Legal formalities that you should be aware of before getting into a timeshare
Timeshares come along with promises of lavish vacations at a cost that appears to look like a “one-time” payment. The reality is far from it sometimes. While it actually may prove to be a helpful investment for some, others usually find themselves stuck in the complex contracts drawn by contractors or resort owners with unreal maintenance fee dues that keep skyrocketing each year. This easily turns a timeshare from a lovely holiday home into a financial burden in no time. And this is why you need to keep track of some legalities before stepping into a timeshare.
1. Know your rescission policies: Every state has its own ‘opt-out’ clauses for owners of timeshares. These policies differ in terms of days that are allowed for you to cancel your timeshare, refunding rules, receipts, etc. Knowing these legal policies is extremely crucial for you to know before you sign your contract as you may end up getting stuck with a timeshare if you want to cancel it post the rescission period.
2. Foreclosure: It’s important to understand that buying a timeshare is not like a real estate transaction, it does not count as an investment – it is more like paying upfront for a lifelong vacation home. This also means that if you default on a loan that you have taken for making a payment on your timeshare, you will face foreclosure which will further affect your credit score. Aside from loans, you need to be careful about other financial matters related to your timeshare – this includes your taxes, annual maintenance fees, etc.
3. Maintenance fee: An important part of buying a timeshare is the maintenance costs that you are required to pay annually. These costs aren’t fixed and could change every year based on inflation, maintenance needed, the addition of facilities, etc. However, you are legally bound to pay this fee, and refusal to pay this can land you into legal trouble.
4. Ownership: The rules of ownership can be different if you have a ‘deeded ownership’. This states that rent, share or pass the property out to the next generations as opposed to the ‘right to use’ ownership which has different restrictions attached to it.