Timeshare Consumer Protections

Over the years, the American Resort Development Association (ARDA) and its members have worked with state and local regulators to establish laws and regulatory guidelines to provide consumer safeguards when purchasing a timeshare. As a result, when purchasing from a U.S. developer, consumers have certain protections and rights. Unfortunately, these safeguards do not always apply for purchases from non-developers or companies based outside the U.S.   

 

DISCLOSURE: 

Buyers are given the benefit of disclosures to help them understand all of the facts and obligations surrounding timeshare ownership. Developers are required to explain the obligations and risks of timeshare ownership by providing one of the following forms of disclosure: 

  • The required state disclosure which details all of the important specifics of the timeshare plan;
  • The purchase contract disclosure which focuses on the initial and ongoing financial obligations of the purchase; and,
  • The public offering statement which describes the accommodations and facilities of the timeshare plan and other important features such as annual assessments, reservations and use rules.


RESCISSION: 

Buyers also have the right to cancel their purchase within a limited period of time. During this period of cancellation or rescission, which is usually 5 to 10 days depending upon state law and company policy, a buyer’s right to reconsider their purchase is absolute and cannot be waived or relinquished. 

Buyers also have the right to hold their money in escrow until the sale is final. The buyer’s deposit and other pre-closing payments are kept in an independent escrow account for safekeeping until the sale is final and the developer has delivered the promised timeshare product. 

 

HOMEOWNER INVOLVEMENT 

Timeshare interests are comprised of long-term, prepaid use rights in vacation  accommodations. Further, timeshares that are backed by real estate or business interests provide purchasers with additional rights to receive information and to participate in certain ownership and management decisions.

 

FINANCIAL ASSURANCES

A developer is required to offer guaranteed financial assurances that each timeshare purchased will be delivered and remain free and clear of the developer’s debt or future financial status. In order for a developer to offer a right-to-use or timeshare license plan, they must obtain a non-disturbance or subordination agreement from any lien holder against any timeshare accommodation or facility. This guarantees that the timeshare use will continue no matter who owns the accommodations or facilities.

 

ARDA CODE OF ETHICS 

If a resort developer is a member of ARDA, it must abide by the ARDA Code of Ethics. Failure to do so may result in membership suspension or expulsion from the Association.