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Timeshare Definitions

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What is a timeshare?

A timeshare is a form of vacation ownership in which a group of people share the purchase cost of a property and use it at weekly intervals, according to a specific schedule.

How many people own timeshares worldwide and in the U.S.?

According to the American Resort Development Association, approximately 4 million American households own timeshares at 1,600 different resorts in the U.S. This accounts for 45% of all timeshare owners. Florida remains the timeshare resort leader followed by California. Worldwide, six and a half million people from 270 different countries own a timeshare. There are around 5,400 resorts in 100 different countries.

How does a timeshare work?

There are different types of timeshares, but basically a timeshare is a type of real estate purchase in which you share the cost with others. Instead of paying full price for a property, you pay a share of the price, and that allows you to use the property for a certain time each year. The rest of the year is used by the others involved in the purchase price. The more shares you buy, the more weeks you are allowed to use.

How do you purchase a timeshare and from whom?

You can purchase a timeshare from either a timeshare developer or individual. Taking advantage of promotional offers by developers, such as staying free at their resort, or shopping on-line to find individuals who are selling their timeshares are just a couple of ways.

What are the different types of timeshare ownership?

The two primary types of timeshare ownership are fee simple and certificate.

Fee simple: Another term for this type is “deeded timeshare property.” By purchasing a week of timeshare, in a deeded location, your ownership never expires and you will receive a deed to the timeshare property. You may decide to pass your timeshare on to other family members or sell it, but until you actually transfer the deed, it belongs to you. This is similar to owning your own home.

Certificate: Certificate ownership, or right to use, gives a person the right to own a timeshare for a certain amount of time. This type frees the user from permanent ownership in a location they may not need to visit in later years. More common outside the U.S., certificate timeshares are often 10 – 15 years in duration, but eventually the time will expire.

Stock timeshares: Instead of owning a deed to the property, you own shares to the resort which allows you to an annual vacation time.

What are the different types of timeshare membership?

Fixed week: This is the most common type of timeshare. You purchase a certain week number to be used when that week falls each year. Week number 01 is considered the first full week of the year and so on. Your date may change a little each year based on when the week starts but basically, your week falls around the same time every year. The benefit to this type is the comfort in knowing your timeshare week will be available for you to use each year.

Floating time: Unlike fixed weeks, the week you stay at your timeshare is not predetermined. You purchase your week to use within a 3 to 4 month period and are responsible for contacting the resort in advance to confirm your exact arrival date. Since this type of ownership offers flexibility, booking your week as early as possible is important since the more popular weeks are chosen first.

Points: With this type of ownership, you can purchase a certain number of points, or credits, which allows you to travel at different times of the year to different sized units. More points will provide better seasons and larger accommodations. Since the points system offers flexibility for owners, they are subject to availability.

Multi-location: This allows a person to visit timeshares in different locations as long as it is within the same timeshare organization. The advantage is, once again, flexibility to visit different resorts at different times.

What are the timeshare accommodations – types and sizes?

The most common resort category is seaside/ocean, followed by regional resorts and golf resorts. Accommodations can also include hotel rooms, condos, cabins, luxury houses, yachts, and cruise ships.

Timeshare units vary from resort to resort but general guidelines in determining the size are as follows:

  • Hotel Unit – sleeps 2
  • Studio/Efficiency – sleeps 2 - 4
  • One Bedroom Unit – sleeps 4 - 6
  • Two Bedroom Unit – sleeps 6 - 8
  • Three Bedroom Unit – sleeps 8+

The accommodations will most likely include all the comforts of home such as linens, cooking utensils, televisions and the like; however, you will be responsible for housekeeping while staying there.

How much should I pay for a timeshare?

Most timeshares cost between $10,000 and $20,000 and even though prices can vary, the cost of purchasing one depends on the following:

  1. Where located and the size of unit
  2. What the season and weeks in question are
  3. Whether the timeshare resort is new or used, and in what condition
  4. What the rating of the resort is and the amenities they possess
  5. Whether or not the resort is being sold by a developer or is a resale (developers have a lot of sales and marketing costs to absorb whereas an individual owner does not)
  6. The type of timeshare such as “deeded” or “certificate”

Other costs to consider before purchasing a timeshare week are the annual fees the resort charges for maintenance, insurance, and utilities. You may also have to pay fees involved with the preparation of transfer documents, recording, and transfer fees, along with the initial maintenance fee. The expense of traveling to and from the resort should also be included if you are figuring your total costs for owning a timeshare and using it each year.

Explain the different types of fees involved in owning a timeshare?

Maintenance Fees: The maintenance fee is an annual charge that is used for the upkeep of your timeshare. This usually includes property taxes, insurance, utilities, cable, telephone, and property upkeep such as furniture, carpet, and the common facilities of the resort. A $200 - $700 a year fee is common and the fee can be much higher for a more desirable resort. The resorts homeowners association usually decides the fees, which may rise over time.

Transfer Fee: A transfer fee is what resorts charge to transfer ownership from one party to another. Transfer fees may vary but are determined by the resort or management company and apply directly to resale timeshares.

