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Key Clauses to Look for in a Timeshare Contract
What are the key clauses to look for in a timeshare contract? Timeshare Defense Attorneys has resources that help answer this kind of questions. Contact us for consultation.
Description of the Timeshare
Timeshare presentations are often high-pressure sales events. Potential customers are exposed to lengthy presentations by commission-driven, trained salespeople.
Buying a timeshare vacation property at a holiday resort is expensive. It’s a good idea to take your time to fully consider all aspects of the contract you are expected to sign.
Time spent considering your timeshare contract will save you a lot of time and frustration in the future. It may even help you avoid a scenario where you ask yourself, “What happens if I stop paying my timeshare?”
At Timeshare Defense Attorneys, this is one of the most repeated questions we receive. Timeshare ownership is not for everybody. However, for some people, it is a good fit. If you are one of these people, it is vital that you thoroughly examine the contract you are presented with and that you do not sign anything until you understand the entire agreement.
In this article, we will look at standard timeshare clauses. We will examine what they mean, what you should look out for, and, most importantly, clauses about your rights and obligations under the contract.
Why Understanding Timeshare Contracts Are Important
In Latin, caveat subscriber means “let the signer beware.” This means that you should only sign a contract after understanding it in detail. This is even more important when it comes to timeshare contracts.
A timeshare contract often does not reflect what was said at the presentation. Promises are made, and statements are made. Specific issues are purposefully underplayed or not mentioned. Salespersons typically want you to sign on presentation day so that they can earn a fat commission.
Remember one important fact. The clauses outlined in the contract are the only ones that count regarding your timeshare rights and obligations. When you sign the contract, you are taken to understand every term you have agreed to.
So, it’s important to be aware of the tactics used to try and influence you to purchase a timeshare. Before signing any paperwork, do your research, read the contract carefully, and ask questions.
The responsibility for understanding the contractual terms rests solely with you. Hence the Latin warning.
In light of this, let’s take a closer look at the key terms of a timeshare contract.
Critical Terms for a Timeshare Agreement
A timeshare agreement typically contains several standard clauses and terms. Unfortunately, the timeshare industry is renowned for some of the most unfair contracts.
After reading each clause, ask yourself – what could go wrong with it? By the end of the contract, you should be able to determine whether you can live with it.
The Description of What You Are Buying
Not all timeshares are equal. Timeshares are typically structured as shared deeded ownership or shared leased ownership interest. Timeshares can be classified into the following categories:
- Deeded timeshare: Deeded timeshare interests are fractional ownership rights in a resort for a fixed-week stay. The owner of this type of timeshare owns the week through a deed. Due to its deeded nature, the owner is able to sell, rent, or give away the timeshare if they choose.
- Right to use timeshare: Owners of right to use timeshares do not receive a deed. However, they do receive a contract detailing how long the right to use the timeshare is valid. Right-to-use leases typically end after 30 to 99 years, depending on the original contract. The resale market, however, allows owners to sell their shares.
- Leasehold timeshare: A leasehold timeshare does not have a permanent ownership interest and has an expiration date. These timeshares offer the same rights and benefits as deeded and right to use timeshares.
The type of timeshare you are purchasing is essential. Don’t assume you are buying a deeded timeshare (the most valuable option). Before signing a timeshare contract, have an experienced timeshare defense attorney review it for you if you are still unsure what you are getting.
All Costs Associated With the Purchase
Ignore what was said at the presentation about the costs of owning a timeshare. Scour the contract for all costs, especially the following:
The Full Purchase Price
The total initial purchase price must be clearly stated. Remember that this is your most significant obligation under the contract.
Maintenance Costs and Annual Increases
It is crucial that you understand precisely how much the annual maintenance fees are. The annual maintenance fee increase is usually specified in a clause. Make sure you are comfortable with future increases by calculating your maintenance fees in ten years.
Homeowner Association (HOA) Costs
You will also be liable for these ongoing costs in a timeshare contract. They include the following:
- Maintenance and upkeep of common areas
- Utilities and services
- Reserve funds for future improvements and major repairs
- Insurance for your unit or even common areas
- Administrative and management costs of running the HOA
- Other expenses, such as taxes
Developer Remedies Should You Fail to Perform
Look for clauses that give the timeshare developer remedies in the contract if you do not perform. You may be forced to pay maintenance or bond payments or be foreclosed upon if you do not. The developer can often sue you for a money judgment if you fail to perform.
Jurisdiction Clauses
Jurisdiction clauses can have severe consequences for you as a buyer. Jurisdiction clauses restrict litigation to a specific court. If this court is far from where you live, this can add significant unnecessary expense to any litigation you may consider.
Sometimes there are arbitration clauses. These clauses ensure that an arbitration process must be followed before the matter can be taken to court. Again these clauses typically favor the developer and can mean extra costs for you.
Cancellation and Rescission Clauses
Before you sign, knowing whether there is a cancellation or rescission clause is essential. This may be your only way out of the contract.
Rescission clauses only apply for a few days (the rescission period). Make sure that if you change your mind and wish to cancel, you do so within the time limit prescribed in the contract.
Also, ensure you rescind in a manner that complies with the exact process specified in the contract.
What Is a Timeshare Perpetuity Clause?
A timeshare perpetuity clause is a clause that states that there is no end to the contract. It may seem appealing to pass on the contract to your heirs, but be very careful – you hand down rights and obligations. Your heirs will likely want to avoid taking over your lifelong obligations.
How Can We Help?
Most people struggle to understand their timeshare contracts. They are written in legalese and are difficult to comprehend, never mind deciphering. At Timeshare Defense Attorneys, we believe you should always know what you’re getting into before signing anything.
We can assist you with the cancellation process if you’ve already signed up with a timeshare company and wish to exit a timeshare contract. If so, please contact us immediately, especially if you’ve just signed and changed your mind.
If you have yet to sign, submitting the timeshare contract to us for a contract review is a good idea. Our highly qualified and skilled timeshare defense attorneys deal with timeshare contracts every day. They will be able and willing to give you sound legal assistance.
Call us today for a free case evaluation.
