It might seem like there’s no way out of your timeshare obligations, but that’s not the case. Here are some legal strategies in timeshare cancellation
While it is true that a timeshare contract is a binding legal document, it is often mistakenly thought that such a contract cannot be cancelled. In fact, most timeshare companies maintain that their contracts are non-cancellable.
This misconception is perpetuated by timeshare companies and user groups that are funded, maintained and controlled by the timeshare industry.
The truth of the matter is, under the law, contracts are cancellable for a variety of reasons, including fraud and mistake.
Moreover, a person who is burdened by the obligations of a contract may “terminate” it and no longer be bound by the contract for reasons other than breach.
Timeshare cancellation vs. termination
“Cancellation” occurs when either party puts an end to the contract for breach by the other and its effect is the same as that of ‘termination’ except that the canceling party also retains any remedy for breach of the whole contract or any unperformed balance.” Uniform Commercial Code 2106(4); see 13 Corbin (Rev. ed.), §73.2; 13 Am.Jur.2d (2000 ed.)
"Termination" occurs when either party, pursuant to a power created by agreement or by law, puts an end to the contract otherwise than for its breach. Uniform Commercial Code sec. 2106 (3)
Since it is the law of the land that a breach of contract by a party to the contract may result in the other party being released from their obligations under the contract, the notion that one is forever bound by a timeshare contract is erroneous as a matter of law.
The purpose of this article is to provide a ray of hope to those timeshare owners who are no longer interested in being tied to their timeshare and its lifetime of financial obligations.
Timeshare cancellation: cooling off period or right of rescission
To start, when you first purchase your timeshare, most states have a rescission or "cooling off" period during which timeshare buyers may cancel their contracts and have their deposit returned. This is known as the “right of rescission.”
Once this period expires, however, most timeshare companies will have you believe that their contract is non-cancellable, and you are thereafter bound in perpetuity to pay the ever-increasing maintenance fees that go along with timeshare ownership.
Moreover, the proponents of timeshare ownership would have you believe that once the initial “right of rescission” expires, the only legal way to end timeshare contracts involves a transfer of ownership whether by selling, donating or giving it away.
In fact, most timeshare user groups and virtually all timeshare companies want you to believe that under no circumstances will a timeshare company voluntarily take back their timeshare. This, again, is not true.
What is true is that most timeshare companies will not willingly take back their timeshare. As will be seen below, when faced with litigation or the potential of litigation, many timeshare companies will in fact either take back their timeshare or simply agree to release the timeshare owner from any future liability in connection with the timeshare contract.
Before I discuss the latest developments in cancelling a timeshare, I’d like to devote a little time to the more traditional means of cancelling or getting rid of an unwanted timeshare.
Timeshare cancellation: sell your timeshare
As mentioned above, the traditional means of ridding oneself of an unwanted timeshare is through a sale, donation or transfer.
On the subject of selling a timeshare, many unwary timeshare owners seeking to rid themselves of their timeshare fall prey to listing companies that propose to list their timeshare for sale.
Such companies have been under investigation by state Attorney Generals for fraudulent and deceptive practices. A proposed timeshare seller wishing to sell their timeshare obligation should first consider listing it on sites like eBay or Craigslist.
Other options are to list it through the developer, if the developer handles re-sales, or through a timeshare resale broker.
One thing the proposed timeshare seller should not do is pay an advance fee for the sale of their timeshare. It is these advance fee practices that have fallen under the scrutiny of state Attorney Generals.
Timeshare cancellation: donate your timeshare
Another frequently discussed solution to the problem of how to be released from your timeshare’s financial burdens is to donate the timeshare.
Where there once were a number of organizations that accepted deeded-timeshare donations, with the ever increasing burden of maintenance fees which seem to go up every year, such organizations are a vanishing breed.
Timeshare cancellation: transfer to a third party
Transferring ownership to a third party who will merely take over the yearly maintenance obligations is another “exit strategy.” These persons, however, won't pay you for the timeshare. In many cases, the timeshare company will simply refuse to recognize the transfer. Alternatively, it will impose onerous resort transfer fees, making the transfer to a third party prohibitive for those faced with financial difficulties.
In recent years, however, new techniques pioneered by real estate attorneys who specialize in timeshare litigation have emerged.
These techniques reached their ultimate fruition in a series of lawsuits filed in California on behalf of a group of timeshare owners who wanted nothing more than the complete release, termination and cancellation of their timeshare interests.
Other similar actions have followed, all seeking cancellation and termination of timeshare interests for the type of fraudulent and deceptive conduct that is frequently utilized by timeshare salespeople to induce unwitting potential owners to sign on the dotted line.
False promises as grounds for timeshare cancellation
Such conduct includes the following representations, typically made at the time the timeshare was sold:
- That the timeshare interest purchased would appreciate and increase resale price and value over time.
- That the timeshare interest purchased could be freely exchanged, transferred and sold.
- That the timeshare interest purchased was a financial investment.
- That the timeshare interest purchased would result in the purchaser receiving booking priority over non-purchasing vacationers wishing to stay at one or more of the properties owned and/or maintained by the defendant.
As a result of the filing of such actions, timeshare companies have become much more amenable to releasing timeshare owners from their timeshare obligations even without resort to litigation.
To avail yourself of such a solution, you should retain an attorney familiar with timeshare laws and the various techniques for terminating a timeshare contract.
In sum, do not believe the naysayers who tell you that it is impossible to get out of a timeshare contract. Should you be the victim of one or more of the foregoing misrepresentations, you too may be able to cancel your timeshare contract.
This is an article by attorney Mitchell Reed Sussman. Mitchell is a California real estate attorney specializing in real estate, foreclosure and bankruptcy. His website is http://www.losangelesrealestateattorney.com/.