Recording Fees: A deed must be recorded in the county where the property is located in order to transfer ownership. Each courthouse charges different fees to record deeds. If you are purchasing from an individual, you can check with the courthouse in the county where the timeshare resort is located to find out how much the recording fee will be for a particular week. If you are purchasing directly from the developer or management company, the recording fees are usually included in the closing costs or will be disclosed at the time of purchase if separate.

Special Assessment Fees: The timeshare homeowners association may charge a special assessment fee if the resorts maintenance fee does not have a fund set aside for major repairs or replacement. Check your contract to see if this applies.

What are timeshare exchange companies? How do they work and how much do they cost?

Exchange companies operate somewhat like a timeshare bank allowing a person to “deposit” their timeshare and “withdraw” another located somewhere else. For example, you may exchange your 2 bedroom condominium, purchased for the summer, for another 2 bedroom somewhere else. In other words, the type of timeshare you receive is determined by the type you own. This sounds simple but exchange companies do use a formula to rate the value of timeshares being exchanged. Note: It is a good idea to deposit your week as early as possible, sometimes up to 2 years in advance is allowed, depending on the exchange company. Once you put in a request for where you would like to travel, matches are based on availability. Being flexible with different resorts and time periods will help you in receiving a match to your vacation request.

Exchange companies charge an annual fee for membership, plus fees for domestic and international exchanges. The exchange fees are approximately $189.00 for domestic and international trades. This is in addition to an annual membership fee of around $89.00.

The majority of timesharing resorts belong to 2 major exchange companies – RCI (Resort Condominiums International, LLC) and II (Interval International). The two companies are affiliated with approximately 5,000 resorts across the globe, and between the two of them, process about 1.5 million exchanges each year.

What is ARDA and who do they represent?

ARDA, or the American Resort Development Association, is a trade association, based in Washington D.C. It represents the vacation ownership and resort development industries. Their mission is to promote the growth and development of the industry through education, communication, membership development, good public relations, and ethics enforcement. Since ARDA has adopted a Code of Standards and Ethics, all members must comply with this code. ARDA monitors regulatory issues that affect timeshares and are actively involved in local, state, and national affairs.

ARDA has over 1,000 corporate members including private firms, publicly traded companies, and international corporations. Their specialty is having a vast knowledge of the timeshare industry which helps them deal with the interests and shared ownership of leisure real estate.

What is a timeshare developer?

Timeshare developers are involved in the developing and selling of property to be used for timeshares. Recently, some major companies have come into the timeshare industry such as Fairfield, RCI, Disney, Hyatt, and Hilton. Developers allow you to use points that can be used at any resort within their system, so you may use a week’s vacation at one of their resorts and a week somewhere else.

What do developers not want you to know?

When you buy a timeshare from a developer, they will explain the features, amenities, and all other aspects related to the timeshare in which you are purchasing; however, you will not be told how to get the maximum value from your timeshare, or they types of problems that may arise. We suggest you do your homework before buying. Many developers will not get involved in the resale aspect until all units are sold, which means if you have to sell for some reason, it may be difficult. When you buy a timeshare through a resort developer, you pay for development and marketing costs. These expenses range from 40-60% of the retail price. With a resale, the owner has already absorbed these costs. The same high season that sold for $20,000 at a resort could sell for as little as $5,000 through resale. You may even find resale opportunities available that offer the same product as the developer but at a much lower cost.

What is a timeshare management company?

After a timeshare developer completes his sale at a resort, the responsibility for managing it is turned over to a timeshare management company. In most cases, the HOA, or Homeowners Association, handles the day to day activities of running the resort, and communicating with the individual timeshare owners. This is an important duty since it helps the timeshare properties run smoothly, which in turn increases the resorts desirability and value.

What are timeshare resale companies and how do they work?

These are companies that deal in the selling of timeshares that have been previously owned. The companies sometimes own the property they are selling but usually do not. Therefore, they can only act as third party agents or brokers for others. There are resale companies that will help you sell your timeshare and let you pay a commission at closing. Others try to get you to pay a fee up-front for advertising, an appraisal, etc. We suggest you investigate any company you consider doing business with before signing a contract to allow them to sell your timeshare. Once you have paid money up-front, it is almost impossible to get it back if the company does not follow through with their part of the deal. More often than not, the ones that charge up-front listing fees and promise unbelievable profits do not sell your timeshare. They take your money, you still own the property, and you are still responsible for all of the fees associated with your timeshare ownership even though you paid them a large amount to help you sell.

Who do you report timeshare abusive sales practices to?

Even though timesharing is regulated through the real estate commission in the state which the timeshare property is located, the sale of vacation plans is not. If you feel you may have been a victim of false or deceptive advertising or marketing of a vacation plan, contact the Federal Trade Commission. To get free information or file a complaint, visit www.ftc.gov or call toll free 1-877-FTC-HELP (1-877-382-4357).

If you would like to investigate a company before making a decision to purchase or to list your property for sale, you can go to www.bbb.org or contact the Better Business Bureau in the state where the company does business.