Developers design their timeshare purchase agreements to lock you into your timeshare so they can tap you for annual maintenance fees and other amounts for the rest of your life. In other words, timeshare contracts are designed to be unfair and a lifetime commitment. In extreme situations, they might be illegal. The question of timeshare contract legality, though, is complex and will be different in every case.
For example, if a timeshare salesperson persuaded you to sign a contract by defrauding you, the contract would be illegal. In some cases, the specific terms of an agreement might be so unfair that the law says they can’t be included in a contract. But because state laws differ regarding timeshares and contracts, it can be hard to know what is OK and what isn’t.
In this article, we’ll dive into the subject of timeshare contract legality, taking a particular look at parts of timeshare agreements that might be legally questionable. We’ll also look at some real-world legal fights over timeshare contracts. Finally, we will offer some guidance on challenging and getting out of onerous vacation ownership contracts.
Are All Timeshare Contracts Legally Enforceable?
No, not all timeshare contracts are legally enforceable. Some are and some aren’t. Keep in mind that timeshare companies have armies of lawyers writing contracts for them. They are very careful about using the law to get away with everything they can, just stopping short of illegal tactics. Sometimes, however, developers can cross the line. Here are a couple of examples of contracts that won’t pass muster under legal review.
1. Contracts Signed by Someone Without the Legal Ability to Do So
United States law generally requires that, for a contract to be enforceable, both parties have to know what they are doing. Even if a timeshare contract is otherwise legal, it isn’t enforceable if it is signed by someone who is under the age of 18 or someone who isn’t mentally competent to do so. For example, someone who has Alzheimer’s disease isn’t able to commit to a contract.
Being under the influence of mind-altering drugs could also render you incompetent to contract. Though alcohol presents a tougher question, as a general rule, if a person is so drunk that they cannot walk or speak, or they wouldn’t be served at a bar, they probably are not competent to contract.
Depending upon the circumstances and state law, a contract may be either void (meaning it could never have legally existed) or voidable (meaning that you have the option to either accept it or cancel it). In any of these cases, you will likely need legal advice from a real estate attorney or law firm regarding how to establish that the contract is not enforceable.
2. Contracts That Are the Result of Fraud
If someone lies to you in order to get you to sign a contract, that is known as fraud in the inducement. This might happen in the timeshare context during a sales presentation.
Imagine that you have told the salesperson that you do not wish to purchase a timeshare interest because you’re worried about being able to pay increasing annual maintenance fees.
She persuades you to sign by telling you that she will cap your annual maintenance fees, exchange program fees, and all special assessments for the timeshare property at $200 per year, something she cannot and will not do. Believing her, you sign the timeshare sales agreement.
In the above case, you were persuaded to sign the contract because the salesperson made a knowing misrepresentation of fact. As a result, your timeshare contract would be voidable, and you would need to seek professional or legal advice regarding a rescission of that contract from a lawyer or a firm like Centerstone Group.
What Are the Common Loopholes in Timeshare Agreements?
Apart from contracts that are either blatantly illegal or can be voided, there are also tricks in the contracts that are legal and can help out both sides, though they almost always favor the developer, not the timeshare owner. Here are some things to look for in your contract.
1. Timeshare Cancellation Clauses
Most U.S. states have laws that allow timeshare buyers to cancel their timeshare contracts within a short period of time after they’ve signed. In most cases, that cancellation will allow you to get a complete refund of all money paid as well. (In some states, this window is known as a “cooling-off period.”)
But be careful. It’s important that you follow these clauses exactly. They usually require that you write a timeshare cancellation letter and send it to a particular address. (You should use registered mail or other documented delivery services to do it, so you can prove it was sent.) If you can’t prove that you followed the exact process listed in your contract during the amount of time provided, your cancellation won’t work.
If you’re within your cancellation period, Centerstone Group offers a free service advising consumers how to best execute a rescission. So if this is a tactic you want to use, you should speak to us as soon as possible.
2. Form Selection and Choice of Law Clauses
It’s likely that every modern timeshare contract has clauses that limit your ability to sue the company. Many of them will require any lawsuit you file to be in a particular place (like Orlando, Florida) or use a particular state’s law to determine your lawsuit’s result. These are tools that timeshare companies use to try and get the legal results they want if they are forced to go to court.
Note that your contract might not even select the law of anywhere in the United States. Some timeshares overseas, like those in Mexico, will use foreign law and mechanisms for resolving disputes. In that case, it’s even more important to have an expert by your side to help you handle a timeshare exit.
3. Mediation and Arbitration Clauses
Timeshare companies will also likely try to force you to give up the right to even sue them in court with provisions requiring alternative dispute resolution like mediation or arbitration. Though it might not be technically correct to call these “scams,” it’s hard not to feel that way when you find out that you can’t get your day in court.
While you may be able to combat these if you were fraudulently induced into the arbitration clause specifically, your chances are not good.
