What is a timeshare and why would you consider buying one? If you visit a favorite spot once or more each year, the chances are that you’ve considered how nice it would be to own property there—a quaint escape that could function as your home away from home while removing all the hassle of finding a hotel.
The downsides are, of course, that owning a second home means double the maintenance, responsibility, and costs.
Enter timeshare plans. At their most basic, timeshares promise all the appeal of owning a vacation home without having to worry about two different boilers bursting, roofs leaking, or kitchens to renovate—not to mention the general expenses and care that owning any home demands.
To help you consider if owning a timeshare is for you, we’ve compiled a no-nonsense, three-part guide to understanding your options. In it, we’ll discuss pros and cons of owning a timeshare, advice from timeshare owners, and how to avoid timeshare scams.
What is a Timeshare and How Does It Work?
The most basic explanation of a timeshare is a program in which a group of people share the use—and costs—of a property, agreeing that each can occupy it for specific time periods.
Timeshare properties are generally residential projects, such as condominiums or townhomes. However, the time sharing concept has also been applied to many other types of property that someone might want to vacation in, including houseboats, campgrounds, and even RVs.
Apart from different types of properties, there are a few different vacation ownership options. While all timeshare programs provide owners with the right to occupy a facility for a given period—usually one week every year or every other year—there are many differences in how this is done:
What Is Deeded Timeshare Ownership?
With deeded timeshare ownership, you actually own a percentage of their timeshare unit. The ownership could be limited to the property alone, or it can include shared ownership of the timeshare resort’s commons areas. This is different from Right to Use ownership or vacation clubs, which are more like a lease. (We’ll explain more about those shortly.)
In the US, deeded timeshare is typically owned in perpetuity (meaning that it lasts indefinitely), giving you certain rights.
One is that you would still own your fraction of the property if the developer goes into default. Most of the time, deeded timeshares are also transferable, giving you the right to sell your timeshare, leave it to others in your will, or give your timeshare away—assuming that it’s paid in full, or the recipient takes over payments.
Another difference with deeded timeshare ownerships is the influence your ownership gives your vote at a resort or communal property. This allows you to have a say regarding maintenance, raising annual fees, and operations.
Deeded Timeshare Ownership Comes With Responsibilities
Timeshare owners who have deeded ownership may also be liable should an issue arise at the resort. For example, if someone is injured on the timeshare property and files a lawsuit naming the resort, that responsibility can extend to deeded owners. (Note that this is often the case for any community with an HOA, including condominium complexes and single-family neighborhoods.)
What else are deeded timeshare owners responsible for?
Unless you’ve bought the timeshare outright for cash, you’re responsible for a monthly mortgage. Ownership also means that you might be responsible for property taxes. Additionally, there are maintenance fees to consider—remember that these fees are likely to increase over time.
There are non-financial responsibilities to consider, as well. While a homeowner association usually handles management of a resort property, timeshare owners must elect the officers of the owner’s association, and select a resort management company that ensures the resort is properly maintained.
How Does “Right To Use” Timeshare Work?
Developers set up Right To Use (RTU) timeshares by dividing the dates of availability for each unit into time-based intervals. They then sell these intervals to buyers.
This means that each timeshare owner receives the right to use a specific unit for an agreed upon period of time that corresponds to the interval that they purchased. This is typically for periods of one week; however, some use “ownership fractions.”
One difference between RTU and deeded timeshare ownership is that, while the interest you own is legally considered personal property, the actual unit is not. This means that, should you buy Right To Use timeshare ownership at a resort, you may not get the same unit every time you visit.
How often you’re allowed to visit depends on which Right To Use plan you choose. Some of the most popular options include:
Fixed or Floating Timeshare Ownership
Fixed timeshare ownership is what the name implies: you buy the right to use your timeshare during a prespecified week of each year. While giving you the opportunity to plan far in advance, fixed ownership limits your flexibility.
Alternatively, floating timeshare ownership gives you the right to use a unit for the specific period of time within a certain season. Note that this flexibility doesn’t extend to the whole year, as off-season and shoulder season periods are less expensive to purchase. While you gain flexibility, weeks are generally allocated on a first come, first served basis, meaning that you run the risk of not getting your timeshare during the dates that you had hoped.
