Timeshares allow you to use vacation property, usually at a luxury resort, hotel, or condominium, for a specific period every year. The cost of having this privilege is based on the location, size of the accommodation, amenities, and time of year. Overall, timeshare owners possess a fraction of real estate with either a fixed or floating period when they can use the property.
With timeshares, you may not have the burden of maintaining a vacation home as a full-time owner. But sometimes, that’s not a good enough reason to keep it.
Canceling a timeshare may be necessary if you cannot take complete advantage of the property or realize you made a mistake signing that contract. However, getting out of your timeshare contract can be somewhat challenging and time-consuming — but not impossible. Read on as we share five essential facts you should know about withdrawing from a timeshare contract.
Why Cancel Timeshare Contract
When purchasing a timeshare, you pay for the right to a portion of vacation real estate, which is often connected to a hotel or luxury resort. Signing up for this deal may have been a relatively simple process because timeshare sellers are infamous for their sales pitch to potential buyers.
You may have been on vacation, attended a sales presentation, and returned home with a timeshare contract. Sometimes buyer’s remorse sinks in after signing the agreement, and other times, you realize the deal is not as trustworthy as you initially thought.
In addition, many timeshare owners get hit with the reality of their financial obligations after signing the contract and determine that all those recurring taxes, fees, and assessments are just not worth it. Or some owners become dissatisfied with their timeshare when they discover it’s not as flexible or available as pitched in the sales presentation. So they change their minds and start looking for a way to terminate their contract.
What Does Canceling a Timeshare Mean?
Timeshare cancellation signifies exiting a timeshare contract with a full refund. For that to happen, you must cancel within a specific time from when you signed the contract.
It’s crucial that you read your agreement carefully to find out exactly how much time you have to void the purchase. You should also be aware that the “cooling-off period,” also known as rescission or revocation, can vary from state to state.
Depending on your timeshare’s location, you may have three days or an entire week to end your contract. Either way, canceling a timeshare requires immediate action. Once you’ve decided and are still within the rescission period, it’s best to write a formal letter, which we’ll discuss in more detail, and send it before the deadline.
Please note that timeshares outside of the US do not follow the same rescission laws. Some countries, like Mexico, may have a cooling-off period, but others may not. You would have to review your contract to determine if you still have time to back out of the deal or if it’s too late.
How to Terminate a Timeshare Contract
Sellers must provide information about timeshare cancellation in your contract, telling you how much time you have to rescind the deal. Checking with your state’s laws on timeshare contracts is another option. Or you can contact the consumer protection office in your state.
Once again, most US states and some foreign countries have rescission laws that grant anyone who has purchased a timeshare the opportunity to cancel within a fixed period. So if you act fast, you can leave a contract just as quickly as you entered it. Here are five strategies for getting out of a timeshare contract:
1. Write a Formal Letter
Ending a timeshare contract not only has to be done promptly, but you’re expected to notify the seller in writing. Some contracts may say a formal letter or document is not required. Still, it’s best if you provide one.
Your contract may outline instructions on what to include in your letter, but generally, your letter for timeshare cancelation should comprise the following information:
- Current date
- Your name, which should be the same as on the contract
- Your contact information (address, phone number, and email address)
- Name of timeshare company or organization
- A specific description of the timeshare and the date of purchase
- A worded statement that indicates your desire to cancel your timeshare contract
You’re not required to list a reason for canceling since you have the right to change your mind. As long as you’ve done so in the rescission period.
Once you’ve finished writing your formal request, you should take it to a notary public to be signed. Make a copy for your records and send the original letter to the seller.
2. Ensure Proper Delivery
If you want to ensure your contract is null and void, you must get your formal request to the seller on time. That requires proper delivery.
Your contract will most likely have specific instructions on where and to whom you should deliver your cancellation letter. You may be required to hand-deliver your formal notice, or you may have to send your letter by registered or certified mail. Whatever the preferred delivery method, follow the instructions precisely and within the allotted time.
If you don’t provide the correct information or closely follow the contract’s language, you risk your timeshare cancellation being invalid. Also, you should have proof of delivery for protection. So if you’re using delivery by hand, make sure it’s done by a reputable service or someone who can legally vouch the delivery was successful.
3. Communicate With the Timeshare Developer
As you can probably tell by now, each timeshare resort has its own process and requirements for purchasing and quitting a timeshare property. Some developers offer their owners opportunities to get out of their contract through various timeshare exit programs such as the “resale assistance” and “deed-back” programs. However, it may be a challenge to get into these developer-operated programs, which vary in detail among the companies.
Getting into a program can be challenging due to the requirements. Some developers won’t even consider you if you owe monies like resort fees or a mortgage if there is one. These stipulations may seem unfair since most owners want to cancel their timeshare because they cannot afford it.
And even if you managed to stay up-to-date with all payments, developers can find another reason not to accept you into their timeshare exit programs. Some developers may ask you to pay the resort to take back the timeshare, which seems unappealing but is an alternative if you desperately want to get rid of the timeshare. All in all, it’s best to reach out to the developer to find out exactly what your options are regarding timeshare cancelation.
4. Cancel Timeshare After Rescission
If you missed the deadline to cancel your timeshare, you might have difficulty getting out of your contract, but you still have some options. One thing you could do is develop a case against the company that sold you the timeshare if you have proof of fraudulent behavior. Some examples of that would be:
- Not including the rescission period in the contract
- Being dishonest about the interest rates or fees
- Using intimidation tactics to get you to sign the contract
You must provide legitimate evidence that the seller performed any of these acts. Otherwise, you would need to look into alternatives for cancelation.
5. Sell the Timeshare
Selling your timeshare is another option if you miss the rescission period and want to end your contract. It may not be ideal because you could end up taking a huge loss, but it’s still worth a try.
There are several sites you can use to list your timeshare. Free sites like eBay and Craigslist can potentially get you a sale, or you can try posting on sites that specifically feature timeshares. Just beware that some platforms may charge exorbitant fees to help you sell your timeshare.
The Worst Option for Canceling a Contract
You may feel the only choice you have left is to stop making payments on your timeshare. However, if you default on your contract, expect major consequences. You could end up affecting your credit score and go into foreclosure.
Since owning a timeshare is similar to owning a house when it comes to paying a mortgage and maintenance fees, the timeshare association could get a lien on your property and repossess it if you fail to keep up with your payments. They could also file a lawsuit against you so they can sell your timeshare to cover the lien. Or the association could take the non-judicial route and follow the state’s procedures for defaulted timeshares.
Find Out About Any Penalties
No matter what you decide, you should be aware of any penalties for rescinding your contract. In some cases, the developer could charge a timeshare cancellation fee based on their estimate of what it will cost them to re-sell your unit. In other instances, you may lose as much as 10% of your refund to cover any damages found after you’ve left the property.
Generally, penalties for a timeshare cancelation can vary based on the location. The more expensive the location, the higher the penalty will be. Check out these tips on canceling a timeshare and call us at 407-362-7859 if you need help exiting your timeshare contract.