Two timeshare owners found this out the hard way when they alleged that the whole contract was the result of fraud but said nothing specifically about the arbitration clause. Unfortunately, the Nevada federal judge in that case was forced to send them to arbitration and close the court case.
How Can You Dispute an Unfair or Deceptive Timeshare Contract?
As discussed above, timeshare companies have a lot of tools they use to try and prevent you from fighting unfair timeshare contracts. This leaves you with a few options.
First, you can get a timeshare attorney and try your luck with the courts. That is exactly what some timeshare owners did in a Delaware lawsuit in which they alleged that Wyndham Vacation Resorts fraudulently induced them into signing contracts. But that route is expensive and time-consuming.
As you can see from the linked document, Wyndham filed multiple expensive motions to dismiss, which the owners had to fight against — and this was at the beginning of the lawsuit, long before a trial could even take place! Remember that timeshare companies have deep pockets and armies of lawyers working for them. As a practical matter, most timeshare owners just do not have the resources to fight back.
Second, you could try reporting the timeshare developer to the Federal Trade Commission or your state’s attorney general. These entities have an interest in consumer protection and stopping timeshare scams, though the help they may be able to offer may be limited to filing a lawsuit.
The third option you could take is a less legally rigid one. You can seek the help of a timeshare exit company like Centerstone Group to find a legal and ethical exit that is not as formal, expensive, and time-consuming as a lawsuit.
Centerstone Group will look at your specific situation and determine if you need a cancellation, a transfer program, or our proprietary pressure campaign. Starting with an expertised exit team is a good place to start because they can guide you on the best course of action and will know when the help of an attorney is needed.
Centerstone Group has helped thousands of timeshare owners, saving them millions of dollars, and currently enjoys a 4.78-out-of-5-star rating with the Better Business Bureau (BBB), which has also awarded us an A+ designation.
Seek Expert Help If You Have Questions About Timeshare Contract Legality or Want an Exit
Whichever route you choose to get out of your timeshare agreement or challenge timeshare contract legality, it’s important to talk to an expert and look at all your options before making a final decision. These contracts are detailed and complex, and timeshare developers have spent a lot of time making sure the odds are tilted in their favor, even in cases where their staff has used dishonest sales tactics.
Getting Centerstone Group on your side evens the playing field. We have decades of experience in the timeshare industry, so we know all the developers’ tricks and tactics. Contact us today for a free consultation, and we will see what we can do for you.
Developers design their timeshare purchase agreements to lock you into your timeshare so they can tap you for annual maintenance fees and other amounts for the rest of your life. In other words, timeshare contracts are designed to be unfair and a lifetime commitment. In extreme situations, they might be illegal. The question of timeshare contract legality, though, is complex and will be different in every case.
For example, if a timeshare salesperson persuaded you to sign a contract by defrauding you, the contract would be illegal. In some cases, the specific terms of an agreement might be so unfair that the law says they can’t be included in a contract. But because state laws differ regarding timeshares and contracts, it can be hard to know what is OK and what isn’t.
In this article, we’ll dive into the subject of timeshare contract legality, taking a particular look at parts of timeshare agreements that might be legally questionable. We’ll also look at some real-world legal fights over timeshare contracts. Finally, we will offer some guidance on challenging and getting out of onerous vacation ownership contracts.
Are All Timeshare Contracts Legally Enforceable?
No, not all timeshare contracts are legally enforceable. Some are and some aren’t. Keep in mind that timeshare companies have armies of lawyers writing contracts for them. They are very careful about using the law to get away with everything they can, just stopping short of illegal tactics. Sometimes, however, developers can cross the line. Here are a couple of examples of contracts that won’t pass muster under legal review.
1. Contracts Signed by Someone Without the Legal Ability to Do So
United States law generally requires that, for a contract to be enforceable, both parties have to know what they are doing. Even if a timeshare contract is otherwise legal, it isn’t enforceable if it is signed by someone who is under the age of 18 or someone who isn’t mentally competent to do so. For example, someone who has Alzheimer’s disease isn’t able to commit to a contract.
Being under the influence of mind-altering drugs could also render you incompetent to contract. Though alcohol presents a tougher question, as a general rule, if a person is so drunk that they cannot walk or speak, or they wouldn’t be served at a bar, they probably are not competent to contract.
Depending upon the circumstances and state law, a contract may be either void (meaning it could never have legally existed) or voidable (meaning that you have the option to either accept it or cancel it). In any of these cases, you will likely need legal advice from a real estate attorney or law firm regarding how to establish that the contract is not enforceable.
2. Contracts That Are the Result of Fraud
If someone lies to you in order to get you to sign a contract, that is known as fraud in the inducement. This might happen in the timeshare context during a sales presentation.
Imagine that you have told the salesperson that you do not wish to purchase a timeshare interest because you’re worried about being able to pay increasing annual maintenance fees.
