Timeshare contracts are a cost-effective way of enjoying a vacation in a second home, and their scope has been expanded to suit a wide variety of travel preferences.

However, the dangers of a less-than-watertight timeshare can turn your dream trip into a nightmare.

Let’s explore the ins and outs of timeshares, from snagging the best deals to spotting the scams.

Key takeaways

  • A timeshare contract gives you the right to use a vacation property for a set period each year
  • It’s a cheap and flexible way of going on vacation, at least compared to buying a property outright
  • Not every timeshare contract is the same — you can own, rent, or opt for a points-based system
  • Make sure to read the small print, as hidden fees and tough exit clauses can catch you out
  • Contract management platforms are essential when handling timeshares between multiple co-owners and property portfolios

What is a timeshare, and how does it work?

A timeshare is essentially a shared ownership model for vacation properties.

Multiple people hold the right to use the property for a specified period annually.

It’s common for vacation units in resorts, condominiums, or campgrounds.

Breaking it down, if you have a timeshare on a house for one week per year, you only pay for 1/52 of the total equity, and the maintenance fees and taxes are also evenly distributed.

The concept of timeshares isn’t new; they started popping up in the 1960s in Europe before taking the world by storm.

Today, timeshares are everywhere — allowing vacationers to enjoy the same chalet in the Alps every year, share a luxury flat in Miami, or even explore different resorts owned by the same brand — all without the expense of full property ownership.

The beauty of the model is that it gives you peace of mind.

Imagine not worrying about whether your Airbnb rental will be canceled last minute or having to scour for good deals months in advance.

You’re guaranteed to have a good vacation every year.

Timeshares are a commitment

However, signing a timeshare contract is also a big commitment.

For starters, many types of ownership models cater to different customer interests, which can be daunting to a first-timer.

Some also come with perks like cleaning services, entertainment programs, or even a concierge.

You need to consider what’s important to you when you’re on vacation because backing out of a timeshare contract is more complicated than simply canceling a hotel room.

4 types of timeshares

There’s more than one way to own a house, and vacationers have similar flexibility when it comes to signing for a timeshare on a holiday property.

Here are the four main types of timeshares.

Freehold timeshare

Freehold timeshares are the original model for timesharing.

They grant outright ownership of a portion of the property, along with a deed to prove it.

This means your vacation spot isn’t just for a set number of years.

It’s yours to visit, sublet, sell, or leave in a will to your heirs. The heyday of the freehold timeshare is largely over, as most modern travelers now prefer more flexible vacation schemes.

However, the model undeniably has advantages for those who prefer a traditional vacationing experience and a lasting stake in their second properties.

Right-to-use timeshare

The right-to-use (RTU) model grants vacationers a more flexible and temporary method of timesharing.

You don’t have ownership rights, but you do sign an enforceable contract that gives you exclusive rights to use the property.

In this sense, it’s more akin to a long-term rental agreement than traditional property ownership.

This setup allows for a lighter commitment, ideal for those who seek the vacation lifestyle without the ties of real estate investment and all the paperwork that comes with it.

Leasehold timeshare

Leasehold timeshares sit between RTU and traditional ownership.

They’re similar to RTU timeshares because they have a set expiration date.

The key difference is that your name is on the deed, which means more paperwork but also more freedom with how you use the property.

For example, you could choose to sublet your leasehold timeshare if you aren’t going to use it every year — a flexibility you may not have with an RTU.

Points-based timeshare

This is technically a sub-type of the RTU variety, but as the most common form of timeshare today, it’s worth talking about.

A points-based timeshare allows owners to accumulate points through their timeshare purchase, which can be redeemed for stays at various properties within a brand’s network.

It’s flexible because you can visit at different times of the year or carry your points over.

A good example is the Disney Vacation Club, where members can use their points to explore different resorts and enjoy a new experience every time.

How long is a timeshare contract?

For those who choose a freehold timeshare, the commitment is permanent, granting ownership of the property indefinitely once the mortgage is settled.

Leasehold and right-to-use (RTU) timeshares, however, have a defined term specified in the contract.

Some contracts may also offer the option to switch to a rolling tenancy after the initial term ends.

As a rule of thumb, signing up for a longer term offers better value, but only if you’re ready for the commitment.

Right to cancel: how long do you have to get out of a timeshare contract?

So, what if you want to cancel a contract?

With freeholds, you can sell anytime, but finding someone to buy can be slow and expensive.

Since vacation homes are usually far away from where you live, most people need to find a property agency to list and sell the timeshare on their behalf.

Leasehold and RTU timeshares come with an escape hatch called the cooling-off period.

