How many times have you heard someone say, “I own a timeshare” and wondered why it is so easy for consumers to assume that they own anything, when they have signed a timeshare contract? Why are timeshare debt liabilities ever viewed to be assets?
The value proposition that is part of the timeshare sales pitch, counts on the consumer seeing more value in what is often a predatory and limiting contract. In other words, the timeshare industry wants you to feel like you are ‘part of something’, a group or elite community of people who love vacations, and have exclusive rights to the properties that they pay for.
We feel that it is important for consumers to fully grasp what they are buying, from a legal and financial perspective, when they sign a timeshare contract. What do you really own, and how will the contract impact other aspects of your personal financial portfolio? Where does this myth of ownership come from, and who does it benefit?
An Asset Versus a Liability According to Business Principals
You will never own your timeshare. No matter what type of contract you signed, it is important to realize that a timeshare agreement is in fact, purchasing time, or a lease of a certain amount of guaranteed time at a resort, annually, and nothing more. But if you’re feeling confused about the terms of timeshare ownership, or why the resort wants to make you feel as though you are an owner, there is a very good reason.
People who buy into a timeshare, are also buying into an ideal. Vacation time with family and friends is something that they value highly, and perhaps saving for vacations in a more conventional way has been more difficult in the past. They see a timeshare as an opportunity to have guaranteed vacations; after all, if you are paying for it every month, chances are you are going to use it, right?
Sadly, that’s not the case, and many timeshare owners become disenchanted with the services, the resort in general, or concerned about the rate of escalating costs and fees that they are being charged. Some clients we’ve helped saw their fees triple in a single year. That’s alarming, when your family is already on a restricted budget. The timeshare as a cost saving proposition, is fabricated by resort associations and marketers. If you add up the numbers, you aren’t saving anything at all. In fact, in most cases, the timeshare becomes more expensive than an annual vacation, booked directly with a hotel or resort.
Different Types of Timeshares Add to the Confusion
The argument that many consumers hear about timeshare ‘ownership’ is often substantiated by deeded timeshare agreements. This type of timeshare contract is deliberately misleading as a structure, and intended to help the owner see more value than there really is, in the cost and expense of their contract and lease.
What is a deeded timeshare? Standard timeshare agreements are called “right to share”, which means that the time and space is allocated between all timeshare ‘owners’ that have a contract with the resort. But the biggest difference between deeded timeshares and right to share agreements, is fractional ownership.
Individuals who buy into deeded timeshare agreements, have the right to stay at the property, no matter what. If the developer or resort exchanges ownership, or becomes bankrupt, the individuals holding timeshare contracts would still be guaranteed their time. This is thought of as a ‘step up’ for timeshare owners, because those that sign into a ‘right to share’ agreement, have no rights or claims to use the resort, if the development is sold, or enters bankruptcy.
Deeded timeshares are sold with this safety assurance in mind. But often consumers spend even more money purchasing a deeded timeshare, than they would for a ‘right to share’ contract. Another benefit of a deeded timeshare, is that the maintenance and membership fees cannot be increased, without a vote from all contract holders.
It gives deeded owners some additional confidence, that they can control to some degree, how expensive their timeshare becomes in the future. Non-deeded owners are frequently subjected to escalating annual fees, special assessments and other legitimized ‘cash grabs’ by timeshare resorts, looking to increase their revenues.
When you buy a house, or a car, or a vacation home with a mortgage, you are given a deed of sale. While the deeded timeshares do offer some additional consumer protections, there is never any true ownership of the property, despite assurances from the resort. Interestingly however, the timeshare industry has learned that the retention rate for deeded contracts is greater and longer than ‘right to share’ arrangements. Why? Because consumers are misled into believing that they own something, that may appreciate in the future, like an asset.
Ask your creditors or your local bank, whether a timeshare is a liability (bill) or an asset, in their opinion. American tax laws allow for very restricted and minimal circumstances, where timeshares can offer a tax deduction advantage for lease owners. It’s viewed at by all financial institutions, as a personal financial liability, that can impact lending, mortgages and other important needs.
Remember that the timeshare industry works hard to create mythologies within a unique culture of average consumers. People who want to ensure that they can enjoy some affordable vacation time. It’s really that simple. But by blinding consumers to the business realities and nature of the timeshare contract, the industry uses every resource it has, to keep people believing that it’s a good deal. Even if it becomes more expensive, than they comfortably afford.
Are all timeshare resorts fraudulent or bad? We don’t think so. But after almost a decade and half of helping consumers cancel their timeshare contracts, we have a negative opinion about an industry that thrives by misleading buyers. When it comes to fighting a timeshare, we’re on your side, and we will advocate with a proven legal method, to help you cancel your timeshare in twelve-months or sooner.
Don’t allow your timeshare to prevent you from other important financial goals and interests. Start today, with a free consultation with Aconsumercredit™.