What's Your Timeshare Worth on the Resale Market?
Guides, Tips, and Hacks, Timeshare Agreements
3 min read
The timeshare marketplace can be confusing. There are many types of timeshares, and the contract terms and conditions vary so much from resort to resort. You can be certain of maintenance fees but not much else. In this post, we’ll look at the deeded timeshare, what it is, and how it’s different from a Right to Use timeshare.
A deeded timeshare is a form of timeshare ownership wherein the owner purchases a specific unit for a specific week. The owner receives the deed to that unit for that week and therefore owns the timeshare. Each unit will have 52 deeds and those deeds apply to a fixed week. Deeded timeshare contracts are usually contracts in perpetuity. That means the contract lasts forever and the deed can be passed down to heirs. Most timeshares in the United States are deeded timeshares. Usually (but not always), owners of deeded timeshares can rent their unused weeks to recoup their maintenance fee costs. And usually (but not always), owners can sell their timeshares if they choose. Also, deeded timeshare owners usually have voting rights and therefore have a say in how the resort is run—including setting the maintenance fees.
But what’s this other kind? A Right to Use (RTO) timeshare is a type of timeshare contract in which the consumer buys the right to use the property each year. However, the actual deed and therefore the ownership stays with the resort. The “owner” doesn’t really own the timeshare. And, although some RTO timeshares are contracts in perpetuity, most have an end date, usually between 20 and 30 years. RTO timeshares are more common outside of the US, especially in places that restrict property ownership by non-citizens. So, at the end of the contract term, your ownership ends. In some cases, you may be able to repurchase or renegotiate.
An RTU timeshare may be fixed week, floating week, or in the form of credits. RTOs may have more flexibility around weeks and units than a deeded timeshare. But they also tend to have more restrictions on rental and sales. And RTO timeshares don’t usually come with any voting rights, so you’re at the mercy of the resort.
So, who wins in the deeded vs. RTO timeshare? Well, from where we’re sitting, it looks like the resort always wins. There are pros and cons to each for consumers, but the resort is always going to make money. The bottom line is that you should know which type of contract you’re dealing with.
If you are bound by a contract that no longer serves you, consider timeshare cancellation. Contact us for a free consultation by clicking here.
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