Is a time share a good idea?

-- Posted: June 16, 2000

Ask the Dollar Diva
By Dorothy Rosen • Bankrate.com

Dear Dollar Diva,
I have just written four post-dated checks for a downpayment on a time share resort. The representative from the group financing the time share had me sign something, but I just realized he didn't give me a copy of what I signed. Now I wonder if I made the right decision.

You made the wrong decision. The Diva's advice is to do what you can to get out of the deal right now. Keep track of your efforts with a journal recording the calls you make, people you speak to, what they say, and the date and time they say it. Although it's not clear what you've signed, here are some general pointers

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When you sign a contract for a time share, there should be as rescission period of several days to think the sale over. If you change your mind within this period, all you have to do is notify the seller that you want out. Make sure you follow up your phone call with a letter.

After this "cooling off" period, you've got to hope the seller's done something wrong if you want out of the deal. He earns a nice commission when he sells a unit and is not likely to give that up graciously.

Who to contact for help

Usually timesharing is regulated through the real estate commission in the state where the time share is located. You should be able to find the telephone number of the state's real estate board on its Web site. If not, let your fingers do the walking: call (800) 555-1212 for toll-free directory assistance.

If you're dealing with a real estate broker, the transaction would be subject to the state's real estate rules. Otherwise, inquire about the rules governing time share transactions. The Diva is not aware of any federal law prohibiting the use of post-dated checks to purchase a time share. When you make your call to the real estate board of the state where the time share is located, inquire if there are state laws prohibiting this practice for time share purchases. If not, find out what practices are prohibited; knowledge is power.

You can also contact the consumer protection division of the state where the time share is located for information and help. Be prepared for questions by having all of your documents in front of you when you make your calls to the real estate board or the consumer protection division.

What's wrong with time shares?

A time share is an indulgence, not an investment. The Diva doesn't know anyone who is in love with his time share, but she knows owners who would love to dump the darn things, if only they could find buyers. With the potential for hefty future assessments on top of annual fees (whether you use it or not) and practically no resale market, why on earth would anyone want to buy one? Especially an expensive new one?

The Diva believes that a time share is a lousy place to put your hard-earned dollars. Here's why:

Buyers tend to think of this purchase as an investment, even when the developer tells them it's not. (For example: The Consumer Protection page of the Federal Trade Commission links time share information to an investment channel. It knows time share owners and wannabe owners think "investment" when they think "time shares.")
Since it's not an investment, there is no return. (If you fool yourself into thinking it's an investment, expect to get a negative return.)
If it's financed and a high interest rate is paid, expect to magnify that negative return.
It's goodbye guests, but not goodbye fees if the resort gets seedy looking.
You pay maintenance and assessment fees even if you don't use it.
You can get the same vacation for less money by renting someone else's time share.

Instead of a time share, invest your funds so you'll have the money to go on future vacations whenever and wherever you want to. Besides, it won't cost you anything if you decide to stay home one year.