The Role of Arbitration in Timeshare Disputes

Timeshares are among the most expensive, financially destructive products one can purchase. And, if you were tricked or defrauded into purchasing a timeshare, you might be thinking that you should hire a lawyer. But before you do that, you should learn a bit about arbitration and the role of arbitration in timeshare disputes.

Arbitration is a legal process that many timeshare developers prefer to use instead of fighting in a court of law. It’s usually cheaper and has fewer rules, which is good for a large company trying to save on its legal bills. It’s not so good for timeshare owners, who may find themselves thrown into a confusing — or even unfair — process.

You might think that this all sounds a little exotic and that it couldn’t possibly apply to your timeshare contract. However, virtually every single one of them has a mandatory arbitration clause. You can usually find it with its own signature block or spot for your initials, showing that you specifically agreed to it, even if it wasn’t pointed out to you at the time.

This article will take a look at what arbitration is, how it works, and the pros and cons of the process for timeshare owners. As the top timeshare exit company, Centerstone Group and its team of professionals have a wealth of knowledge about arbitration and how it works in these cases. We are happy to be a key resource of information for you on this tough subject.

How Arbitration Works

Arbitration is a method of alternative dispute resolution (also known as ADR). It is called “alternative” because it is a process that is sometimes used instead of a lawsuit in court, and it is a popular subject that is taught in law schools across the country.

The idea behind arbitration is that, instead of fighting in court for years, two parties with a dispute will find a third-party arbitrator who is often, but not always, a judge or lawyer. These arbitrators often work with well-known ADR companies, like JAMS ADR or the American Arbitration Association (AAA).

After an arbitrator is found, they will privately hear the dispute and give a binding legal decision. There may or may not be sworn depositions of witnesses or other discovery. The arbitration rules are supposed to be entirely up to the parties, who can agree on the best way to present their case.

While this might sound nice in theory, arbitration proceedings are often not nice in the real world. When you see arbitration in these kinds of cases, you see that big companies (like timeshare developers) often force their customers to sign contracts that contain arbitration clauses, also known as “mandatory arbitration agreements.”

Therefore, just by buying a timeshare and signing a contract with an arbitration provision, you might have already agreed to sign away your right to sue the developer in court. Sometimes, that also means that you might not even be able to join a class action lawsuit.

If you think that sounds unfair, you’re not alone. Sadly, though, United States arbitration laws — like the Federal Arbitration Act (FAA) — are strict, and the Supreme Court has regularly upheld the use of arbitration in consumer cases.

What Is the Role of Arbitration in Timeshare Disputes?

In timeshare cases specifically, arbitration clauses are used by developers to quickly dispose of legal claims by timeshare owners. To be clear, owners don’t always lose in arbitration. But the fact is that companies like Wyndham or Disney, who are repeat and frequent users of the process, will always have an advantage over timeshare owners.

Because arbitrators (the people who decide the cases) are neutral third parties who are usually smart people, they will try to be fair. Therefore, if you have been defrauded by a developer or if they did something illegal, you may be able to get a judgment in your favor. 

In most cases, you will also be able to have a lawyer help you with the arbitration. Although you can go into arbitration without a lawyer, this would likely be a mistake. Arbitrations are hard enough with representation, and owners without a lawyer will probably lose. For this reason, Centerstone Group often refers owners going to arbitration to experienced lawyers who can help them get the best possible result from the process.

Challenges and Limitations of Arbitration

As you’ve probably guessed, there are challenges and limitations to the arbitration process.

For one, the process will be difficult and not conducted in the public eye like a lawsuit would. Unlike a court, which is a public place that can be overseen by your local government, arbitrations happen behind closed doors, in offices and conference rooms.

In fact, depending on the contract you signed, you may not even be able to call witnesses or present evidence at an arbitration. This secrecy, restrictiveness, and lack of accountability usually make lawsuits a better option for timeshare owners.

If you lose the arbitration, you can expect to get a judgment against you from the arbitrator for costs or even attorney fees! (Arbitrators usually charge an hourly fee to both parties, and you may have to pay the developer’s half of the fees if you lose.) This judgment — which can easily be thousands of dollars — can then be enforced in a court of law against you, adding to the mountain of debt your timeshare has already caused.

Another problem with arbitration is that, if you get a bad or biased decision from the arbitrator, it is very hard to appeal. Generally, an appeal will only work in very limited circumstances, like where an arbitrator blatantly ignores the law. This is very different from a lawsuit, where you would be able to bring a bad decision to a court of appeal for review.

Don’t Let Your Timeshare Developer Decide What’s Right for You

The bottom line about arbitration in timeshare contracts is that it is a legal process that was designed and stuck into your contract to help the developer, not you. Unfortunately, the role of arbitration in timeshare disputes is that it’s a way for timeshare companies to save money on legal fees and stack the deck in their favor. 

An arbitration agreement is only going to make things harder for you, so it makes sense to avoid the arbitration process when you can.

Fortunately, Centerstone Group is experienced in a variety of timeshare exit strategies that don’t require arbitration. We can handle contractual cancellations, transfers, or even force exits using our proprietary pressure campaign. And, if you need legal advice, we can put you in touch with a timeshare attorney or law firm that will be able to give you solid legal advice.

We are the premier timeshare exit company, with an A+ rating from the Better Business Bureau (BBB) and a 4.8-out-of-5-star rating from our clients.

Contact us today so we can review your case in a free consultation.