Timeshare Arbitration vs. Litigation: Which Is Better for Owners?
Most timeshare owners can tell you that the vacation ownership experience isn’t easy. Even in the rare cases where someone is happy with their purchase, legal disputes can arise about maintenance fees, management company fees, or other matters, like trying to get out of or to change a timeshare contract. In these cases, understanding timeshare arbitration vs. litigation is key.
Litigation is what most people understand as “filing a lawsuit.” It means that either you or the timeshare company sues in a court of law that then settles the dispute.
Arbitration is a form of alternative dispute resolution (ADR) that takes legal issues out of court and has a neutral third party (often a private lawyer or retired judge) make legally binding decisions about them, with little or no possibility for an appeal if you lose.
As the leader in timeshare exits, Centerstone Group is intimately familiar with both processes and regularly helps timeshare owners who need to make difficult decisions about these two processes. In this article, we’ll explore the key differences in timeshare arbitration vs. litigation, which process is faster and more efficient, and which is often better for timeshare owners and timeshare developers.
What Are the Differences Between Arbitration and Litigation in Timeshare Disputes?
When things go wrong with timeshares, it’s not uncommon to seek legal solutions. Though it often shouldn’t be the first course of action, many owners will hire timeshare lawyers and file a lawsuit, which is known in legal terms as litigation. While litigation may seem fast-paced and exciting on TV shows, the truth is that it can take years and be quite costly.
Further, upon suing a timeshare developer or resort, owners are surprised to find that their timeshare contracts contain arbitration clauses. These paragraphs often force owners to waive the right to sue in court and take any disputes to a neutral third party (known as an “arbitrator”) who decides the claims according to the law.
Unlike court rulings, arbitration awards don’t have direct appeals and are very difficult to change.
The following table is a brief summary of the features of each and how they differ.
Litigation
Arbitration
Cost
Very high: Attorney fees and court fees must be paid over the course of months or years.
Medium to high: The arbitration process is shorter, but attorney fees are still required. You also have to pay the arbitrator who decides your case, even if they decide against you.
Time
Months to years: Even if you get a favorable decision, the developer will likely appeal, a separate time-consuming process that can take years to resolve.
Months: Arbitration proceedings take much less time than court, but that is because you have practically no ability to appeal if the arbitrator makes a bad decision.
Fairness
Trustworthy: Though not all court systems are alike, they are staffed with experienced judges and civil servants who do their best to be impartial throughout the litigation process.
Questionable: Arbitrators are often retired lawyers or judges, but they are usually picked by resorts because they know those resorts well. They may also give favorable decisions to their “repeat customers.”
Quality of Decision
High, lots of oversight: Though judges can make mistakes, courts of appeal oversee and can correct those mistakes with enough time.
Unknown, next to no oversight: Arbitration decisions do have to follow the law but will not be reversed unless the arbitrator manifestly disregarded the law – a standard that requires its own court case and is “virtually impossible” to prove.
Does Arbitration Favor the Resort or the Owner?
In a perfect world, arbitration would be just as fair as litigation. Unfortunately, there’s a lot of evidence showing that arbitration does tend to favor resorts and timeshare developers over owners.
In timeshare disputes, as in other kinds of cases, arbitration has what is called a “repeat player” problem. In other words, owners will likely only use arbitration once in their lives. Resorts and developers do it constantly.
In multi-business disputes, this is not as much of a problem because the parties are on relatively equal footing with each other and are both familiar with the arbitration process. In the timeshare context, though, it becomes a huge headache for owners, who simply don’t have the knowledge or resources to fight as hard as timeshare companies.
Because these businesses are such frequent users of arbitration and other ADR processes, they reap the benefit of this “knowledge gap.” There’s also the “frequent customer” appearance that is hard to ignore and makes the process look unfair, even if the arbitrator strives to do the best job possible.
These factors mean that even organizations that strive for fairness, like the American Arbitration Association (AAA), may have trouble delivering the same level of results to owners that courts would be able to do. And because federal law (including the Federal Arbitration Act) makes arbitration so difficult to appeal, a bad decision against an owner is nearly impossible to reverse.
