Consumers should research timeshares thoroughly

January 14, 2001

Timeshares have a new name and a new image.

"Vacation ownership" - as timesharing is now called - offers customers the right to use a vacation property for a certain time each year for as long as they own the share. Consumers pay an upfront price tag for the privilege as well as annual or monthly fees or dues for upkeep and operating expenses of the facility.

The entry of major hotel chains - such as Marriott, Westin and Hilton - in the business has added significant respectability to timesharing. Marketing new timeshares is more upfront and usually includes important protections for consumers, including a "cooling-off" period and full disclosures of fees, annual costs and legal obligations. At the same time, a growing resale market for vacation timeshares often provides less complete information about the risks and benefits of timeshare ownership.

Disclosure laws vary from state to state, depending on where the timeshare arrangement is advertised and where the contract is negotiated and signed. Vacation ownership arrangements outside the United States may include little or no consumer protections. Consumers are well advised to beware of signing any timeshare contract while they are outside the United States.

Before signing any contract for timesharing, consumers should be certain they fully understand what's included and what all the costs are. If there's an exchange program, how many properties will the timeshare owner have access to? How far in advance are reservations required? Unless these amenities are clearly provided for in writing, they may be changed or withdrawn.

Is there a right of cancellation? What is budgeted for repairs and replacements of the facility? If the budget is too low, timeshare owners may find themselves being assessed for major repairs and replacements.

Each timeshare facility should have a timeshare instrument that describes the rights and obligations of participants. This is an important document, and it should be read carefully.

Some people sign timeshare contracts because they get caught up in the magic of the moment after experiencing a wonderful weekend in a beautiful vacation spot. A cooling-off period, which gives the customer a week or 10 days to reflect on the purchase, is essential.

Another important consideration: What location and timeshare period should you buy? Don't count on exchanging a less-desirable time or location for a more-desirable one. The most desirable times and locations are in high demand, and you will likely be left out in the cold, rather than enjoying the warm sun and surf.

Timeshares may be hard to resell, so vacation ownership should be considered as a long-term, fairly illiquid investment. If you get tired of your timeshare or need to sell it in a hurry, you may have to sell at a loss.

Timesharing has its advantages, and many consumers find the product attractive. But vacation ownership is not for everyone. If you're thinking of buying a timeshare, research the facts thoroughly and carefully consider the costs and benefits before you sign on the dotted line.

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