A Smart Look at the Evolving Legal Approaches on Timeshares

It is no doubt that today timeshares have become one of the top vacation accommodation options and given the somewhat unusual nature of the timeshare unit purchaser and the resort owner, a number of models for handling the legal relationship have emerged. The three most common types of these are the deeded interests, right to use, and leasehold agreements.

Under a deeded interest method of conveyance, the purchaser will receive a title for the real property that is being purchased from the timeshare developer. The unit owner, consequently, buys the right to use the owner’s rights to use it in perpetuity, sell it on and pocket the proceeds and leave it to others as part of the estate, when the owner dies. In effect also, the resort developer sells the ownership of various time periods for each unit.

Meanwhile, the right-to-use type of conveyance is not associated with deeding of the underlying real property to the purchaser. Instead, the individual is given contractual rights to use the timeshare facilities for a specified period of time. Typically, this would involve the interval purchased, say one week, but for time periods limited in the agreement, say 25 years.

For a leasehold agreement, it is similar to a right-to-use contract in that the purchaser holds a leasehold interest or other interest of less than a full ownership interest. This means that the purchaser has the right to inhabit the timeshare unit for a specified period of time, and at the termination of the lease, the property reverts to the timeshare developer. Usually, the time period concerned is shorter than with a right-to-use agreement.

Although there are many owners trying to get out of their timeshares today, this vacation option is unique in both the hospitality and tourism sector and the property ownership sector. In hotels, and in the accommodation sector, individuals will pay to use the unit for a specific time period, but this does not imply ownership nor does it enable the guest to claim user rights over the same time period.

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