Timeshare Tips

Key considerations when you’re buying north or south of the border.

By Lisa Ann Schreier

MARCH 2006 ALASKA AIRLINES MAGAZINE (reprinted with permission)

People who ski British Columbia’s superlative slopes or enjoy Mexico’s sunny beaches often think about buying into a timeshare resort at these favorite vacation destinations. Favorable exchange rates north and south of the border may make it especially attractive to own or lease fixed-price accommodations via a timeshare, and that may be partly why there are already 335 timeshares in Mexico, and nearly 85 time-shares in Alberta and British Columbia, with more being added to these attractive, recreation-rich markets every year.

In addition, a timeshare can be exchanged for comparable accommodations all over the world, so timeshare holders who want to use Mileage Plan Partner miles to visit, say, Europe or Australia can trade for quality, ready-made accommodations, gen­erally complete with kitchen, living room and dining room so that a family has room to spread out and can easily make their own meals if they want. And with more than 5,400 timeshare resorts worldwide, from Aruba to Zambia, consumers have more choices than ever.

If you’re considering a timeshare in Canada or Mexico, there are some basic questions you’ll want to get answers to before you decide whether and where to purchase: Are you buying more to spend time at a specific “home resort,” or more to trade or exchange for time at other resorts? If you are buying more for home-resort use, be on the lookout for specific amenities that are important to you. Is the resort ski-in/ski-out? Does it sit on a private beach? Does the kitchen come with a dishwasher, and do you get a “starter kit” of basic kitchen essentials when you check in?

If you’re looking more toward trading or exchanging, you’ll want to make sure the resort is rated 5-Star or Gold Crown if you wish to trade for time at other such highly rated resorts. You’ll also want to pay extra attention to what week or season you are purchasing. While purchasing a “low-season” week is less expensive than a “high-season” week, a low-season week will be more difficult to trade for a high-season week in other areas. Most resorts are affiliated with one of the two major exchange organizations, Interval International and Resort Condominiums International, but be sure to check.

Are the purchase contract and/or other documents written in English, and if not, are you capable of comprehending all the legal documentation? If you’re not paying cash for your timeshare, are your payments fixed in local currency, and therefore subject to fluctuations in the exchange rate, or are they fixed in U.S. currency so that you can count on the same amount for each payment?

What protections do the local and/or national laws governing timeshares offer you? For instance, is there a three-day right of recision on your purchase? If the law doesn’t provide this, you may want to get it written into your contract.

Will the person you will deal with at closing, who usually will not be the sales­person, speak good English? And does the resort have a U.S. office or have someone on-property with whom you can discuss reservations and other aspects of your ownership in English?

What taxes and other fees are you obligated to pay, and how often are these taxes and other fees likely to increase? If your property is deeded, you’ll probably have to pay property taxes, and there may also be special assessments to cover costs related to items such as major overhaul of a golf course, fixing erosion of a beach, and repairing damage from storms. You’ll have maintenance fees that increase with inflation, and there may also be special fees to participate in certain resort activi­ties and, although they are rare, sur­charges for big bumps in utility costs or a legislated bed tax. Of course, if the resort is having to charge extra to cover utilities and pay a new bed tax, standard hotels will likely be doing the same.

What type of insurance protection does the resort offer, and is it covered in your annual fees? While most timeshares in Canada are deeded in perpetuity, almost no timeshares in Mexico are. Your deeded timeshare in Canada may very well have an annual insurance cost, and it is vital to ask if the insurance is replacement cost or a set-dollar cost. Just as with your primary residence, you may have to pay more out-of-pocket to help the resort repair damage if insurance doesn’t cover full replace­ment cost. In Mexico, because timeshares are right-to-use as opposed to deeded, there generally will be no insurance costs, but no insurance, either. Make sure you find out, and determine what that will mean for you if a hurricane sweeps through.

What financing options does the devel­oper offer you? The down payment per­centage is usually negotiable. However, financing provided by the timeshare com­pany can sometimes come with a high interest rate. You may want to look at other alternatives, such as a home-equity loan or line of credit on your first home, or perhaps paying the timeshare company by credit card if the card has a lower inter­est rate and/or you can pay it off before any interest is due (perhaps you have a large bonus check coming or you were planning to sell some stock). If it makes sense to pay by credit card, you may get fringe benefits, such as airline miles, that are related to card use.

It’s a good idea to consult a tax adviser about what funding method would work best for your situation. An adviser can also determine whether timeshare proper-ty-tax and interest payments will be tax-deductible, since deductibility varies by the specifics of a taxpayer’s situation and type of timeshare purchase.

What “perks,” such as a referral pro­gram, are offered? In a referral program, for each person you refer who visits the resort, you may earn money, free or dis­counted exchange-company member­ships, vouchers for purchases such as drinks, or even payment of maintenance fees.

Does the resort let you “lock off” or “lock out” your two-bedroom timeshare so that instead of one week in a two-bed-room, you can have two weeks in a one-bedroom if you want? And, is there a fee involved?

Are you sober? This may sound like a strange question, but if you attend a time­share presentation where free beers or margaritas are flowing, be wary. “Don’t drink and sign” is good advice when you’re considering a major purchase and reading/negotiating a contract.

Below are three examples of time­share buyers who made good deci­sions when purchasing a week or more of timeshare at resorts north or south of the border. Names have been changed to protect privacy.

