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The Parts of a Timeshare Contract and What They Mean for You

Timeshare contract: magnifying glass on a contract

In the classic film Willy Wonka and the Chocolate Factory, Sam Beauregarde has a low opinion of contracts, remarking that they are “strictly for suckers.” This is a bit silly — you use contracts every day, and we need them in a functioning society. But Sam’s point does make sense in the context of unfair contracts, like those you find in vacation ownership.

 

Even a brief search on the internet will show you how many people are unhappy with their timeshares. You might wonder why so many people continue to keep them. The answer is that timeshare contracts are among the most draconian, harsh, and unfair contracts that exist.

 

You might have already known this, but you might not understand why timeshare contracts are so bad. While they are usually not illegal scams or unconscionable, they are still heavily tilted in favor of timeshare developers. This means that, when dealing with a resort or trying to cancel your timeshare, you will almost always be at a disadvantage.

 

In this article, we will take a look at provisions that you are likely to see in most timeshare contracts. We’ll explain what they mean, how they work, and what you can do to get yourself out of a timeshare contract if you are unlucky enough to be stuck in one.

 

Description of the Timeshare

Timeshare contract: toy house and a Deed contract

No matter what the salesperson promised you in that high-pressure sales presentation, what you’re buying will be set down in the contract. In fact, even if you were promised something different in the meeting, only the written contract is enforceable by virtue of a standard integration clause, which says that what is written in the contract reflects your actual understanding of the sale.

 

The contract itself will state exactly what you are buying. There are several types of timeshare property that your contract could grant: 

 

  • A fractional real estate interest (or deeded timeshare interest) in a condominium for a fixed-week timeshare
  • A floating week that can used for either a specific condo or a particular resort
  • A vacation club membership (often in the form of “points”) that you can theoretically use to book time at a number of different timeshare resorts

 

When you are trying to cancel a timeshare contract, you might not think it matters exactly what the legal nature of your interest is. But this can make a lot of difference. Generally speaking, having an actual real estate interest is better than simply having a vacation club membership. (Though even timeshare interests are not that valuable compared to other real estate interests.)

 

Your Obligations and What Happens If You Don’t Pay

Lawsuit form

After you understand the exact legal nature of your interest, the second most important thing to understand is the ongoing costs of timeshare ownership. You probably already know that you are paying too much, but you need to know exactly what amounts you are paying and where they come from in the contract.

 

For example, there will be a provision in your timeshare contract that requires you to pay annual maintenance fees, and it will set an amount for those fees. (It will likely also tell you that those fees will go up a certain percentage every year in perpetuity.) 

 

You’ll also see separate paragraphs for costs like HOA and special assessments for things like repairs or property upgrades. There may even be fees for things like renting your timeshare or listing it on the timeshare resale market.

 

When figuring out exactly what you have to do under the timeshare contract, also be looking for the resort developer’s remedies that they can use if you fail to pay. The contract will often give timeshare companies very broad rights to come after you. This can include foreclosure on your interest or even suing you for a money judgment.

 

Though it’ll be unpleasant, learning about all the bad things a timeshare company can do to you is a crucial step. You can’t begin to get yourself out of a bad situation until you learn exactly what weapons the company has against you. This will also help you to know when the company is bluffing or even takes the wrong position.

 

Forum/Venue Selection Clauses

 

Building of the Miami Beach Courthouse on Washington

Buried deep in the middle of your timeshare contract will be a paragraph you may not understand. It might be called “choice of law,” a “venue selection clause,” or a “forum selection clause.” It might seem like legalese, but it can make a very big difference for how you protect your legal rights under a timeshare contract.

 

Normally, when a lawsuit is filed, it has to happen in a certain state that has jurisdiction over both the people in the lawsuit and the property at issue. These clauses stop you from filing a claim anywhere but one particular court (probably the one that is closest to the developer’s office).

 

Even worse, the clause might restrict you to only bringing claims under the law of a certain state. For example, let’s say you live in California, which generally has strong consumer protection laws. You buy a timeshare agreement from a company in Texas, which usually has very pro-business laws. Let’s say that after signing your contract, you discover that a salesperson lied to you about what you were buying.

 

You sue in California court for fraud, but the timeshare company files a motion to throw out your case, pointing to a forum selection clause in your contract that states:

 

“The state courts of Texas shall have exclusive jurisdiction and venue over any dispute arising out of or related to this Timeshare Contract, and the parties hereby consent to the jurisdiction of such courts. The Parties further agree that this Timeshare Contract will be governed by and construed in accordance with the laws of the state of Texas.”

 

Given this language in the contract, the California court would probably throw your case out and force you to pay court costs for the timeshare company without even ruling on the merits of your case.

 

It’s also possible that your timeshare contract could have an arbitration or mediation clause that requires you to forego any court case in favor of a private dispute resolution conference with the developer in a location of their choice. 

 

This might sound like a cheaper, better option, but rest assured that the developer chose it because it will probably end up better for them. For example, the terms of the contract might require you to travel to a resort in Orlando, Florida, to arbitrate your case with the company, imposing further costs that you can’t afford.

 

Given the serious problems that these clauses can cause, it’s important to find them in your contract and understand what they mean before your timeshare developer uses this against you.

 

Cancellation/Rescission Clauses

 

Delivery man handing an envelope to a woman

Finally, keep in mind that most states require timeshare contracts to include “cooling off” provisions that allow you to cancel your agreement within a certain amount of time after you have signed. These provisions usually require you to write and send a cancellation letter within the rescission period in order to take effect.

 

As other contract terms, you have to make sure that any cancellation letter you send complies both with the applicable law and the words of the agreement. If it doesn’t, there is a good chance that your letter won’t work, and you will then be stuck without a cancellation option.

 

Worried About Your Timeshare Contract? Let Us Help

As you can see from even this brief discussion, timeshare purchase contracts are full of tricks and traps for unwary timeshare buyers. You can certainly try to get out of a timeshare contract by yourself, but if you fail, you will likely make your legal and financial situation even worse.

 

A better solution is to plan your escape with a timeshare exit company like Centerstone Group. We are professionals with collective decades of experience in the timeshare industry, and we use our knowledge to help timeshare owners get legal, ethical exits from their timeshare properties.

 

Sometimes that exit is a well-crafted and focused cancellation letter. Other times, we may use our proprietary pressure campaign to convince a timeshare company to change its mind. And, if your case does need legal action, we have legal partners we can work with to get you the best, and most fair-priced, resolution possible.

 

We are an A-rated company that is accredited by the Better Business Bureau (BBB). Read our client’s reviews and testimonials, then contact us for a free consultation and case evaluation.

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