Timeshare Purchase Tips

If you've decided to join the throngs of vacation goers who have discovered the delights of vacationing in timeshares, you should be aware that there are two basic types of purchase plans: deeded and non-deeded.

• In a deeded plan, you purchase an ownership interest in a piece of real estate. You actually own a portion of the property and structure.
• In a non-deeded plan, you purchase a lease, license or club membership that lets you use the property for a specified time period each year for a specific number of years. While what you own is a piece of paper, that paper gives you the legal use of the property.

In both types of purchases the cost of the unit will depend on the season and length of time you wish to purchase. For example, a week in Aspen during January ski season is worth more than a week in July.

As with any home purchase, read contract papers carefully and make sure you understand what you are buying. You may want your attorney to review any documents you will be asked to sign. Consider these points when buying a timeshare:

• Practicality. People buy timeshares for the convenience of pre-arranged vacation facilities. Make sure you'll be able to use your timeshare every year. Some questions to ask yourself: Are your vacation plans subject to last minute changes? Do they vary in length or season each year? Will you be physically and financially healthy enough to travel to your timeshare?
• Investment. A timeshare is an investment in leisure time and quality of life. You are unlikely to gain financially from the resale of your timeshare and will probably not recoup your initial investment.
• Cost. In determining whether to invest in a timeshare, make sure you factor in all the costs of purchase, including: mortgage payments, closing costs, broker commission, finance charges, annual maintenance fees, taxes, travel costs.
• Documents. Thoroughly read and make sure you understand your purchase documents. Ask your attorney to check over any contracts or agreements you will be asked to sign. Ask if there is a cooling-off period during which you can cancel and get a refund. If not, ask to have it included in the contract. If the seller tries to rush you or won't let you take the documents home for review, walk away.
• Promises. Oral promises are worthless. Make sure all oral promises made by the salesperson are written into the contract.
• Exchanges. Find out if you can arrange trades with other resort units in different locations. Ask about fees and limits. Some programs will not allow you to trade up to a peak time or more exotic location.
• Reputation. You want to ensure that your timeshare will be properly maintained and managed. Research the track record of the seller, developer and management company before you buy. Ask for a copy of the maintenance budget and find out how the property is maintained. Visit the timeshare and talk to current owners. Check with the Better Business Bureau and consumer protection agencies to see if any complaints have been filed.
• Default. Make sure you know your rights if the management company has financial problems or defaults. Make sure your contract contains a non-disturbance provision clause guaranteeing your continued use in the event of default. It should also have a non-performance protection clause guaranteeing your ownership rights.