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ABCs of time shares

Puzzled by some of those time-share terms? Here's the 411 on some common industry jargon:

Accelerated use: Using more than your allotted yearly time for one vacation. For instance, you purchased two weeks a year at a condo but arrange to take four weeks this year, four weeks next year and skip years three and four.

Banking: A system that allows you to save or "bank" time to use or trade. One example: You own one week a year at a time share. You might bank your week for a few years, then take a three-week vacation at your condo. Some programs have limited banking.

Certificate of use/right to use/time-share license: Rather than purchasing ownership of your condo, you have contracted to be able to use it for a specified period. Unlike a deed, most times you can't pass these on to heirs.

Constitution/bylaws: All of the paperwork between the developers, owners, management companies etc., detailing the rules and conditions that govern the property.

Fee simple deed: You actually own an interest in the property. This is the most common type of deed, says Robert Freedman, a shareholder with Carlton Fields, PA, who specializes in time-share and community development law. Like your home, it's yours forever, and you can pass it on to your heirs.

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Lease hold deed: When the underlying land is leased by the developer long-term. You buy a deed to the property, but your rights expire when the developer's land lease expires.

Exchange fee: The fee charged by the exchange company when you trade time at your property for time somewhere else.

Fixed unit: You are buying the rights to stay in the same unit each time you visit.

Fixed week: You are buying the rights to stay during the same week of the year each time you visit. But the weeks of the year are usually assigned numbers, so the actual dates could change slightly. May not be the same unit each time.

Floating: By far the most prevalent situation these days and common with points-system properties, says Freedman. You buy the right to visit for a certain length of time, but the date and/or unit are generally not fixed.

Fractional: Generally, a larger ownership share in a very upmarket property. Usually functions as a second or third home. Most are fee-simple deeds, says Freedman.

Holiday ownership/vacation ownership: Time share.

Interval: The annual period that you are allotted at the time-share property.

Levy/lien: Owner's association or management company action to take back property for nonpayment of maintenance fees or assessments. Often similar to "the way a bank would foreclose if you didn't pay your mortgage," says Freedman. "Practically speaking, in most cases they just take back the time-share property."

Maintenance fees: Annual amounts determined by owner's association or management company for the maintenance and operation of the time-share property and the time-share program. Usually includes real estate taxes.

Points: A value system used in some time-share properties and networks. Rather than purchase a particular quality level of accommodation or number of days, members will elect to buy points. They can then trade the points for various lengths or dates at various resorts, depending on demand and availability. Sometimes, point-based system properties can use either deeds or certificates of use. Point values have no real value outside the time-share program. Exchange companies have their own points systems and will translate your points into their own value system if you make an exchange.

Sinking fund/reserves: An account set up by the property management or the developer to pay for large long-term maintenance projects, like roofing or pool resurfacing.

Special assessment: An unscheduled charge shared by all the time-share owners, usually to cover maintenance, special projects or bills.

Sources: Robert Freedman and The Timeshare Beat

 

-- Posted: July 29, 2004
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See Also
Getting a good deal on a time share
Selling your time share
Is a time share a good idea?
Track prime rate/other leading rate indexes
More real estate stories

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