Lynne and Michael live in Oak Brook, Illinois, and have vacationed seven out of the past 10 years in Whistler, British Columbia. They usually take their 12-year-old daughter, Brooke. Since they vacation during “prime” or “high-time”—when there is the best skiing and most children are on vacation from school—they decid­ed it made sense to buy a fixed-week time­share so that they could count on a quali­ty, prepaid place to stay each year and wouldn’t have to research rates and avail­ability. After looking around, they decided on a two-bedroom timeshare that was CND$24,000. “The two-bedroom works best for us,” Michael says. “We can use it as a full two-bedroom condo that sleeps eight people, or the years that we don’t need a full two-bedroom, we can ‘lock it off’ with no extra charge and get two weeks in a one-bedroom.”   He likes that the resort is located right on the mountain. Lynne likes having a kitchen, even though she doesn’t plan to cook three meals a day. “I know that hav­ing a kitchen in the condo will come in handy for breakfast and snacks,” she says.“We don’t live without a kitchen at home, why should we do without one on vaca­tion? It’s a really nice convenience.”

Lynne and Michael were originally offered a payment plan in Canadian dol­lars, but they knew that the exchange rate, and therefore their monthly payment, would be subject to change. They asked for and received payment terms fixed in U.S. dollars, and also got a no-prepay-ment-penalty clause, giving them the free­dom to refinance at their own terms once they returned home, potentially saving them thousands of dollars in interest over the term of the loan.

The resort is a member of Interval International, so when Michael and Lynne call to talk about reservations or exchang­ing, they know that the representative will be fluent in English and available through a toll-free number or the Internet.

“We spent a good four hours asking lots of questions before deciding to pur­chase our timeshare, and we were confi­dent in our choice,” Michael says, “but it really gave us some peace of mind when the person doing the closing pointed out that we had a three-day right of recision. We’ve all had buyer’s remorse, and this way we had three days to read all the fine print. We are very happy with our pur­chase and have recommended timeshare to our friends.”

RICK AND SUE, WHO LIVE OUTSIDE OF WASHINGTON, D.C., just got married and don’t have a lot of money, but they enjoy getting away once a year to somewhere sunny. Before getting married, they had each gone on a few all-inclusive vacations to Puerto Vallarta, and they decided to honeymoon there.

“Although we weren’t planning on buy­ing a timeshare, we went to go look at one after being offered some dinner certifi­cates,” says Rick, with a slightly sheepish look on his face. “We considered ourselves fortunate because we had just talked with a friend of ours who is timeshare-savvy and knew what questions to ask,” says Sue. The couple ended up with a studio timeshare, which although nondeeded is a floating versus fixed week, something that was critical for them because they don’t always know when they can take their vacation.

“Sure, $12,000 is a lot of money, but we knew we’d go on some sort of a vaca­tion every year for the next 20 years,” Rick says, “so the money was going to be spent anyway, and although it’s a studio, the resort offers lots of amenities and activi­ties, lots of which are at no charge to the owners. It would turn out to be more money if we rented a week here every year.”

Rick and Sue made sure that the con­tract and other legal documents were written in English and that the closing process was handled by an English-speak-ing representative. Because their time­share is in Mexico, it is a 20-year right-to-use, rather than deeded. However, they made sure that the right-to-use program gave them the flexibility of defining “uses” as weeks, not actual years. That way they’re not limited to one week per year. They can visit their resort three times in one year if they want, or three weeks in a row, thereby leaving them with 17 uses before their contract runs out.

Although the annual maintenance fees were $500, slightly more than the world­wide average of about $400, Rick and Sue were impressed by the grounds, the ser­vice and the amenities. “Our resort has three swimming pools and a private beach, and offers complimentary trans­portation to and from the airport,” says Rick. “We would pay for this one way or another, and the resort offers a tremen­dous referral program. If anyone we refer to the resort decides to purchase there, Sue and I get ‘resort dollars’ in our account, which we can use to help offset or pay the annual maintenance fee. It’s a win/win for everyone.”

The resort where Rick and Sue pur­chased their timeshare is a member of RCI (Resort Condominiums Inter­national), and both the salesperson and the closing officer pointed out the toll-free number the couple could use to call an English-speaking representative at RCI, and noted that the couple also could handle reservations and exchanges online. HELEN AND TONY ARE BOTH RETIRED AND LIVE IN BROOKLYN, NEW YORK. Last year, while they were vacationing in Victoria, British Columbia, they came across a resort with 12 small chaletlike cabins about 25 miles outside the city.

“It was small and intimate,” says Helen. “We’ve always shied away from owning a timeshare because we always thought they were large ‘resorty’-type places with thousands of other people. We enjoy a quiet vacation.”

The couple pulled in to the resort to learn more. “We didn’t want to sit through the whole timeshare sales pitch, and we told them that from the beginning,” says Helen. “We just wanted to see the place and find out what it was all about.”

The resort had sold out of all of its timeshares and was now being run by the homeowners association, so the person who showed them around directed them to a local Realtor who had several time­share weeks for sale on the secondary market.

Although Helen and Tony were wary of a so-called “used” timeshare, they settled on a one-bedroom cabin during the low season. “We know we’re not going to be able to trade this week for a week in Hawaii or Las Vegas, but we don’t want to go there,” Helen says. “This is perfect for us. We couldn’t be happier with our decision.”
The couple bought their timeshare for CDN$5,000 cash, first checking to make sure that all maintenance and other fees were up-to-date.
They were fortunate enough to pur­chase at the same time that the home­owners association was having its annual meeting, and Tony decided to become involved in the meetings. He’s since become secretary of the board.

“Now, whenever I hear bad things about timeshare, I’m quick to point out that you have to ask the right questions and buy at the right place for your needs,” he says.

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Lisa Ann Schreier is the founder of Timeshare Insights (www.timeshareinsights.com), an independent timeshare-consulting firm. She is also the author of the best-selling Surviving A Timeshare Presentation … Confessions From The Sales Table, and Timeshare Vacations For Dummies, both of which offer extensive timeshare advice.
Reprinted with permission from the March 2006 issue of Alaska Airlines Magazine, published by Paradigm Communications Group, Seattle.

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