It is said that illegal drug users can never quit. The same thing can be said about many timeshares.
Timeshares encompass a large array of types of jointly owned real estate or investment-like groups that own real estate sometimes at one or more locations. The idea is that many people come together, with each co-owner getting a share of time at one or more locations, usually to go on vacation. The principle is supposed to be that multiple owners can share the cost of acquisition (and potentially some of the maintenance), and each co-owner will possess a window of time of exclusive access to accommodations larger than a hotel room with amenities that exceed those of a regular house. To avoid some securities laws, timeshares are often legally structured as a proportional ownership in real estate rather than as an investment group.
Timeshares are often marketed to people while those people are already on vacation at a more traditional hotel or resort. The spiel is usually something like, “Why not have the same experience at a neighboring property every year, forever for a lot less money, likely just an initial investment?” Frequently, the timeshare documentation (looks short, but often includes hundreds of pages of “attachments”) is signed by vacationers before leaving the sales presentation.
Initially, a timeshare can be a good deal. However, as a timeshare group populates, the best vacation dates become scarcer. Therefore, it can eventually cost “extra” money to reserve desired dates and locations. Additionally, the open-ended terms in many timeshare agreements often allow timeshare management to adjust the terms/costs of the timeshare agreement at the management’s own discretion.
Usually, the biggest “gotcha” in timeshares are “maintenance fees.” Some timeshares do not have maintenance fees to begin with, but the contracts allow for those fees to be assessed in the future. Therefore, someone may drop $5,000 to $150,000 on a timeshare purchase only to find that there are eventually monthly or quarterly maintenance fees of hundreds or thousands of dollars, even if the timeshare is never used.
You would think it would be easy to get out of a timeshare. Why not just sell the timeshare back to the company or to someone else? This is a struggle because if the deal is bad now, why would someone take it over? As a result, sometimes, timeshares cannot be given away.
Additionally, timeshare agreements sometimes include something that is illegal in Ohio. Because timeshares are often legally structured as real estate transactions, some of the deeds for timeshares include requirements (technically called “deed restrictions”) that require that every time ownership of a timeshare property transfers, every prior owner of the property is paid a commission. Of course, this can add up to tens of thousands of dollars and effectively make any transfer effectively economically impossible.
There are some companies that try to help people out of their timeshares, but those companies are not miracle workers. My advice: do not start using drugs, and do not buy a timeshare.
Lee R. Schroeder is an Ohio licensed attorney at Schroeder Law LLC in Putnam County. He limits his practice to business, real estate, estate planning and agriculture issues in northwest Ohio. He can be reached at Lee@LeeSchroeder.com or at 419-659-2058. This article is not intended to serve as legal advice, and specific advice should be sought from the licensed attorney of your choice based upon the specific facts and circumstances that you face.