The Hidden Risk Of Timeshares

Our Comments: One huge risk that you take on when purchasing a timeshare is the cost of repairing the facility if there is major damage to it (something you don't carry when you stay at a hotel or rent a condo). Of course insurance should pay for it, but it rarely works out to be that easy. And if you have to pay special assessment fees for damage, your losses will increase dramatically. Just one more issue that should make you think long and hard before buying:

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With no insurance settlement in sight for the $20 million in damages from Hurricane Ivan, Morritts Tortuga Club and Resort has gone into arbitration with its insurance company, Lloyds of London...

A special assessment fee of US$5.74 million had been charged to timeshare owners to cover the 15 percent deductible on the $20 million claim to the insurance company. Although most of those fees have been paid, numerous owners are claiming that actually the fee is not their responsibility as part of their purchase agreement and should be paid by the developer.

Furthermore, it was the developer's responsibility to carry adequate insurance coverage. And since the industry standard throughout the Caribbean is 5 percent, this is a sign the property may be under-insured, which they say is a clear example of financial mismanagement...

According to some timeshare owners, the attorneys for Morritts Tortuga have said any substantial legal fees that it accrues will be passed on to the timeshare owners in another special assessment fees... Entire Article

Timeshare Scammed In Vegas

Our Comments A typical timeshare strategy - hook you in with an offer of some supposedly great "free" deal which ends up not being so great plus you have a timeshare you can't get rid of. From one of our readers...

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"I was in Vegas when we got scammed by the high pressure sale tactics - was promised 2 free cruises with purchase of time share - was promised we could rent out the property and make enough profit to pay for years costs - was told property would increase in value ever year and if we wanted to sell would be no problem as there are hundreds of buyers out there...

REALITY. The cruise was free if you paid for all fees associated with the cruise - these fees are higher than if you just booked the cruise yourself. No one wants to buy our timeshare. It's been listed for 12 months not and not even a buyer offer has been made. It takes a lot of advertising and months of planning (general two years if you want to rent it out). I will never invest in a time share again." - BB

Luxury Timeshare Yachts

Our Comments: I came across an article in the newspaper this morning and I simply cringed when we saw the idea of a luxury boat timeshare. This concept will end up being far more costly to anyone who gets involved that even a regular timeshare unit (note: there seem to be some boat fractional time units where there is no ownership of the boat and set fees which seem a little better but should still be approached with extreme caution). Having been around yachts (not quite this size, but I did used to race 36 footers) their value dives far faster that condos plus the upkeep of them is extremely expensive. Definitely no discount parts in the luxury yacht business. Just as with regular timeshares, you can rent something like this for a week for far less than you could ever getting into a timeshare with it. Lastly, weather is a huge determining factor with sailing - sign up for a set time each year and you may never even get out. Avoid at all costs.

Don't Prepay To Sell Your Timeshare

Our Comments: If you buy a timeshare, in all liklihood it's going to be hard to sell and certainly don't prepay to try and get the timeshare sold (it's no better than throwing money out the window).

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Timeshare vacations are still popular with some, and salesmen are still out there making pitches for them.

But, before you buy you should know they're not easy to resell and there are a lot of companies ready to take your money by offering to sell them for you... Entire Article

Man Pays $84,000 In Fees To Get Rid Of $9,000 Timeshare

Our Comments: This just goes to show that even smart people can make poor financial decisions when put under high pressure sales tactics, something that the timeshare industry uses in vast amounts. The fact that timeshares have been the top complaint under new consumer laws passes in Singapore doesn't surprise us in the least bit.

This entire episode highlights why you should never pay an upfront fee for selling your timeshare.

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He paid $9,000 for a time-share membership plan in 2001. But to terminate the membership, sales manager K B Ong paid a mind-boggling $84,000 fee to a time-share resale company to help him do so...

It's like buying a car for $50,000 and forking out another $500,000 to scrap it...

'I was also not given time to think because the company was pressuring me to make immediate payments each time. I felt I had to pay because I was stuck, having already paid so much...

'I also felt misled when he told me that some time-share consumers who tried to terminate their memberships had been sued for more than $50,000 by time-share companies.'

