A A A
23/02/2009

Timeshare

What is timeshare and what do you need to watch out for with contracts for long-term holidays so as not to be caught out?

Timeshare and other long-term holidays

Timeshare is a contract concluded for a period of several years that grants a private individual the right to use an immovable property for a well-defined period every year. These are often holiday homes, which the buyer may use during one or more weeks. In addition to the original purchase price, the buyer of a timeshare will have to pay annual fees to cover maintenance and management costs, insurance and taxes.

All kinds of other holiday products have been developed alongside this classic timeshare formula. You can, for example, buy points which you can exchange every year for a holiday home for a specific period and at a specific value. Holiday clubs are another example. You buy a membership in a holiday club, as a result of which you enjoy a discount every time you reserve a stay from the catalogue.

Top

Pay tomorrow for a holiday in the future

All these holiday formulas appear to be advantageous at first sight. Yet they also entail many disadvantages, of which the seller of course says nothing.

Timeshare and equivalent products appear to be financially attractive in the first instance. Thus you can enjoy the use of an apartment during your holiday abroad at a price that is significantly lower than if you were to buy that apartment.

Still there are many who quickly regret having signed a contract for this type of scheme. These are in fact holiday formulas where you pay a large sum in advance for holidays in the future. If the buyer no longer wishes to make use of his contractual rights, he loses his money.

Timeshare is therefore a poor investment, contrary to what cunning salesmen try to make you believe. This is all the more obvious when you try to sell your timeshare on to someone else. This is very difficult or even impossible. If you do manage to sell your timeshare, then you will usually sell at a loss.

What is more, the maintenance fees can go up very quickly, the apartment block may be badly managed, or the company could go bankrupt. Also changes to the buyer's private life may mean that he does not wish to or cannot make use any longer of his timeshare. Yet timeshare contracts never include a clause providing for total or partial repayment of the amount paid on signing the contract.

Top

Watch out for swindlers

Sellers use aggressive sales techniques

Timeshare sellers usually approach their customers at their holiday destination. They often approach a holidaymaker on the beach and give him a scratch card. When it turns out that the holidaymaker has 'won' they ask him to come along to collect his prize. Once he has arrived in an often remote holiday apartment block, the 'winner' is required to attend a presentation before he can collect his prize. During this presentation, which may last for hours, the sellers try to convince the consumer of the advantages of the timeshare product. Exhausted, the consumer signs the contract as the only way to escape from the salesmen, a signature he will quickly regret.

Another sales technique is the promise of a 'cash-back'. Here the seller promises that you will get back your original investment several years after buying your timeshare. Given the number of complaints we hear about this, we consider these formulas to be fraudulent and strongly advise you not to enter into such a contract.

Top

Contracts are unclear and reselling impossible

Such contracts are often very vague about the additional costs of such a purchase, and whether you can change your mind or terminate the contract.

The annual charges turn out to be higher than expected and increase disproportionately over the years. If the consumer wants to resell his timeshare, points or membership, this turns out to be very difficult, because there is virtually no demand. Some dishonest businesses try to relieve you of even more money through false promises. They assert that they will recover your original investment when they sell the timeshare for you, but demand administration fees to do so. Ultimately the promise to sell the timeshare turns out to be untrue and the consumer has again lost more money.

You can find out more information on the reselling of a timeshare or equivalent product in our brochure in Dutch and in French.

Top

The European Union protects timeshare owners

Such dishonest trading practices led the European Union to draw up a Directive on Timeshare in 1994.

This Directive states that the European consumer must receive detailed information before he can sign a contract. The contract must moreover include details of the basis used for calculating the amount of annual charges. It must also state whether or not it is possible to join a scheme for the exchange of contractual rights. Moreover, the contract must be drawn up in the language of the consumer's place of residence.

The Directive gives the consumer the right to cancel the contract, without giving reasons and without charge. He must do so by registered letter within 10 calendar days.

The Directive prohibits any payment before the cooling-off period has expired.

Attention: this Directive only applies to timeshare contracts lasting for a minimum of 3 years and in relation to a contractual right of use of a minimum 1 week per year. It offers no protection to consumers who join a holiday club, to buyers of points or to buyers of a timeshare that does not fulfil the aforementioned conditions.

More and more timeshare products fall outside the scope of this Directive. Dishonest salesmen deliberately develop products with which they can circumvent the Directive.

For this reason, the European Commission started up a procedure to revise the Directive in 2007. This will expand the definition of timeshare and will also apply to other long-term holiday products, to resale and to exchange.

Consumers who conclude a timeshare contract under duress are not only protected by the legislation on timeshare, but they can also rely on the European Directive on dishonest trading practices, which prohibits misleading and aggressive selling techniques. It is however very difficult, if not impossible, to demonstrate that you have been the victim of these kinds of practices.

Top

Buying and selling timeshare: be careful

You can find blacklists of timeshare firms on the internet, but you should remain wary, because not all dishonest firms are listed there.

Be wary if you are approached by a firm that wishes to sell timeshare or wants you to sign a contract to resell your timeshare. Think carefully about the consequences of your decisions.

If you do decide to buy, check whether the charges linked to your purchase are clearly stated in the contract, as well as the basis for the calculation and the manner in which they will evolve. Bear in mind that you will have to pay these charges every year, even if you do not live in the holiday home.

If you buy points, find out about their value, the available destinations and the weeks.

Do not trust firms that seek to buy or sell your timeshare at a (suspiciously) cheap price. These firms lead you to believe that they have already found a potential buyer in order to encourage you to sign a contract. Do not pay anything until your timeshare has actually been sold.

Do you have any questions about timeshare? Feel free to contact us. We will be able to give you advice.

chn/kme