Timeshare Arbitration vs. Litigation: Which Legal Route Is Faster or More Cost-Effective?
There’s no doubt that arbitration is a faster and cheaper alternative to litigation. That said, it does not seem cost-effective because the results of arbitration are often quite bad for timeshare owners.
To be clear, arbitration is not cheap. To do it correctly, Centerstone Group recommends that you retain an attorney, who will charge you fees just like you would pay in litigation. In these cases, Centerstone Group works with trusted attorneys and law firms to help its clients. Though their experience is vast, it does not come cheap, even when you consider that Centerstone Group negotiates discounted rates on legal fees with those lawyers.
You also aren’t just paying for your lawyer. The arbitrator has their own fees and costs, which will likely be thousands of dollars. While the shortened timeframe and overall cost is lower than litigation, the less reliable results mean that arbitration is anything but cost-effective.
Therefore, arbitration is rarely a good option in any dispute that an owner has with their timeshare company, despite the lessened time and cost. What you should consider, though, is that you have far more options available to you than just these two, and Centerstone Group’s team has expertise in all of them.
For example, we have successfully negotiated and used our proprietary pressure campaign to get our clients out of thousands of bad situations. We also have a transfer program to get timeshares to customers willing to deal with timeshare contracts and fees. Whether we use these methods or others, rest assured that Centerstone Group has the most complete toolbox in the industry to find a successful exit strategy for your case.
Let Centerstone Group Help Set You Up on the Path to Success
Don’t let a bully timeshare company or a draconian contract fool you into thinking that timeshare arbitration vs. litigation is your only option. Developers want you to believe that so you will choose arbitration – the option that is best for them – and then, when it goes wrong, they can gaslight you by claiming it was your idea the whole time.
As the premier timeshare exit company, Centerstone Group specializes in finding far more cost-effective and successful strategies for timeshare exits.
Our team not only has decades of experience in the timeshare industry and timeshare exits, we are also an accredited, A+-rated company with the Better Business Bureau (BBB), where our satisfied clients have also given us a 4.78-out-of-5-star rating. If you’re stuck in your timeshare and feeling like you have no good options, contact us today for a free consultation.
Most timeshare owners can tell you that the vacation ownership experience isn’t easy. Even in the rare cases where someone is happy with their purchase, legal disputes can arise about maintenance fees, management company fees, or other matters, like trying to get out of or to change a timeshare contract. In these cases, understanding timeshare arbitration vs. litigation is key.
Litigation is what most people understand as “filing a lawsuit.” It means that either you or the timeshare company sues in a court of law that then settles the dispute.
Arbitration is a form of alternative dispute resolution (ADR) that takes legal issues out of court and has a neutral third party (often a private lawyer or retired judge) make legally binding decisions about them, with little or no possibility for an appeal if you lose.
As the leader in timeshare exits, Centerstone Group is intimately familiar with both processes and regularly helps timeshare owners who need to make difficult decisions about these two processes. In this article, we’ll explore the key differences in timeshare arbitration vs. litigation, which process is faster and more efficient, and which is often better for timeshare owners and timeshare developers.
What Are the Differences Between Arbitration and Litigation in Timeshare Disputes?
When things go wrong with timeshares, it’s not uncommon to seek legal solutions. Though it often shouldn’t be the first course of action, many owners will hire timeshare lawyers and file a lawsuit, which is known in legal terms as litigation. While litigation may seem fast-paced and exciting on TV shows, the truth is that it can take years and be quite costly.
Further, upon suing a timeshare developer or resort, owners are surprised to find that their timeshare contracts contain arbitration clauses. These paragraphs often force owners to waive the right to sue in court and take any disputes to a neutral third party (known as an “arbitrator”) who decides the claims according to the law.
Unlike court rulings, arbitration awards don’t have direct appeals and are very difficult to change.
The following table is a brief summary of the features of each and how they differ.
Litigation
Arbitration
Cost
Very high: Attorney fees and court fees must be paid over the course of months or years.
Medium to high: The arbitration process is shorter, but attorney fees are still required. You also have to pay the arbitrator who decides your case, even if they decide against you.
Time
Months to years: Even if you get a favorable decision, the developer will likely appeal, a separate time-consuming process that can take years to resolve.