This is a short window where you can change your mind, and it varies by location — Europe generally offers a longer cooling-off period than the USA — but most are around 30 to 90 days after initial contract signing.

After this period, exiting the agreement becomes more challenging, with fees sometimes applied for early termination.

It’s essential that you read any contract before you sign it and understand how lengthy and costly the process of getting out of your timeshare could be.

These terms should be clearly outlined; it’s a big red flag if they’re not.

How much does a timeshare cost?

In 2024, Hilton reports that the average initial purchase price for new buyers is approximately $22,000.

In 2023, ARDA stated that the average cost of a timeshare, allowing a buyer to use it for one week annually, was $24,140.

Like any vacation, there are good deals for budget timeshares. However, likewise, the sky’s the limit for more luxury destinations.

How much you want to spend is entirely up to you.

What’s included in timeshare costs?

Timeshare expenses are more spread out than a one-off vacation purchase, with several costs that some fail to consider.

Let’s look at what’s included:

  • Initial purchase price: The upfront cost for acquiring the timeshare rights.
  • Maintenance fees: Annual charges for cleaning the property.
  • Special assessment fees: Occasional fees for significant repairs or improvements.
  • Exchange fees: Costs for selling your timeshare or exchanging locations or times.
  • Utilities: Some places have pay-as-you-go fees for utility bills, while others have a basic standing charge.
  • Event fees: In communal locations, such as resorts, you can pay for entertainment events in advance.

How to calculate the long-term cost of a timeshare

To get a grip on what you’re spending, here’s a simple formula for calculating the long-term costs of a timeshare:

(Annual Maintenance Fees + Any Expected Special Assessments + Hidden Costs) x Number of Years You Own the Timeshare + Initial Purchase Price = Total Cost.

So, if you’re paying $1,000 in fees annually, expecting $2,000 in refurbishments over 10 years, and your purchase price was $10,000, that’s ($1,000 + $200) x 10 + $10,000 = $22,000 as your total timeshare cost.

Pros and cons of timeshare contracts

Before deciding on a timeshare, it’s so important to mull over whether such a financial commitment fits in with your priorities and preferences.

Is it really worth it? Let’s take a look at the advantages and disadvantages of timeshare contracts.

Pros Cons
Guaranteed annual vacations Annual maintenance fees regardless of usage
Potential for cost savings over traditional hotel stays Difficult and sometimes costly process to exit the contract
Access to resort amenities and services Upfront costs and potential for hidden fees
Fixed vacation costs assist in financial planning Contracts can be complex and restrictive
Opportunity to make friends with like-minded travelers Risk of damage to the property by co-owners
Option to rent out or exchange timeshare weeks The resale market can be challenging, especially for freehold properties

How to get out of a timeshare contract

When it comes to exiting a timeshare contract, the paths available to you differ depending on the type of agreement you hold:

Getting out of a freehold timeshare

The direct path to getting out of a freehold timeshare is to sell it to someone else.

You can do this through a timeshare resale website or a trustworthy property agency.

Getting out of a leasehold or RTU timeshare

Most leasehold or RTU timeshare agreements have a grace (or “cooling-off”) period during which you can cancel penalty-free.

After this, you must negotiate with the resort or go through a timeshare exit company.

Check your contract for a “surrender clause” to determine the specific costs and timeframe for this process.

Timeshare agreement loopholes

There are also a few loopholes where what seemed like a binding timeshare agreement might become a voidable contract.

Let’s explore them:

  • Claiming misrepresentation: If you had promises made to you during the sale that aren’t in the contract, you have grounds to back out.
  • Proving a legal violation: Any failure by the resort to comply with local laws or timeshare regulations can void the contract.
  • Lack of availability: If an RTU timeshare provider can’t offer reasonable booking opportunities, they may not be upholding their end of the contract.
  • Change in timeshare ownership: If you’re renting a timeshare, a change in the freehold ownership can nullify the contract.
  • Environmental damage: Natural disasters affecting the property can also end the contract.
  • Personal bankruptcy: If you can demonstrate that the timeshare is a significant financial burden, a court may be able to help you settle.

What should you be aware of when considering timeshare contracts?

Let’s recap some key points that you should know when timesharing for the first time:

Renting a timeshare

When you’re renting a timeshare, you’re putting faith in the timeshare company to manage the property and deliver a good vacation experience.

Compared to freehold timeshares, where you have a better idea of who the other owners are and what hidden costs you could face, rentals are more of a shot in the dark.

For example, imagine the aftermath of a wild party the week before your arrival.

