Tenants & Homeowners
Before you buy a timeshare
Beware of envelopes bearing gifts. How many New Yorkers have been thrilled to receive a notice that, as part of a promotional effort to sell timeshares, they were the lucky winners of a free trip to a tropical paradise? It's hard to resist the lure of a dream come true for little or no expense.
Unfortunately, all that glitters is not gold. All that is promised is not delivered. Often the free trip turns out to be a grueling trek from timeshare to timeshare, punctuated by endless sales talks, and topped off by a whopping bill for hidden costs and unforeseen charges.
At the Office of the New York State Attorney General, we offer you some advice and show you how to protect yourself when you are contemplating buying a timeshare.
Of course, not every prize winner turns out to be a loser. Some reputable sellers of timeshare products do deliver all that they promise. How can you sift through the offers and figure out who's scamming you and who's not?
A timeshare as any arrangement for sharing ownership of a vacation home, condominium, or other interest in realty where each of the joint purchasers may occupy the unit during a specified period each year.
Any timeshare offer mailed to your home in New York is subject to New York law. Carefully check the letter you received.
If an offering plan has been filed in New York, this gives you extra protection:
- Any offer of a free or low-cost tour that includes a timeshare presentation must state that the complete offering terms are in a New York offering plan available from the seller.
- A seller wishing to market timeshares in New York must fully disclose the terms, conditions, and facts of the transaction to all prospective purchasers.
- The seller must also offer buyers an opportunity to cancel their purchase for seven business days after they have signed a contract of sale.
Sometimes a seller avoids using the term "timeshare" altogether, substituting "interval ownership" or "vacation club ownership" for the word "timeshare." All advertisements to New Yorkers must clearly and prominently use the term "timesharing" to describe the product the seller is offering. No matter what terminology is used, the offer is subject to the same rules and regulations. Before you pack your bags, be sure to establish that the timeshare is on file in New York.
Did you really win anything?
Some of these offers create the impression that you've already won something, like a sweepstakes or lottery. They may promise you a car, television, or some other type of extravagant prize. However, in order to collect, you are usually required to visit the timeshare. Don't be fooled.
If any advertisement or direct-mail piece makes such an offer, it must state the following:
- a full description of the exact prize won
- the cash value of the prize
- whether you are required to submit to a sales presentation
- all terms and conditions attached to the prize
A seller's letter will often appear to be an urgent notification to winners in a contest. If the winners want to take advantage of a special deal, they must act now. This sense of urgency is meant to sweep the recipient into impulsive action.
This sales technique is against New York law. Under the law, advertisements must "not appear to be an urgent and official notification to winners in a contest and must not use any other means to convey a false sense of urgency or importance." Reputable timeshare developers are familiar with our local requirements. If their competitors are ignoring our advertising rules, they may also be setting other traps to catch you.
Before you sign anything, make sure you have been given an offering plan that has been filed in New York, even if the timeshare or you are out of state. New York law requires that if any business is transacted in New York, the offerors must be registered here. If the seller has decided not to file in New York, they should reject your business unless the entire sale is conducted out of state.
If a plan has not been filed in New York, you might be dealing with an out-of-state developer who is running the show in whatever fashion they like. Under New York law, any seller doing business in the state must provide you with full and complete information concerning the material facts of the deal. This might include the seller's identity of the seller, their financial condition, the status of the property for sale, the existence of any risks or problems, and any other issue that you may consider important in your decision to purchase.
If a New York plan has been filed, you have the right to cancel within seven business days after you sign a contract. Once you have the offering plan, be sure to read it before the seven-day cancellation period expires. We encourage you to show it to your attorney or financial advisor for help in deciding whether to stay in the deal. Don't let high-pressure tactics force you into signing anything — some salespeople specialize in aggressive sales techniques. Don't be afraid to ask questions. Insist on receiving the answers in writing, or having the salesperson show you the plan.
What is most important is that you use your best, and most prudent judgment. These are often long-term commitments. Once you enter into one, it can be difficult to get out. Remember: You can always just say no.
Before deciding to buy a timeshare, remember that this decision involves continuing financial and legal obligations. Does it make sense to take this deal? Buying a timeshare could be a commitment that you have for the rest of your life.
Examine the special risks summarized at the front of the offering plan.
As you think about the long-term commitment you may make, consider the following factors:
- In a right-to-use timesharing plan, if the sponsor declares bankruptcy, your rights as a purchaser may be terminated.
- You should buy a timeshare for personal recreational use and not for profit or investment. Often no resale market exists for timeshares.
- Most real estate brokers will not list timeshares. You can try to sell your timeshare on your own, but this may bring you into direct competition with the seller, who may have a large inventory of unsold units.
- Full control for the adequate operation and maintenance of the timeshare lies with the seller or a successor operator. Therefore, the facilities and services are available only as long as the seller is able to provide them. During the early years of the project, if the seller fails to meet their obligations, a small number of timeshare owners will have to cover the costs of keeping the entire project going.
After examining the risks, you still have to decide whether the convenience and appeal of the timeshare is worth the price. Compare the expenses with the cost of a comparable hotel or resort for the number of years you plan to own the timeshare and the time value of your money.
Remember that you will be liable for many financial obligations:
You will have to produce a down payment. If you take out a loan, you may have financing costs for the rest of the purchase price.
You will be paying annual timesharing charges to maintain the unit. You might also be liable for future special assessments that management considers necessary: These assessments are hard to predict and might show up when you least expect them.
Even after you have paid all the costs of owning a timeshare, you will still have typical vacation costs, such as meals, transportation, and miscellaneous expenses.
Before entering any timeshare agreement, be sure to consult with a financial advisor.
The new breed of timeshare developers has seized upon the concept of flexibility to help market their units. You can sometimes trade or swap for different weeks of the year at different resorts all over the world.
Keep in mind, however, that if you purchase an undesirable week at a bargain price, you're probably not going to be able to trade it for anything much better. Some timeshares are set up so that once you have purchased, you still are not guaranteed a specified time interval.
These resorts are operated on a first-come, first-served basis. Their internal reservation system requires that owners get in line to obtain a reservation. You're usually promised that you'll get some reservation, but it may not be your first choice.
The Office of the New York State Attorney General enforces the rules and regulations that protect you as a consumer against fraudulent timeshare practices. If you have any questions or concerns, don't hesitate to call or write.
The Attorney General and staff are here to help you.
- Any timeshare offer mailed to your home in New York or made to you in New York is subject to New York law.
- Any offer of a free or low-cost tour that includes a timeshare presentation must disclose that a timeshare is being offered. It must refer to an offering plan that has been filed in New York.
- You always have seven business days to cancel after signing a contract. You have the right to a full refund.
- Carefully read the offering plan and be certain you understand it. You may want to consult an attorney or financial advisor to see whether the deal makes legal or financial sense for you.
- A timeshare ad cannot appear to be an urgent and official notification to winners in a contest. It must not use any other means to convey a false sense of urgency or importance.
- Some of these offers are designed to create the impression that you've already won something, like a sweepstakes or a lottery. To collect, you usually must visit the timeshare. Any advertisement or direct-mail piece making such an offer must state:
- full description of exact prize won
- obligation to submit to a sales presentation
- all terms and conditions attached to the prize
- The Attorney General enforces these rules and regulations to protect you, the consumer. Refer any questions or problems to the Real Estate Finance Bureau at 212-416-8122, 28 Liberty Street, New York NY 10005.
- Remember, in a sweepstakes offering, the odds of winning anything other than the least valuable prize are very small.
- You can just say no to signing a contract, check, or credit card receipt.