Timeshares – also known as vacation ownership – are a growing industry that’s becoming increasingly popular. While they can be a good way to save money on annual travel, there are also some things you should know about them before you decide to buy one.
Unlike owning real estate, timeshares aren’t something that you purchase on your own; you buy into a shared-ownership plan with other owners. This means you can’t resell your unit or change the terms of the agreement without approval from other owners.
Most people don’t realize that timeshares can be complicated, and they often buy into them without really knowing all the ins and outs. The following are some of the most important timeshare facts to know:
You Own a Part of a Resort Property
A fee-simple timeshare is a deeded interest in a condo, apartment or other vacation property that is owned in a fractional basis, with each owner receiving a 1/52nd ownership in the property along with 50 other owners who share their ‘timeshare week’ with them. This is a common type of ownership, and the World Tourism Organization estimates that 90 percent of the resorts in the United States use some form of this kind of system.
The key to understanding this type of ownership is that each individual timeshare owner has a ‘right’ to a ‘week’ at the resort, but the actual time spent on vacation varies from owner to owner. This type of ownership isn’t for everyone, as it can be expensive and can sometimes be difficult to book.
There are different types of timeshares to choose from, based on what you’re looking for in your vacation destination and your travel style. There are floating week timeshares, fixed-week timeshares, and timeshare resales.
Fixed-Week Timeshares – These are the most common timeshare ownership, and they come with set dates when you can use your ownership week at the resort. Some of these are for certain times of year (like high-season or low season), while others can be used one week per year at any time.
Some timeshares have a lifetime agreement and will be passed down to family members. This can put your heirs in financial trouble because they won’t be able to sell their units or pay yearly maintenance fees, and will be stuck with the burden of owning a timeshare for life.
The downside to this type of ownership is that the owner can’t change the date or location of their timeshare, and they can’t sell it for a higher price than what they paid. This can become costly if the developer decides to raise the yearly maintenance fees or if you need to relocate for work or medical reasons.
It’s also worth noting that many developers don’t want their timeshare units sold for a lower price when they’re inherited, because it would mean they wouldn’t be able to collect those yearly maintenance fees or pay the mortgage on their property.