If the timeshare company doesn’t keep up with maintenance, you might have to clean up yourself and go through an arduous claims process.

And if you’re dreaming of Christmas in your timeshare, so is everyone else, and availability might not be in your favor.

Do you ever pay off a timeshare?

Yes, you can pay off a freehold timeshare. Usually, you’ll do so on a monthly mortgage that lasts 20 to 25 years.

Alternatively, you can go for an interest-only mortgage, in which you’re not paying off anything except the interest on the mortgage loan.

On the other hand, a leasehold or RTU timeshare is a rental agreement, so you’re only paying to use the property for a temporary period of time.

This means you’re not paying off the mortgage or gaining any equity in the home.

Timeshare scams

Sadly, there can be unscrupulous actors in the timeshare industry who think they can make a quick buck by preying on unsuspecting tourists.

Protect yourself by looking out for the following scams:

  • False upgrade offers: Some RTU providers hook you in with “upgrades” that eat away at your points with very little in return.
  • Resale rip-offs: Some property agents or resellers promise to sell your timeshare fast but charge high fees without delivering results.
  • Maintenance scams: Suddenly, there’s an urgent “special” fee that you need to pay before you can go on vacation.

However, if you can prove a breach of contract by the timeshare company, you can get your money back in a small claims court.

This hinges on the terms of the contract being crystal clear and any breaches of it being well-documented.

So, read the deal thoroughly before signing and collect substantial evidence as you go.

Are there alternatives to a timeshare?

Exploring vacation options beyond timeshares? Consider these alternatives:

Fractional ownership

Think of it as a timeshare’s upscale cousin.

You get more time (usually weeks to months) and a bigger slice of property ownership.

This model is popular among families and close-knit friendship groups.

Settling for a hotel instead

Hotels are more straightforward and occasionally work out cheaper, but only in the most touristy spots.

If you want to vacation somewhere remote, a timeshare can be your best bet at an affordable cost.

Peer-to-peer property marketplaces

Sites like Airbnb offer experiences with more space and privacy than a hotel room, and you can even use it to rent out your main home while you’re on vacation.

Joining a travel club

These clubs offer memberships that provide access to discounted rates on accommodations, flights, and other travel services.

Plus, they have great resources and pre-made itineraries to plan your perfect vacation.

Manage all your contracts with speed and accuracy with effective, simplified contract management software

Timeshare contracts remain an attractive option for vacationers.

They guarantee a good vacation every year without compromising on flexibility or breaking the bank.

However, they do come with risks.

Customers need to be aware of all the costs and responsibilities at the contract signing stage, or they may claim foul play when hit with hidden fees.

Clearly written wording and effective communication between parties is a must to keep everyone on the same page.

This is no small task for timeshare companies who own large portfolios, of which each property is co-owned or leased between dozens of individuals.

This is where document workflow software like PandaDoc saves the day.

Our solution makes the contract lifecycle easier at every stage.

You can create agreements from pre-built templates in minutes and gather legally binding eSignatures from every party.

Plus, our platform integrates with your CRM to store all customer correspondence in one place.

Say goodbye to contract chaos and hello to hassle-free vacation planning with PandaDoc.

Frequently asked questions

  • Exploring the secondary market is your best bet for finding timeshares at a fraction of their original cost. Owners looking to exit their contracts quickly often list at competitive prices but use caution before rushing into any deal that seems too good to be true.

  • Many resorts offer payment plans but don’t overlook personal loans from your bank. Compare interest rates to snag the best deal and avoid overpaying in the long run.

  • List your timeshare on resale websites or with an agency specializing in timeshares. A good listing has clear details, attractive photos, and upfront info about fees.

  • Check out similar listings (such as properties in the same resort/vacation complex) or use a timeshare valuation tool online. Bear in mind that seasonal trends can influence demand and, therefore, the market price of your property.

  • Selling or transferring it is safest. If you’re stuck, try directly negotiating with the resort to reach a return solution. Simply refusing to pay any fees is a bad idea — it’s sure to hurt your credit score, and you may be faced with extra penalties.

  • It’s risky. Expect collection calls, a hit to your credit, and possibly legal action. Try to resolve matters through the timeshare company’s preferred route. If they’re not upholding their end of the bargain, you can always take things to a small claims court.

  • Some resorts take timeshares back under specific conditions. It’s called “deed back,” but they’re not always keen, so ask nicely. If they agree, you’re probably going to face some sort of administrative fee, at least.

  • Timeshares offer a predictable vacation experience with potential savings over buying a second home outright or opting for hotel stays. However, they require a commitment to annual fees and maintenance, which catches many people out.


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