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Contract Termination: Are There Timeshare Lemon Laws?

July 24, 2017 – by Primo Management Group

You got caught up in the heat of the moment and bought a timeshare. Now what? Here’s what you need to know about contract termination.

We’ve all been there. You’re relaxing at an ideal locale, enjoying welcoming weather, live entertainment, good food. You’re in your happy place.

Just when you think things can’t get any better, someone offers you a free gift merely to listen to an opportunity to own a piece of this luxury.

For many, a timeshare property is an attractive alternative to maintaining a costly second home. In fact, according to the American Resort Development, timeshare sales have increased by more than 34% since 2012.

But perhaps you are having second thoughts. Or, somewhere down the road, your circumstances or vacation habits have changed.

Maybe annual maintenance fees or unexpected assessments have become too much? What can you do if your timeshare contract no longer serves your needs?

If your dream has turned into your albatross, you may be wondering about contract termination. This can be a complicated issue.

Timeshare Contract Termination

First, are you within your “cooling off” period? The phrase, “cooling off,” is part of the Uniform Consumer Sales Practices Act, which most (if not all) states have adopted in some form.

Consumer law acknowledges that sometimes people make emotional decisions when wooed by salespeople. Laws geared toward consumer protection provide a certain time period to terminate the timeshare contract without incident (which is sometimes referred to as “rescission.”)

This cooling off period varies by state. A few of the most popular states for timeshares: Nevada’s timeshare statute provides five calendar days. In Florida, which is home to 22.7% of US timeshares, the law provides 10 days.

Rescission under Tennessee law must take place within 15 days.

Are You Out of Time for Timeshare Contract Termination?

Granted, the easiest method of contract termination happens within the statutory cooling off period. But even if you are outside of that window, you may have other options.

The laws of some states have provisions specifically for timeshare contracts that protect consumers in some circumstances. In other cases, general principles of contract termination may apply.

Some of the possible common law basis for contract termination are :

Ambiguity
Fraud
Mistake
Violation of Public Policy
Lack of Capacity
Duress
Ambiguity

One common contract doctrine is that of contract interpretation. If there is any ambiguity in your contract concerning your rights, the ambiguity is interpreted by the court or arbitrator against the person who prepared the contract.

Fraud

There are two kinds of fraud . One is a situation where someone signs a document believing it to be something other than what it is. While the law presumes that you would not sign a contract without reading it first, you may be able to show fraud if a sales agent handed you a document to sign and told you it was something that it wasn’t.

The other type of fraud is a situation where someone signs a contract because of some false information provided by the person seeking to enforce the contract.  The party seeking to get out of the contract would not have signed the contract, but for the false information that induced them to sign it.

The Federal Trade Commission (FTC) recently returned thousands of dollars to victims of a timeshare resale scam. Deceptive and misleading conduct is not the norm, but it is grounds for contract termination when it happens.

Mistake

There are two kinds of mistake: a unilateral mistake and a mutual mistake. A unilateral mistake is where one of the parties was mistaken as to an essential fact on which the contract was based (such as the specific property being conveyed).

Ordinarily, a unilateral mistake is not grounds for contract termination. The doctrine of caveat emptor (“let the buyer beware”) applies.

A mutual mistake of fact occurs when both parties were mistaken. In this situation, one or both of the parties may be able to terminate the contract.

Violation of Public Policy

Public policy usually involves matters of public health and safety. If your timeshare is a threat to health or safety, or if enforcing the contract would be contrary to the public good, this could be grounds for contract termination.

Lack of Capacity

“Capacity” refers to one’s ability to understand what he or she is signing.

Minors are generally deemed to lack “capacity” to enter into a contract and, in most cases, would be able to terminate a contract on that basis. Mental impairment could also be a lack of capacity.

Voluntary intoxication (which sometimes happens on vacation), could be a lack of capacity depending on state laws and your particular circumstances. Literacy and language barriers are other factors used to determine someone’s capacity to contract.

Duress

Duress is rarely found by courts and arbitrators because even high-pressure sales tactics usually do not rise to the level of duress needed to get out of the contract. If you believe that you were forced into signing a contract, you should speak with an attorney about whether you can use this to prevent enforcement of the contract.

Contract Termination Through Arbitration

The laws that pertain to your case will be the laws of the state where the timeshare is located. (And not the state where you live.) This is standard among timeshare contracts.

Something else to look for is whether you can pursue a contract termination in court, or whether you are required to use binding arbitration. In some states, it is lawful for a company to ask a consumer to waive their right to a jury trial in the event of a dispute.

What If Contract Termination Is Not Possible?

Depending on the type of timeshare you have, you may be able to sell it.

If you own a deed, for example, some timeshare companies may accept it in lieu of foreclosing for unpaid maintenance fees. Sometimes higher-end timeshare companies will broker a sale, albeit with a commission to be paid by the seller. If you sell timeshare property without paying commission, be mindful of any restrictions and transfer fees.

Conclusion

Getting out from under an oppressive timeshare contract is a tricky matter. Are you looking for a reputable exit company for timeshare contract termination? Contact us today for a free consultation.

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