Real Estate Newsletter
Real Estate Newsletter
Waste and Mismanagement
Since the 1970s, more and more people have jumped on the time-share bandwagon as their choice for vacation accommodations. A concept original to Europe, more than 4 million US households now have time shares, most commonly in beachfront settings. Time share purchasing, financing, use and selling can be fraught with legal problems, so it can be in your best interest to proceed carefully and with a knowledgeable real estate attorney at your side.
Basics
Time sharing allows a vacationer to purchase an annual set or floating time period, usually of one week, during which he or she has exclusive use of a particular vacation property. Time shares are often at large resorts, but can also be at smaller complexes or even single properties. Many arrangements include a trading option whereby time shares can be exchanged for stays at other properties around the world.
Most time-share arrangements are sold or managed by large travel or hotel companies. These companies often offer point systems whereby not only can time share stays be traded for comparable stays elsewhere, but also points can be used for other travel industry purchases like cruises or airfares.
Time shares either involve actual deeded real estate ownership — specifically referred to as interval ownership or time-span estates — or right-to-use contracts, sometimes characterized as leases, licenses or memberships. Both arrangements can be complex for average people and can lead to serious legal and financial hardship down the road. Over time, legal problems can develop concerning insurance, maintenance, property valuation, property damage, taxation and property management. Again, legal advice is highly recommended throughout the time-share experience.
Controversy
While some feel that the time share concept is a good value, many complain of hidden fees, rising costs, unavailability of desirable trades and difficulty selling. In fact, in the flooded time-share resale market, vacation properties usually sell for a fraction of their original price.
Regulation
Federal, state and local regulation of time sharing is a piecemeal conglomeration of different legal concepts. Some arrangements are treated by the law as regulated securities; some are regulated under consumer protection laws; and others under real estate regulations. Some states have specific time-share statutes and some apply their condominium laws to time shares. Locally, zoning ordinances can have great impact on time-share developments.
Proceed with Caution
If you are considering a time-share arrangement or already are involved in one, a real estate lawyer can help you sort out what particular laws apply in your jurisdiction and to your particular time-share arrangement, whether it involves actual real estate ownership or a complex contract to use the property. It is advisable to have all purchase, financing or sales contracts thoroughly reviewed by your attorney. Even if you have already signed one, it may include a cooling-off provision that would allow you to rescind, usually within a couple of days. Legal advice can help you decide whether to utilize such an option.
Developers and property managers should also proceed into the time-share field carefully and only after being thoroughly educated by experienced legal counsel.
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