After a recent experience, I wanted to offer a consumer alert and some practical advice about buying a timeshare, as well as how to rescind a timeshare contract.
Before Purchasing a Timeshare
If you are thinking about purchasing a timeshare, it is my opinion that it is almost certain to be a bad deal and investment. From my own personal experience, I actually went through the free visit and subsequent purchase, and against my own best judgment, I signed my name to a timeshare contract. Below I list why I decided to purchase a contract, and how I found those reasons to be largely unattainable. Luckily, I was able to rescind my contract and I hope that by posting this article, I can prevent someone from making a bad decision.
1. I wanted to use my timeshare primarily to travel around the world. The actual timeshare was located at Massanutten, Virginia. Although the resort was beautiful and packed full of fun, I had no intention of vacationing in Virgina every year for a week for the remainder of my life. Instead, based on the resort’s promise, I was looking to trade in my timeshare week in order to be able to vacation in locations around the world.. I had Paris, Costa Rica, and even Dubai on my shortlist, and the representatives even made this a selling point, literally promising the ability to travel to virtually any location around the world. However, in actuality, I found that it is extremely difficult and costly to trade your week for a week in a highly desired place, which makes sense– why would anyone want to trade their week in Dubai with you in order to come to Virginia? They do give some confusing pathway to make it happen, but it is next to impossible, and in reality, you probably will have to try to reserve at least 1-2 years in advance and will have to spend considerable money to have your week swapped. In other words, its next to impossible, and if you are lucky to get a swap, the time and money you expend would easily equal or exceed the amount you would spend just going on a vacation to the location without buying a timeshare.
2. I thought the timeshare was an investment. I never actually believed this one… But I list it because it was repeated to me multiple times by the sales representatives. As standard advice during a divorce, I typically advise my clients that a timeshare is a liability not an asset. The value of a timeshare is highly unlikely to increase It almost certainly has little to no resale value. In fact, I have heard of people who cant even give a timeshare away; many charities wont accept them. Just look on any timeshare resale website and you will likely find the timeshare you are considering at a fraction of the asking price. Many timeshares are listed at $1 or free, because the owner is so desperate just to get someone to take over the maintenance costs.
3. Although the timeshare interest rate was sky high… I can “just refinance.” If its that easy, why not call your bank on the spot and get a loan decision on the spot. Banks are highly unlikely to refinance a timeshare loan because it has no value. If you default on the loan, they have no desire to be stuck with your $25,000 loan when the underlying “asset” is worth about $1 on the open market.
Here is the ultimate purchase test: Do I want to pay $25,000-$100,000 in order to come back to the property that is on my contract (in my case Massanutten, Virginia) year after year? In other words, don’t make a decision based on seeing the world. The answer to this question is likely to be NO. So there you go.
How to Cancel a Timeshare Purchase
If your first question is “should I cancel the purchase of the timeshare I just made from the developer” let me start by saying the answer is YES!
The fact that you are having ANY second thoughts about such a large purchase (and one that is very difficult to get out of) means without any doubts, you should cancel that purchase. Under no circumstances should you just “go ahead” with the purchase thinking that it truly is the deal of a lifetime, because even if you do the research and find out its exactly what you want, that same deal will be available for you from that same resort next week, next month, even likely next year. You however ONLY have one shot at cancelling the deal, and if you do not act on it you will be unable to back out of the deal.
Other valid reasons to rescind include:
- You can buy the exact same product from an existing owner on the resale market for between 0 and 15% of what you just paid.
- You might have felt pressured into making such a large purchase without having the time to do the research
- You may have made a bigger financial commitment than you are comfortable with now that you are home and have had time to think
- You may not know exactly what you purchased and how that timeshare works
- You may have financed your purchase at a very high interest rate
- or you may simply just have buyers remorse!
- Fact is, there are a million valid reasons to cancel your purchase, and no valid reasons not to back out now and do your research until you are perfectly comfortable that you are making the right decision!
What is Rescinding?
Rescinding is a completely legal way to cancel the purchase of a timeshare and get all of your money back, within a certain number of days. The number of days you have to rescind differs from state to state (see below). The right to rescind during a “cooling off period,” is your legal right, and the developer can’t change that, no matter what you may have been told.
Your salesperson may have verbally asked you to promise not to rescind – all that means is that he was trying to manipulate you into giving up your legal rights! Neither the salesperson, or the developer, have any say about your right to rescind – this right is established by local law and is not affected by any verbal promise not to rescind. Some salespeople in Mexico have even been known to ask buyers to sign away their right to rescind, but that isn’t legal either. So even if you signed a paper stating that your don’t have a right to rescind, or that there is no right of rescission in Mexico, you still DO have the right to rescind.
How long do I have to Rescind?
Great question, and it varies by state to state ranging from 3 days to 15 days (however the average is about a week), a list of the currently known rescission periods are broken down by state here: State Timeshare Laws and Info note that the “state” law that applies is almost always the state in which the Timeshare was purchased in, not the state you live in.
Ok, so I am within that period, how do I Rescind?
Great question number two, you are on a roll! By law, in every sales contract (the one you signed and must have a copy of) must contain exact instructions on how to cancel your contract and will (should) also include the length of time one has to cancel. Oddly enough this section is many times buried and or hidden within your contract making it “less than obvious” for the owner to discover, ill let you draw your own conclusions on why that is.
Once you locate these instructions you MUST FOLLOW THEM EXACTLY, you dont want to mess around here as you are generally risking thousands of dollars, and by the time you discover you made a mistake, your cancellation period is now over. Most of these instructions spell out that you must MAIL a note containing your personal information, along with the purchase information and a request to cancel the transaction. In my case, it required the rescission letter to be mailed certified mail, return receipt requested. I have not heard of any that require anything substantial or complicated, so keep it simple and include only what is requested, you do not need to fill out an explanation or make any excuses, and by all means do NOT call the salesman and ask to cancel, they are the ones that talked you into buying, and will make every effort to get you to change your mind about cancelling!
also note the following:
- Along with the letter, send a copy of the main page of the contract.
- Be sure you send your rescission letter using the exact form of mail/communication stated in the instructions – you may be required to FAX or mail your rescission – follow these instructions exactly.
- If you are required to mail your rescission, make sure it is postmarked within the required time and that you get a return receipt when it’s delivered.
- If you are required to FAX your rescission, make sure you keep a copy of the FAX receipt to document the date and time.
- If the rescission instructions require you to send a FAX, you should also mail a copy of your rescission papers via a trackable mail delivery service with proof of delivery.
- Make copies of everything you send – don’t send any original documents.
- Expect your salesperson to try and talk you out of it. Don’t get embroiled in a long discussions, just keep politely repeating, “I’m not interested.”
- You may be required to return the owner’s guide or other materials you got as a new owner.
If you have any doubt about the proper procedure for rescinding your timeshare contract, find and obtain a consultation with a licensed attorney- even if the consult costs a few hundred dollars, because that amount does not even compare to the total lifetime costs associated with what you will pay for a timeshare.
Opinions and conclusions in this post are solely those of the author unless otherwise indicated. The information contained in this blog is general in nature and is not offered and cannot be considered as legal advice for any particular situation. The author has provided the links referenced above for information purposes only and by doing so, does not adopt or incorporate the contents.