After twelve years of being America’s leading timeshare cancellation team, we’ve heard from hundreds of individuals and families who have fallen into the “timeshare trap”. One of the common themes in every story they share, is how they were unaware of the high-cost of maintenance fees and other fine print within the contract, that was not explained to them.
When you consider that some timeshare contracts can last twenty, fifty or even 99 years in length, and the fact that they are as legally binding in the United States as a traditional mortgage is, the omission of details of the contract is fraudulent. However, in many cases, the information is provided in the written contract and not reviewed with the buyer, which can leave the timeshare owner with few legal options to cancel their timeshare.
The negative financial implications of purchasing a timeshare are hidden deliberately within the contract, and not reviewed by most timeshare sales teams because they don’t want consumers to fully evaluate the risk.
Anatomy of a Timeshare Sales Pitch
No matter what incentive is offered, it is important for consumers to realize that consenting to participate in a timeshare sales presentation will expose you to a high-pressure, and often very successful pitch. Do some online research about timeshare sales method’s, and the training videos and articles you will find about the “best approach” to close a timeshare sale may shock you.
Make no mistake, you are pitting yourself against determined sales professionals with one objective; to earn commission by convincing consumers to sign a long-term lease on a resort membership or property. Often the sales ‘professionals’ working for the resort are temporary or contract staff, who work solely on commission. They are not concerned about the outcome of the contract, or your satisfaction as a consumer, because they know that once you sign, you have a legally binding document that is iron clad. One that is virtually impossible to cancel, after the rescindment period is over.
Timeshare sales teams don’t care if the consumers are angry afterward. They have a schedule of appointments to keep, and the vacation resort has lawyers. When a sales person omits details about a contract, it is fraud, however the burden of proof is on the buyer to explain how they were not informed; and that information is usually contained in the fine print of a timeshare contract.
A salesperson will deliberately downplay the following information items:
The real monetary value of the timeshare.
Resale statistics for the resort, including resale success rates and prices.
The potential for maintenance fees to increase.
The financial viability of the resort or vacation membership company.
It is important to remember that even the most successful resorts and timeshares can experience financial problems. If your timeshare goes bankrupt, you lose your initial buy-in value, as well as your right to use the weeks you purchase. If the timeshare goes under, consumers lose all rights to the services that they have already paid for.
Why Are Consumers Charged Maintenance Fees?
Much like a condominium agreement, resorts that operate as timeshares split more than use of the property, they also split the cost of running the vacation club with lease owners. The maintenance fees are payable monthly or sometimes biannually, depending on the contract, and are charged to timeshare owners to cover:
Municipal taxes for the property
Cost of updating and refurbishing suits, grounds and recreational equipment
Landscaping, planting and routine outdoor maintenance
Cost of utilities
Cost of the administration staff and management of the property
Maintenance fees can also mislead consumers into believing that they own the unit they are paying for. Unlike purchasing a condominium with a mortgage, and paying homeowner association fees, the consumer will never own the property. At best, most timeshare contracts are designed as a long-term lease, with a large amount of financial liability and responsibility, for a property that will never be an asset for the timeshare owner.
The High-Risk Disclosure of Maintenance Fees
When consumers purchase a house, or other large ticket item like a new car, there is transparency in the financial documentation provided to the buyer. You know exactly how many payments you are going to make, what the interest rate is, and the total amount of interest you will be paying for your purchase. Laws in the United States are in place to ensure that all sellers of large ticket items, provide voluntary disclosure and review the details of the contract with the consumer.
While your timeshare contract may outline the maintenance fees, our clients have shared that very few sales people take the time to review that “fine print”, particularly regarding maintenance fees. The focus in the sales pitch is about the affordability of the lease, or how much you will be required to pay monthly. Naturally, they don’t explain that the affordability number they have provided you can change, with very little notice, whether the consumer agrees or not.
The Truth About Timeshare Maintenance Fees
They can be increased at any time.
Fees can be increased more than once, annually.
Natural disasters and property damage can significantly increase fees.
Renovation of the resort (to update or improve facilities) will increase fees.
Many contracts do not have a cap or limit on maintenance fee increases for timeshare owners.
Timeshares are asking you to pay a large, upfront fee, and then a monthly, quarterly or biannual maintenance fee, which can increase at any time, per the resorts discretion. The truth is that you may not know how expensive your timeshare can become, until you have a problem with skyrocketing fees that no longer fit within your budget.
Remember that less than 2% of timeshares are ever successfully sold, and few owners every recoup their original investment. Furthermore, as maintenance fees increase, so do online complaints for some of the largest resort companies, making it even more difficult for timeshare owners to find a buyer. After all, would you want to buy a vacation property when you know that the fees are continually climbing? Probably not.
If you, or someone you know, is considering purchasing a timeshare, we recommend some of the resources on our consumer protection blog. Be informed about your purchase and the real cost of owning a timeshare, including the financial risk of increasing maintenance fees.