Case said that under the Consumer Protection (Fair Trading) Act, Mr Ong could file a claim against the resale company for alleging that it was in contact with ATC when this might not be the case.

The CPFTA was enacted on 1 Mar 2004 to curb unfair business practices and enhance protection for consumers.

Time-share companies have topped the list of breaches of the CPFTA since its enactment till end last year, reported The Straits Times... Entire Article

Florida Attorney General Lists Timeshares As Top 10 Scam

Our Comments: The fact that Timeshares made the list of the Florida Attorney General's list of most common scams doesn't surprise us in the least bit. From the article:

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Timeshare scams occur both at the time of the original purchase and at the resale. Beware of a hard sales pitch or an up-front fee. Consider reselling the timeshare "by owner," by placing an advertisement in a newsletter or magazine read by potential timeshare buyers, or listing the timeshare with a licensed real estate broker in the area where the resort is located... Entire Article

Another Timeshare Article

Our Comments: Another article on timeshares this time in the San Francisco Chronicle. While not as informative as the Chicago Tribune piece, it does highlight a few of the pitfalls of timeshares at the end of the article. While the article says that timeshares can work for cautious buyers, we'd say "extremely cautious buyers who know all the facts beforehand" which would mean that for most people timeshares being worthwhile would be the exception rather than the rule.

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...Don't consider a timeshare an investment; the value of a timeshare interval almost never increases. If you like the idea, figure the buy-in price as a prepayment on future vacations, to be amortized over a period of years. Be skeptical about puffed-up claims for exchange opportunities in exotic locales. The most common complaint from timeshare owners is that they can't ever find an acceptable exchange interval.

Watch out for bait-and-switch or upgrade pitches. When owners complain about lack of exchange opportunities, promoters often urge them to upgrade to better located and more expensive intervals, which is supposed to expand exchange opportunities miraculously. Also beware of escalating management, maintenance and other fees. The developer/owner/manager may increase fees with no effective constraints.

If you like the idea, the best strategy is to buy a resale. Timeshares, like new cars, can lose 50 percent of their value as soon as you buy them. In the resale market, you can buy at 10 to 50 cents on the dollar of the original price. Check with a broker in an area you're considering, or go online to one of the many timeshare resale sites. Entire Article

Informative Timeshare Article

Our Comments: The Chicago Tribune came out with an informative article titled 10 reasons why you should think hard about time shares highlighting some of the pitfalls of purchasing a timeshare (free registration required to read the article). We feel that these are quality warnings that everyone who is considering purchasing a timeshare should read. Here are the 10 things a timeshare salesman is not likely to tell you highlighted:

1. A time share is a lousy investment
2. Fees add up in a hurry
3. Travel costs can add up to a lot of money
4. Time shares are complicated
5. The break-even point is many years away (if ever)
6. You'll lose vacation flexibility
7. Time-share prices are very negotiable
8. Don't buy the time share from me (or in other words, by used)
9. Timeshares come with lousy financing
10. You'll have a hard time unloading your timeshare

Read the Entire Article

Bahrain To Regulate Timeshares

Our Comments: We applaud Bahrain for taking the step to regulate timeshares even before any timeshare units have been built in their country and hope they disregard the wishes of those in the timeshare industry that think they should keep the regulations the same as the international community. We hope that they will make them much stricter in favor of the consumer rather than the timeshare builders.

While the regulation is a good first step, we ahve concern that the article is already referring to timeshares as an "investment" - something that should always make you turn and run for the hills as quickly as possible.

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A new law regulating the sale of timeshare properties in Bahrain has been proposed by a group of MPs.

The move follows some alleged incidents by Bahrainis who purchased properties that did not exist.

The MPs say that the sale of apartments, villas, chalets and hotel rooms within and outside of Bahrain should be regulated under clear laws...

Under the proposal, the contracts would have to be filed with a government body and the laws would clearly state the rights of buyers to use and rent property...

Timeshare properties allow investors to own properties for one or more months a year for a certain period of time.

It can be a cheap way for them to spend their holidays or the properties can be rented out for extra income.

"There are no timeshare properties at all in Bahrain so a law regulating it could open up a huge industry," he said... Full Article