Getting Out of a Timeshare Can Be Tricky: Legal Pitfalls and Solutions

Resort vacations are a dream for many, and the timeshare industry put it within reach of many middle-income Americans. However, with the increase in timeshare sales also came predatory schemes, including misrepresented benefits and no exit from ever-increasing fees. While some timeshare owners remain content, others feel stuck.

Many timeshare owners end up with something they rarely use and the burden of annual maintenance fees and hassles. What can they do to end this timeshare agreement?

A lawyer can help you develop an exit strategy if you want out of your timeshare. Contact a local real estate lawyer for legal advice about giving your timeshare back.

Review Your Timeshare Contract to Determine What You Own

Timeshare developers are very unlikely to allow you to simply quit an unwanted timeshare. Florida consumer law attorney Brendan Sweeney says the timeshare companies make it very difficult. “Consumers get preyed on. People are in vacation mode when they enter these contracts, and don’t take the time to read the details. The salespeople count on that,” he says.

To avoid getting trapped, review your contract to determine what you own. These agreements may have a mortgage on the property, upfront fees, as well as separate obligations to make annual payments (usually as maintenance fees), plus additional fees for exchange membership.

Increasingly, the industry has moved away from selling deeded estate interests in favor of rights of use (personal property interest), such as “points-based” or “vacation club” designations. These agreements do not have any ownership or equity interest, but are merely a contract for fees. Typically, rights of use are for a term of years, and will eventually expire.

The following are some options to get out of a timeshare after you signed the contract.

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Option 1: Sell the Timeshare

The timeshare resale market is not robust, but it exists. Don’t anticipate getting back what you paid for timeshare ownership.

However, if your goal is simply to be out from under the ongoing obligation, selling on the secondary market is the best option. Yearly fees will add up over time to more than you paid in the timeshare purchase in the first place. If you do decide to sell, here are a few important factors to keep in mind:

Beware Soliciting Third Parties

Do not sell through any third party who solicits your business or asks for payment in any amount prior to selling your property. These are generally scams.

“Resellers are almost all boiler rooms,” Sweeney says, referring to operations utilizing high-pressure, deceptive sales tactics. “I know of one operation that I traced to an auto body shop in Orlando.”

Ask the Timeshare Company About a Buyback

Start by approaching the resort or timeshare company to see if they want to buy back the property from you. There may even be a right of first refusal in your purchase contract, meaning that they get first dibs on buying.

Don’t Sign Over Your Interest Until Approval

Don’t sign over any deeded interest until you’re sure the transaction is approved and processed with the timeshare agency. Include language from the state statute regarding timeshare resale.

Consider a Deedback

If the timeshare company won’t buy it, Sweeney recommends a deed in lieu of foreclosure or deedback. With a deedback, you negotiate with the timeshare company to simply return the property to them.

He cautions that you must properly do the agreement, with the company’s consent, and strongly advises working with a lawyer. “They’re not openly giving these negotiated resolutions, but this is the way to get out.”

Option 2: Rent Out Your Timeshare

If you need to recoup the expense of the annual fees, you may want to simply rent out your week. Check your contract to see about possible restrictions on transfers, including limits on what you can charge.

Option 3: Cancel, Terminate, or Void the Timeshare Contract

You may be able to get out based on principles of contract law. Many state laws provide for a “cooling off” rescission period from the date you receive the signed purchase documents. During this period, you can cancel your timeshare and have your money refunded.

You can terminate a timeshare contract with a formal cancellation letter. Talk to an attorney about the requirements for a timeshare cancellation and make sure you document your actions. Send a written letter and get a copy of proof of delivery.

Beyond this time period, you may still be able to terminate the agreement, based on misrepresentations made or undue sales pressure. For example, the sales team may have told you that the timeshare:

• Would appreciate in value
• Was easily sellable (including back to the company)
• Could be easily traded for other locations with no additional expense
• Would be rented by the timeshare company for you if you didn’t want to use it

Sweeney recommends reviewing your contract with an attorney to assess what violations may have occurred.

Option 4: File a Complaint

There are a number of administrative and government agencies whose responsibility is to protect consumers. The more these agencies are aware of widespread problems, the more likely they are to take corrective action.

Consumer protection groups include the Better Business Bureau, the state attorney general, state business regulators, and the Consumer Financial Protection Bureau (CFPB). In addition, you can make a fuss with local news media, which could help encourage a timeshare company wanting to avoid negative publicity to settle with you.

Option 5: Stop Paying

Another option is to simply stop paying fees and allow the matter to go into collection or foreclosure. This will have serious implications for your credit score and should only be undertaken as a last resort. Even if you’re contemplating default, contact the timeshare company first and seek a hardship resolution.

Get Legal Advice from an Experienced Lawyer

Timeshare law is not well-known and can be difficult to manage on your own. Timeshare companies often have their own legal team, so knowledgeable representation on your side can help level the field.

Ultimately, Sweeney says purchasing a timeshare is a “serious agreement, with serious repercussions, like buying a house,” and recommends bringing in a real estate lawyer as early in the process as possible.