Depending on your level of commitment phobia, you may want to consider the meaning of the word “perpetuity” before signing a timeshare sales contract. Known for easy ingress and knotty egress, timeshare ownership is associated with stories enumerating the challenges of off-loading the thing. One case in point: timeshare listings on eBay starting at $1? Is this a scam, or is it buyer’s remorse in the form of desperation? In all fairness, not every instance of timeshare ownership is Draconian; many owners are completely satisfied with the ease of a pre-planned yearly vacation and the fees associated with ownership.

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For starters, timeshares are not a real estate investment. They do not; appreciate in value, fare well in the resale market, or generate income for the owners. Rather, they are a “lifestyle purchase,” or a prepaid vacation with a guaranteed week per year, or other stipend of fractional ownership, depending on the contract signed with the timeshare developer.

Sometimes, sales contracts include a no exit clause. Read the fine print to assess any implied restrictions on sales. On the other hand, if your timeshare is classified as a “vacation club,” there is no lifetime ownership.

The recission period is your right to back out of the contract. "Unfortunately, your right to cancel is usually only available immediately after the closing and only for a very limited amount of time," according to Vincent Averaimo, a partner with Milford Law in Connecticut. Normally the time period is three to 15 days and varies by state.

For those interested in a tried-and-true vacation experience, timeshares afford a no-stress, pre-planned getaway to the same place at the same time of year, for the rest of your life. The property and its associated fees eventually pass on to your heirs. Floating in the infinity pool staring at the blue sea with the tranquility of vacation-induced relaxation might not be the best place to make such a long-term decision.

Time for a reality check

  • If you must borrow money to purchase the timeshare, walk away. For starters, banks will not lend you money to buy one due to the rapidity of their depreciation.
  • Often, the timeshare developer will be happy to step in and arrange financing at a much higher percentage rate than any bank.
  • Furthermore, if you foreclose, the unpaid mortgage and maintenance fees are usually higher than the timeshare’s value. In which case, lenders can seize/pursue your other assets.

If you do plan to close the transaction, shop for a unit with an owner’s association, or “club.” Functioning like a condominium board, the association gives voice to the collective owner’s group. Read and research the ins and outs of the implications of your sales contract prior to signing.

Types of ownership

  • Fixed Week
    Normally, the buyer owns the rights to a specific unit during the same week, year after year. The contract will stipulate details. Flexibility on dates is not a typical part of this arrangement.
  • Floating
    The buyer has more freedom in reserving dates to utilize the timeshare – within a given parameter. On the downside, it can be difficult to book your week given you are up “against” other floating timeshare holders also trying to book prime vacation weeks.
  • Right-To-Use
    The timeshare developer maintains property ownership in this arrangement. And, the buyer leases the agreed-upon property for an agreed-upon amount of time (days and years).
  •  Points Club
    Similar to the floating timeshare, but the buyer can stay in different locations, depending on how many points they accumulate from the club. Points are “currency” and reservations are on a first-come-first-served basis.

Exit strategies

According to Timeshare Exit Team, 85 percent of the 9 million timeshare owners in the U.S. are looking to dodge their timeshare contracts. In fact, the demand to escape timeshares is such that an entire sub-industry of exit companies cropped up. Buyer beware. Check with the Better Business Bureau before engaging with any of them.

If you find your life situation changes and travel is no longer feasible, or if escalating maintenance costs become too burdensome, how can you opt-out?

1. First, try negotiating with the resort. Wyndham and Diamond Resorts have programs for those wishing to “transition out of vacation ownership.” Even so, the resort holds the decision-making card and may opt-out of assuming ownership of your unit.

2. Other routes you can take: Rent out your timeshare to offset a portion of the yearly maintenance fees. Alternatively, sell. Again, avoid scams by working with The Licensed Timeshare Resale Brokers Association, or LTRBA. Their brokers do not charge an upfront fee and are educated in timeshare industry know-how.

3. Demand everything in writing and hire a real estate attorney to review any documents before signing.

4. Never wire money, pay in cash, send a money order, or a certified bank/cashier’s check. In the case of fraud, law enforcement will have difficulty tracking and recovering your funds.

5. Pursuing legal action with an attorney to end your timeshare ownership is another option.

Santa Barbara attorney Tom Harriman tackled his client’s disengagement from her timeshare as follows: “First, we asked the timeshare company to buy it back. They refused. Then we offered to give it back. They refused.” When he finally advised his client to cease paying the annual maintenance, the timeshare company took the unit back. Harriman advises this is a risky road, given the timeshare company can report your non-payment to credit bureaus.

Is there really a way out of a timeshare? Yes, there is. Keep in mind; it takes more work than getting in. Non-payment can result in foreclosure. In this case, consulting a bankruptcy attorney for pros, cons, and longterm financial advice is advised.