BARRISTER'S BRIEFING: It’s Time to Talk About Timeshares
Leon Cameron, Esq. | March 13, 2017
We see the glitzy advertisements on television all the time. A low-cost timeshare offer beckons you away to a tropical or otherwise desirable location. Realtors and members of the public should always investigate to see if all that glitters is truly gold. The purpose of the article is to describe exactly what are the basic timeshare laws in New York and what consumers should know before purchasing one.
The definition of a timeshare is any arrangement for sharing ownership of a condominium, vacation home, or other interest in real estate where the joint purchasers may occupy the real estate during a specified period each year. If you ever receive a timeshare offer through the mail you should be aware that the offer is strictly subject to New York State law. For instance, under state law all timeshare advertisements must clearly use the term “timeshare” as opposed to “vacation club ownership” or “interval ownership.”
Furthermore, any offer that promises a free or low cost tour, which includes a timeshare presentation, are required to declare that the complete offering terms are in a New York offering plan available from the sponsor. Additionally, sponsors wishing to market in our state are mandated to disclose all conditions, terms and material facts of the transaction in writing to all prospective purchasers. Also, sellers must also afford buyers of a timeshare a seven-day grace period within which to cancel the transaction after signing a contract of sale.
Before buying a timeshare, consumers should know that they are likely entering into a financial and legal commitment that will bind them for the rest of their lives. It sounds dramatic, but holds true in most instances. Certain factors of the offering plan should be analyzed and weighed in the mind of the consumer:
In a “right-to-use” vacation-interval timesharing plan, a developer owns the resort that is made up of condominiums or units. Each condo or unit is divided into “intervals”—either by weeks or the equivalent in points. With this type of plan if the developer declares bankruptcy, the rights of all purchasers may be terminated.
Timeshares should be bought for recreational use and not for investment. The resale market for timeshares is quite limited and in some markets, does not exist at all.
Real estate brokers generally do not list timeshares. A timeshare purchaser may try to sell their timeshare on the open market, but this may bring the purchaser in direct competition with the sponsor.
The developer, or successor operator, fully controls the operation and maintenance of the facilities. Therefore, the facilities and services will be available only as long as the sponsor is able to provide them. In the nascent stages of the project, the failure of the sponsor to fulfill their obligations may require a small number of timeshare owners to cover the costs of the entire project.
After analyzing the potential prats and pitfalls involved, consumers should make financial comparison between the cost of the timeshare versus a comparable hotel or resort for the same period of time, factoring in the time value of money. While the purchase of a timeshare is largely a financial consideration, consumers in New York can be confident knowing that timeshare offerors are subject to strict state legal requirements. The New York Attorney General’s Office offers additional information on timeshare purchasing on its website www.ag.ny.gov.
Editor’s Note: The foregoing is for information purposes only and does not confer an attorney/client relationship. For a legal opinion or advice specific to your situation, please consult with a private attorney at law.