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Forced Arbitration in Timeshare
Are you facing forced timeshare arbitration? Find out what we can do to help you. Schedule a free consultation now!
Time Share Arbitration
Timeshares involve shared ownership of vacation property to be enjoyed over time. Many vacationers are desperately looking for ways to exit their timeshare. The accumulating maintenance fees, unresponsive behavior from the resort developer, and the thoughts of an unappealing timeshare property quickly turn the purchase into a nightmare.
Arbitrations may sound like a rational approach when it comes to conflict resolution, but there may be better approaches for timeshare disputes. Timeshare buyers must understand its implications under the contract, especially if they have been fraudulently induced into purchasing a timeshare product.
Mandatory Arbitration Agreements: Hidden in the Fine Print
The cancellation process for timeshare properties can be complicated for consumers who are unhappy with the property. When clients attempt to cancel their timeshare contract and seek legal recourse, the resort developer informs them of the fine print in the written agreement. This clause includes a mandatory arbitration clause that prevents consumers from seeking legal redress in a court of law.
According to the clause, all legal disputes arising from the contract must be resolved by arbitration. A private arbitration will usually be set up by the timeshare company, which will choose the arbitrator and venue, and you will share the costs.
In general, binding arbitration does not allow appeals. You may find yourself facing a biased, confidential hearing that lacks judicial safeguards and limits your ability to argue your case instead of a transparent, public hearing with evidentiary requirements. Confidentiality and a lack of documentation enable companies to settle dishonest contracts privately.
Most buyers are unaware that arbitration clauses in timeshare contracts automatically waive their right to access the courts. If you are considering purchasing a timeshare, make sure you consult a knowledgeable attorney in Las Vegas.
Current Arbitration Laws
Arbitration is an alternative dispute resolution process that resolves disputes outside the judicial system. Arbitration awards represent the binding outcome of disputes and are determined by one or more arbitrators.
Arbitrators are independent, impartial third parties who make decisions that both sides agree upon to resolve disputes between opposing parties. The American Arbitration Association (AAA) or private parties can appoint arbitrators.
Arbitration agreements are governed by the Federal Arbitration Act (FAA) and administered by the American Arbitration Association under its Consumer Arbitration Rules.
According to section 2 of the FAA, arbitration agreements are enforceable except when revoked on legal or equitable grounds. Section 2 aims to prevent unfair arbitration contracts from being enforced. Consequently, if there are grounds to invalidate any contract, then an arbitration clause could also be invalidated.
While parties attempt to avoid mandatory arbitration under this provision, the Supreme Court continues to enforce arbitration agreements.
Arbitration Regulatory Bodies
Timeshare consumers with genuine complaints about unethical sales tactics may turn to the Consumer Financial Protection Bureau (CFPB). The CFPB proposed a new rule that allowed aggrieved consumers to bring a joint class action against service companies irrespective of forced arbitration clauses. However, the rule was overturned by the US Congress.
Are Mandatory Arbitration Clauses Bad?
Mandatory arbitration clauses strip away the consumers’ statutory rights, thus making consumer protection claims unenforceable. It makes provision for all arising disputes to be settled exclusively through individual arbitration. However, arbitrators push for unconventional solutions and do not always follow the law.
The Arbitration Process
Timeshare contracts often contain forced arbitration clauses that allow timeshare companies to choose arbitrators, create lists of arbitrators, or choose the arbitration organization. The timeshare resort company hires a private arbitrator to handle these mandatory arbitration disputes, and the arbitrations are conducted privately.
This means that the process is likely to be biased toward the company. Generally speaking, the buyer will find a jury trial more beneficial to their case. In addition, the consumer has to share in the arbitration fees, which may be more than the amount paid in other consumer claims.
Arbitration Agreement: Class Action Lawsuits
Class action waiver clauses are usually included in arbitration clauses, which allow companies to proactively squash claims against unfair, discriminatory, and illegal practices.
Timeshare contracts contain these clauses to limit their liability, allowing them to avoid class actions and, thus, avoid civil rights enforcement.
Review of the Arbitration Award
The Federal Arbitration Act limits judicial review of arbitration awards to ensure transparency and impartiality of the arbitral process. Hence, arbitration hearing decisions are rarely reviewed by the courts.
A court may review arbitrators’ awards if the arbitrator seems to have substituted their judgment for that of the parties, the decision was not drawn from the contents of the contract, the award contains a substantial error, and the award is against public policy.
Compelling Arbitration
Where a customer refuses to participate in the arbitration procedure, the company can petition the federal court by filing a motion to compel arbitration because the agreement requires that all claims stemming from the contract be resolved through arbitration.
When presented with a motion to compel arbitration, the courts ask two questions: whether there is a valid arbitration agreement and whether the particular dispute falls within the terms of that agreement.
Effects of a Void Arbitration Clause
When a forced arbitration clause is found to be invalid, the timeshare purchaser is no longer obligated to arbitrate and may choose to bring the claim in court.
Forced Timeshare Arbitration? It’s Easy to Get Help From Skilled Attorneys!
The timeshare law field is a niche in real estate law. Our timeshare lawyers will examine both the contract and the laws that govern their interpretation and arbitration in order to give you a comprehensive analysis of your case.
Many people need help understanding their legal options due to the legal jargon contained in complicated timeshare agreements. Therefore, you must seek the advice of a licensed timeshare attorney if there is a dispute over your timeshare contract.
Over the years, we have helped countless clients get out of unfair timeshare contracts. If you have been forced into arbitration or you oppose it, we can assist you in protecting your legal rights. You can rely on us for assistance in navigating and terminating timeshare contracts and ensuring your rights under timeshare collection laws.
Get a free consultation with Timeshare Defense Attorneys if you want to benefit from the steady hand of a legal professional.