She persuades you to sign by telling you that she will cap your annual maintenance fees, exchange program fees, and all special assessments for the timeshare property at $200 per year, something she cannot and will not do. Believing her, you sign the timeshare sales agreement.
In the above case, you were persuaded to sign the contract because the salesperson made a knowing misrepresentation of fact. As a result, your timeshare contract would be voidable, and you would need to seek professional or legal advice regarding a rescission of that contract from a lawyer or a firm like Centerstone Group.
What Are the Common Loopholes in Timeshare Agreements?
Apart from contracts that are either blatantly illegal or can be voided, there are also tricks in the contracts that are legal and can help out both sides, though they almost always favor the developer, not the timeshare owner. Here are some things to look for in your contract.
1. Timeshare Cancellation Clauses
Most U.S. states have laws that allow timeshare buyers to cancel their timeshare contracts within a short period of time after they’ve signed. In most cases, that cancellation will allow you to get a complete refund of all money paid as well. (In some states, this window is known as a “cooling-off period.”)
But be careful. It’s important that you follow these clauses exactly. They usually require that you write a timeshare cancellation letter and send it to a particular address. (You should use registered mail or other documented delivery services to do it, so you can prove it was sent.) If you can’t prove that you followed the exact process listed in your contract during the amount of time provided, your cancellation won’t work.
If you’re within your cancellation period, Centerstone Group offers a free service advising consumers how to best execute a rescission. So if this is a tactic you want to use, you should speak to us as soon as possible.
2. Form Selection and Choice of Law Clauses
It’s likely that every modern timeshare contract has clauses that limit your ability to sue the company. Many of them will require any lawsuit you file to be in a particular place (like Orlando, Florida) or use a particular state’s law to determine your lawsuit’s result. These are tools that timeshare companies use to try and get the legal results they want if they are forced to go to court.
Note that your contract might not even select the law of anywhere in the United States. Some timeshares overseas, like those in Mexico, will use foreign law and mechanisms for resolving disputes. In that case, it’s even more important to have an expert by your side to help you handle a timeshare exit.
3. Mediation and Arbitration Clauses
Timeshare companies will also likely try to force you to give up the right to even sue them in court with provisions requiring alternative dispute resolution like mediation or arbitration. Though it might not be technically correct to call these “scams,” it’s hard not to feel that way when you find out that you can’t get your day in court.
While you may be able to combat these if you were fraudulently induced into the arbitration clause specifically, your chances are not good.
Two timeshare owners found this out the hard way when they alleged that the whole contract was the result of fraud but said nothing specifically about the arbitration clause. Unfortunately, the Nevada federal judge in that case was forced to send them to arbitration and close the court case.
How Can You Dispute an Unfair or Deceptive Timeshare Contract?
As discussed above, timeshare companies have a lot of tools they use to try and prevent you from fighting unfair timeshare contracts. This leaves you with a few options.
First, you can get a timeshare attorney and try your luck with the courts. That is exactly what some timeshare owners did in a Delaware lawsuit in which they alleged that Wyndham Vacation Resorts fraudulently induced them into signing contracts. But that route is expensive and time-consuming.
As you can see from the linked document, Wyndham filed multiple expensive motions to dismiss, which the owners had to fight against — and this was at the beginning of the lawsuit, long before a trial could even take place! Remember that timeshare companies have deep pockets and armies of lawyers working for them. As a practical matter, most timeshare owners just do not have the resources to fight back.
Second, you could try reporting the timeshare developer to the Federal Trade Commission or your state’s attorney general. These entities have an interest in consumer protection and stopping timeshare scams, though the help they may be able to offer may be limited to filing a lawsuit.
The third option you could take is a less legally rigid one. You can seek the help of a timeshare exit company like Centerstone Group to find a legal and ethical exit that is not as formal, expensive, and time-consuming as a lawsuit.
Centerstone Group will look at your specific situation and determine if you need a cancellation, a transfer program, or our proprietary pressure campaign. Starting with an expertised exit team is a good place to start because they can guide you on the best course of action and will know when the help of an attorney is needed.
Centerstone Group has helped thousands of timeshare owners, saving them millions of dollars, and currently enjoys a 4.78-out-of-5-star rating with the Better Business Bureau (BBB), which has also awarded us an A+ designation.
Seek Expert Help If You Have Questions About Timeshare Contract Legality or Want an Exit
Whichever route you choose to get out of your timeshare agreement or challenge timeshare contract legality, it’s important to talk to an expert and look at all your options before making a final decision. These contracts are detailed and complex, and timeshare developers have spent a lot of time making sure the odds are tilted in their favor, even in cases where their staff has used dishonest sales tactics.
Getting Centerstone Group on your side evens the playing field. We have decades of experience in the timeshare industry, so we know all the developers’ tricks and tactics. Contact us today for a free consultation, and we will see what we can do for you.