timeshare. For timeshares within the United States, you have a right of rescission, meaning that you get a cooling off period during which you can cancel your timeshare purchase contract. The length of time and the manner in which you can cancel the contract varies by state, but this right gives you the ability to get out of a timeshare purchase that you realize you shouldn't have made.

Payment of Annual Fees

Owning a timeshare property is like owning any other property. Every year, you have to pay your property taxes. You also usually have to pay something to keep it up. When you have a timeshare, these expenses get passed on to you as annual dues or maintenance fees. For as long as you have the timeshare, you'll have to pay them. Like a condo, if you don't pay the fees, you can be foreclosed on by the timeshare developer or manager. The developer also can pursue you with traditional collection methods for any unpaid fees.

Special Assessment Payments

You don't only have to pay fees, though. While most timeshares carry insurance and have reserve funds that pay for major repairs, sometimes the unexpected occurs. When the complex incurs a large and unexpected expense, it can pass the cost of that expense to the owners through a special assessment. You're legally obligated to pay those special assessments, just like you are the maintenance fees. With many timeshares being located in areas that are prone to violent weather, this is a real risk.

Giving Up Ownership

Some timeshares are structured like regular real estate where you have a deeded interest in a specific unit for a specific period of time. On the other end of the extreme are properties where you don't really own anything. Right-to-use timeshares are extended leases where you pay in advance for the ability to use a property or a group of property's facilities. With these properties, you'll be required to stop using your timeshare investment when your lease expires. The developer can then charge you more to extend your lease, sell it to someone else or do whatever else it wants with the property.