Is a Timeshare for You? (Part 1)
Who wouldn’t love to own a vacation home? But then again, who would love the expense, especially if you’re only able to use the property for a week or so a year? Well, of course, you know where we’re going with this—timeshares. Timeshares have often gotten a bad rap, thanks to telemarketers calling you during dinner, saying you’ve won a dinner or weekend, which turns out to be the stage for a heavy-handed timeshare sales pitch.
But is a timeshare for you? Read on to find out.
First of all, what is a timeshare? It’s just what it says it is—you buy a share of a property at a vacation destination and can use it for a time each year. There are two basic vacation ownership options available: timeshares and vacation interval plans.
The deeded timeshare ownership is legally considered real property—you either own your vacation unit for the rest of your life, for the number of years spelled out in your purchase contract, or until you sell it. You’re purchasing the right to use a specific unit at a specific time each year, and you may rent, sell, exchange or bequeath your specific timeshare unit. You and the other timeshare owners collectively own the resort.
That sounds pretty exciting and exotic, doesn’t it? You own a resort. But wait. There are drawbacks, as you might have guessed. For instance, because so many timeshares and vacation interval plans are available, the resale value of your share will probably be significantly lower than what you paid. And of course, unless you’ve bought your timeshare outright in cash, you’re responsible for the monthly mortgage. No matter how you bought the timeshare, you’re also responsible for paying an annual maintenance fee, and property taxes may be extra. Owners share in the use and upkeep of the units and of the common grounds of the resort property. A homeowners’ association usually handles management of the resort. Timeshare owners elect officers and control the expenses, the upkeep of the resort property, and the selection of the resort management company.
So what about Vacation Interval plans? In this option, a developer owns the resort, which is made up of condominiums or units. Each unit is divided into intervals, either by weeks or the equivalent in points. You purchase the right to use an interval at the resort for a specific number of years, typically between 10 and 50. The interest you own is legally considered personal property. The specific unit you use at the resort may not be the same each year. In addition to the price for the right to use an interval, you pay an annual maintenance fee that is likely to increase each year.
Within the “right to use” option several plans can affect your ability to use a unit.
Fixed or Floating Time. In a fixed time option, you purchase the unit for use during a specific week of the year. In a floating time option, you use the unit within a certain season of the year, reserving the time you want in advance; confirmation typically is provided on a first-come, first-served basis.
Fractional Ownership. Rather than an annual week, you buy a large share of vacation ownership time, usually up to 26 weeks.
Biennial Ownership. You use a resort unit every other year.
Lockoff or Lockout. You occupy a portion of the unit and offer the remaining space for rental or exchange. These units typically have two to three bedrooms and baths.
Points-Based Vacation Plans. You purchase a certain number of points, and exchange them for the right to use an interval at one or more resorts. In a points-based vacation plan (sometimes called a vacation club), the number of points you need to use an interval varies according to the length of the stay, size of the unit, location of the resort, and when you want to use it.
In Part II, we will discuss how to check out a particular resort, how to buy and sell it, and various caveats to consider before making the plunge.