Months: Arbitration proceedings take much less time than court, but that is because you have practically no ability to appeal if the arbitrator makes a bad decision.
Fairness
Trustworthy: Though not all court systems are alike, they are staffed with experienced judges and civil servants who do their best to be impartial throughout the litigation process.
Questionable: Arbitrators are often retired lawyers or judges, but they are usually picked by resorts because they know those resorts well. They may also give favorable decisions to their “repeat customers.”
Quality of Decision
High, lots of oversight: Though judges can make mistakes, courts of appeal oversee and can correct those mistakes with enough time.
Unknown, next to no oversight: Arbitration decisions do have to follow the law but will not be reversed unless the arbitrator manifestly disregarded the law – a standard that requires its own court case and is “virtually impossible” to prove.
Does Arbitration Favor the Resort or the Owner?
In a perfect world, arbitration would be just as fair as litigation. Unfortunately, there’s a lot of evidence showing that arbitration does tend to favor resorts and timeshare developers over owners.
In timeshare disputes, as in other kinds of cases, arbitration has what is called a “repeat player” problem. In other words, owners will likely only use arbitration once in their lives. Resorts and developers do it constantly.
In multi-business disputes, this is not as much of a problem because the parties are on relatively equal footing with each other and are both familiar with the arbitration process. In the timeshare context, though, it becomes a huge headache for owners, who simply don’t have the knowledge or resources to fight as hard as timeshare companies.
Because these businesses are such frequent users of arbitration and other ADR processes, they reap the benefit of this “knowledge gap.” There’s also the “frequent customer” appearance that is hard to ignore and makes the process look unfair, even if the arbitrator strives to do the best job possible.
These factors mean that even organizations that strive for fairness, like the American Arbitration Association (AAA), may have trouble delivering the same level of results to owners that courts would be able to do. And because federal law (including the Federal Arbitration Act) makes arbitration so difficult to appeal, a bad decision against an owner is nearly impossible to reverse.
Timeshare Arbitration vs. Litigation: Which Legal Route Is Faster or More Cost-Effective?
There’s no doubt that arbitration is a faster and cheaper alternative to litigation. That said, it does not seem cost-effective because the results of arbitration are often quite bad for timeshare owners.
To be clear, arbitration is not cheap. To do it correctly, Centerstone Group recommends that you retain an attorney, who will charge you fees just like you would pay in litigation. In these cases, Centerstone Group works with trusted attorneys and law firms to help its clients. Though their experience is vast, it does not come cheap, even when you consider that Centerstone Group negotiates discounted rates on legal fees with those lawyers.
You also aren’t just paying for your lawyer. The arbitrator has their own fees and costs, which will likely be thousands of dollars. While the shortened timeframe and overall cost is lower than litigation, the less reliable results mean that arbitration is anything but cost-effective.
Therefore, arbitration is rarely a good option in any dispute that an owner has with their timeshare company, despite the lessened time and cost. What you should consider, though, is that you have far more options available to you than just these two, and Centerstone Group’s team has expertise in all of them.
For example, we have successfully negotiated and used our proprietary pressure campaign to get our clients out of thousands of bad situations. We also have a transfer program to get timeshares to customers willing to deal with timeshare contracts and fees. Whether we use these methods or others, rest assured that Centerstone Group has the most complete toolbox in the industry to find a successful exit strategy for your case.
Let Centerstone Group Help Set You Up on the Path to Success
Don’t let a bully timeshare company or a draconian contract fool you into thinking that timeshare arbitration vs. litigation is your only option. Developers want you to believe that so you will choose arbitration – the option that is best for them – and then, when it goes wrong, they can gaslight you by claiming it was your idea the whole time.
As the premier timeshare exit company, Centerstone Group specializes in finding far more cost-effective and successful strategies for timeshare exits.
Our team not only has decades of experience in the timeshare industry and timeshare exits, we are also an accredited, A+-rated company with the Better Business Bureau (BBB), where our satisfied clients have also given us a 4.78-out-of-5-star rating. If you’re stuck in your timeshare and feeling like you have no good options, contact us today for a free consultation.