Can You Get Out of a Timeshare Contract?

Once timeshare owners decide they want to exit their contract, they need to understand the concrete steps to doing so. Reviewing your contract is the only way to know the terms that are in effect.

You’ll have to look for rescission options, cancellation windows, and transfer restrictions. There may also be state-specific cancellation laws and deadlines. For legal help reviewing your timeshare contract and pursuing exit strategies, speak with a real estate lawyer.

Rescinding the Timeshare Purchase

If the timeshare was recently purchased, a cooling-off period may be in effect. This is the timeshare cancellation period when buyers can change their minds and back out of the purchase.

There may be notice requirements that the buyers must comply with to properly rescind their agreement to the contract. Typically, homeowners need to send a cancellation letter by certified mail that includes the contract details and a clear cancellation statement.

This is smart for buyers to do regardless, as it provides a level of security. The buyer will have written proof that the seller is on notice of their cancellation notice.

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Negotiate With the Timeshare Developer

There may be other methods to exit the timeshare contract once the rescission period ends:

• See if the developer has a “take back” or “surrender” program and negotiate a return
• Transfer ownership to an immediate family member
• Negotiate lower annual maintenance fees to mitigate financial hardships
• List their timeshare for sale through an approved reseller.

Some developers offer hardship exceptions. Owners may also be able to negotiate with their extra points or credits they aren’t using.

Deed-Back Programs

Homeowners may be able to arrange a deed-in-lieu of foreclosure with the developer. This arrangement applies to deeded timeshares and not right-to-use timeshares. Under this arrangement, the timeshare owners voluntarily transfer their ownership to the lender or resort.

It can be challenging to secure a deed-back arrangement. This is especially true if the owner is behind on payments. If the deed-back is successful, the owner can avoid foreclosure.

Working With a Third-Party Timeshare Exit Company

Instead of reselling the timeshare through the resort, owners can work with a third-party exit company.

Some of these companies claim to list and sell the timeshare for you, similar to a real estate agent. Others will claim to purchase the timeshare from you. While there are reputable timeshare exit companies, there are also many scam companies.

The Legal Pitfalls of Timeshare Exit Companies

Unfortunately, the timeshare industry struggles with predatory companies. Scammers pose as timeshare resale or exit companies, promising owners a guaranteed success rates while demanding large upfront fees. Vulnerable owners who can’t afford their timeshare pay the fees only to find out later that the company isn’t going to follow through on the timeshare resale.

A history of consumer fraud in the industry has led states’ attorneys general and the Federal Trade Commission (FTC) to take action. Florida and California have some of the strictest timeshare laws. Regulations help set parameters around the language used. For example, promises like “guaranteed exit” violate consumer protection laws.

Timeshare owners looking to exit their ownership through resale should watch for red flags such as required upfront payments, using high-pressure tactics to default, or pushing a non-attorney approach.

Before entering the resale market, owners should research potential resale companies. Checking the Better Business Bureau (BBB) and online reviews can help identify reputable companies. Trustworthy companies will also be honest about potential resale values. Verify that a licensed attorney will be a part of the process. Choosing the wrong resale company can lead to increased legal and financial liability.

Preparing for a Timeshare Lawsuit

In some situations, the timeshare developer or resort engaged in behavior that warrants the owner filing a lawsuit to enforce their legal rights.

Common reasons for filing a lawsuit include misrepresentation, fraud, or deceptive, high-pressure sales tactics. The developer could also be the one to not uphold its contractual obligations.

Gathering evidence is essential to support the claims made in a lawsuit. Save all sales presentation materials, written communications, emails, and payment records. Take notes on all conversations, including times, dates, and the names of the people spoken with.

The Role of a Timeshare Attorney

A timeshare attorney looks out for their client’s best interests. This puts them on the owner’s side, not the resort’s. The first thing the attorney will do is review the original contract to identify legal ways to end their client’s timeshare ownership.

It’s crucial for owners to hire a lawyer who has experience with timeshare laws. These cases can involve multiple state laws and practice areas, including contract law, consumer protection, and real estate law. There may also be tax implications, as the cancellation of debt could be viewed as taxable income.

With an exit strategy in place, the lawyer will guide their client step by step. This includes communicating with the developer, resort, or lender on behalf of their client and protecting the client from illegal or predatory exit companies.

If necessary, the lawyer will represent their client in litigation. This includes gathering evidence, preparing arguments, and presenting arguments in court. An attorney will ensure that, upon completion of the cancellation process, their client is protected from any future liability.

The Legal Consequences of Defaulting

Timeshare owners should consult with legal professionals before deciding to default on their timeshare purchase.

The homeowners may face legal action from the developer or the HOA. The creditor whom the owner is paying will want to collect on the outstanding debt. To do this, they may file a collection lawsuit. If the court rules in the creditor’s favor, the owner could face wage garnishments or a judgment lien.

Defaulting on a timeshare agreement can result in long-term damage to your credit score. The negative mark can impact future financial lending decisions.

Find Legal Help

Timeshare contracts are designed to be binding, which is why so many owners feel trapped when circumstances change. A deliberate, legally informed timeshare exit strategy helps you regain control and protect your financial stability.

Use the Super Lawyers directory to find a real estate attorney who can go over your options with you.