Fractional Timeshare Ownership
Rather than purchasing a specific period of time per year, such as one week, fractional ownership is sold in large chunks. This provides a longer ownership period than one week per year, giving owners the opportunity for additional flexibility.
A twelfth-share, for instance, gives its owner a week of use each month of the year, or a three-week block of time in each of the four seasons. Other types of fractionals include tenth, eighth, sixth, and quarter-shares.
Biennial Timeshare Ownership
Biennial timeshare ownership gives you the right to occupy your timeshare every other year. It typically costs about 60 percent of an annual timeshare product, not 50 percent, with the difference covering the developer’s administrative costs.
Lockoff or Lockout Timeshare Ownership
Similar to having roommates on a perpetual vacation, lockoff or lockout ownerships allows you to occupy a portion of the unit and offer the remaining space for rental or exchange. These units can typically accommodate more than one family, and have two to three bedrooms and baths.
A vacation club is a membership, not ownership. Usually, it involves vacation accommodations at multiple sites, and may include travel and other leisure products and services. Vacation clubs offer their members one-stop shopping and the expectation that they are pre-paying for future vacations at favorable prices.
Designed to provide greater usage flexibility than traditional unit-week timesharing, these programs employ points as a "currency" to allocate vacation ownership accommodations according to location, unit size, and demand (which is based on days of the week and seasonality).
An owner with a given number of points may be able to occupy a studio for a high-demand three-day holiday weekend, or apply the same number of points to a three bedroom unit for up to two weeks in the lower-cost “quiet” season.
Whichever type of interval that you purchase, RTU timeshare ownership is much more like a lease agreement, granting you the right to use the property at a certain time, and usually for a predetermined number of years. (Generally, this is for anywhere from 20 to 99 years.)
Right To Use Timeshare Offers More Flexibility & Fewer Rights
While Right to Use ownership doesn't allow for true ownership of a timeshare, these arrangements do tend to be more flexible than deeded timeshares because they assign a particular number of usage units, rather than annual or biennial usage.
Unlike deeded ownership, Right To Use timeshares only give you the right to stay at the property—you won’t have any say in the raising of fees or changing of rules throughout your ownership.
That doesn’t mean that RTU timeshare owners have no rights at all. However, it’s important to understand what is and isn’t allowed. For example, while a management company or the resort developer retains actual deeded ownership of the physical property itself, RTU owners may have the ability to transfer, rent, or bequeath the remaining years of their lease, depending on their contract.
How Do I Know If Owning a Timeshare Is Right for Me?
In the early years of the timeshare industry, sales and marketing misbehavior gave the industry a bad name. Many timeshare developers have used high-pressure and deceptive sales tactics. Coupled with misleading and inaccurate portrayals of what premiums buyers could expect from their timeshare ownership, it’s easy to understand why so many timeshare owners feel duped.
However, that isn’t to say that timeshares don’t have their perks. A timeshare might suit your needs if you like:
- Predictability and planning ahead. Timeshares offer a guaranteed vacation destination each year (or every other year, if you choose).
- To cook your own food while on vacation. Hotel rooms are often just a single room, where timeshares are generally more spacious, have kitchens, and separate bedrooms.
- The flexibility of knowing you can trade. However, this takes some planning, and you might not always get your first pick.
- The option to rent out your timeshare if you won’t be using it. Some timeshare owners earn extra income from renting out their unused weeks. Just be sure to check your contract before planning on making cash from staying home.
If you’re still on the fence, take a minute to think about your vacation patterns over the past few years: Have you visited the same place at the same time every year, or do you prefer a mix of activities and destinations, such as camping adventures, cruises, road trips or organized tours?
If it’s the former and you’re interested in learning more, be wary of timeshare salespeople who answer your questions with a question and won’t be upfront about the purchase price. Instead, check out our next article in this three-part series, where we’ll share what to look for—and what to avoid—when shopping for your timeshare.
Other Articles in This Series:
- Real Cost of Buying & Owning a Timeshare: What the Salesman Won’t Tell (Part 2)
- How to Spot a Timeshare Scam That Can Cost You Thousands (Part 3)