Timeshare Contracts: What’s Written in the Fine Print?

Picture this: You own a slice of paradise that you can visit every year to relax, enjoy the company of loved ones, and recharge before returning to the responsibilities of everyday life. 

But wait: You own that slice of paradise with 51 other families; you get little say in when you can visit; your upfront payment is only the start of many ongoing costs; and to really get your money’s worth, you have to vacation there every single year.

Timeshares can be alluring. It’s easy to find yourself signing up for one due to high-pressure sales tactics and clever timeshare scams. For some families, they really do make sense; as the editorial director of a Disney magazine, I know firsthand how many people swear by the Disney Vacation Club timeshare program.

But as a Certified Financial Education Instructor, I’ve also witnessed families swindled by timeshare contracts, stuck with mounting fees, and desperate for a way out. Below, I’ll break down how these timeshare contracts work, what’s hidden in the fine print, and how you can break free.

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Table of Contents

1. Understanding timeshare models
   1. Fixed-term timeshares
   2. Floating timeshares
   3. Points systems
2. Types of timeshare contracts
   1. Shared deeded
   2. Shared leased
3. What’s in the fine print of timeshare contracts?
   1. License to lie
   2. Hidden fees
   3. Restricted use
4. How to exit a timeshare contract
   1. Right to cancel
   2. Negotiation
   3. Resale market
   4. Timeshare exit company

Understanding timeshare models

Timeshares originated in Europe in the 1960s as a way for people to enjoy their favorite spot year after year, without having to handle the entire costs of a vacation home. Instead, ownership of a vacation unit would be split among several parties, each owning a portion of the cost. The idea quickly spread to the United States.

Today, there are more than 250,000 timeshare units in the U.S. These units range from apartments and campground sites to hotel suites and condos. The average upfront transaction price for a family buying into a timeshare is more than $24,000.

But not all timeshares work the same. Here are the most common timeshare structures and how they work:

Fixed-term timeshares

The fixed-term timeshare model assigns you a specific week each year that you can use your timeshare unit. For instance, you may get the first week of every July or the third week of every November.

This model is dependable if your schedule never changes—like if you lock down the week of Christmas and your extended family always likes to come together to celebrate—but it can be a burden if your travel plans need to be more flexible because of work or school.

If something comes up, it’s possible to try to switch your week with one of the other timeshare owners, but no one is required to swap with you.

Floating timeshares

Floating timeshares offer more flexibility. Owners can book within a broader time period, rather than a fixed week.

However, that means you’ll be fighting other families for availability. If you want to travel during popular times, such as summers, spring breaks, or major holidays, you may find it challenging to lock in your preferred dates.

Points systems

Timeshares built on a points model are the most flexible. Typically, you’re given points annually based on your ownership interest. You then use them to book vacations across a network of resorts, varying by season, room size, location, or theme. Not all resorts are the same number of points, and the points required to book can change throughout the year.

A prime example I encounter in my line of work is Disney Vacation Club (DVC). People who buy into DVC pick a home resort but can use their annual points to book at other locations at Walt Disney World and Disneyland, as well as resorts in Hawaii, Vero Beach, and Hilton Head.

Types of timeshare contracts

Timeshare contracts usually follow one of two ownership structures: shared deeded or shared leased.

Shared deeded

With a shared deeded timeshare contract, you legally own a portion of the property, often in perpetuity. If you get one week a year at the property, you own 1/52nd of it. If you get two weeks, your ownership jumps to 1/26th. While it might not feel like true real estate ownership, it also means you’re partially on the hook for property taxes, maintenance, and even inheritance transfers.

That last one can be tricky. Reddit is filled with worried Gen Xers, Millennials, and even Gen Z-ers who are stressed because their parents purchased a timeshare and plan to leave it to them in their will. Younger generations who have seen how much of a burden timeshares can be want nothing to do with it.

How do timeshares work? How do I make sure my parents don't give my brother and me theirs?
byu/Allforthe2nd ininternetparents

Luckily, no one can force you to take over ownership if you’re bequeathed a timeshare contract in a will. Simply don’t sign for it, but be prepared for it to be foreclosed on (without detriment to your finances). Ideally, however, you should have this conversation with your parents before they write their will. But in case you’re worried, here’s what happens to a timeshare when the owner dies.

If no one wants to inherit a timeshare, the owner can resell it—though the timeshare resale model can be brutal, because increasingly more Americans have realized the major disadvantages of timeshare ownership.

Shared leased

Also known as a non-deeded timeshare, a shared lease timeshare contract involves no actual ownership. Instead, you lease the timeshare (one or two weeks a year, for instance) for a set term—say, 20 or 30 years. When the lease ends, your rights vanish. That’s less risk of unwanted inheritance, but you walk away with no tangible assets after decades of payments.

What’s in the fine print of timeshare contracts?

Some people willingly seek out timeshare contracts—for instance, major Disney fans who visit the parks every year may want to join DVC without ever sitting through a high-pressure sales pitch. But many other families who buy into timeshares only do so because of the high-pressure sales tactics.

Whatever you do, do not sign a contract on the spot. Review the fine print in detail before committing to a decades-long or permanent agreement. Here are some of the things that might be hidden within a timeshare contract:

License to lie

A license to lie clause invalidates verbal assurances a salesperson makes during their pitch. Real estate agents who omit information or misrepresent the timeshare experience are protected by these clauses, as long as the contract itself does not contain misinformation. Within reason, this gives sales people the ultimate freedom to say what they want to convince you to purchase.

Hidden fees

Unless you read your contract carefully, you may miss that maintenance fees can go up over time, or that you’ll pay extra for an exchange (to book a different property instead), or that you may have to pay special assessment fees to upgrade or repair the property. There could also be surprise add-ons for housekeeping, parking, or insurance.

Restricted use

Some timeshare agreements may sneak in blackout dates during which you can’t book. If you have a floating timeshare or points-based timeshare, there may be less flexibility than you were promised.

How to exit a timeshare contract

Exiting a timeshare contract is not easy, but there are a few ways to get out of a timeshare:

Right to cancel

Most states offer a short rescission period—typically three to 15 days—after you sign a timeshare contract. During this window, you can cancel the agreement without penalty. The exact length varies by state, so check your local laws and act quickly.

To cancel, you’ll usually need to submit a written notice following specific instructions in your contract. If you’re within that timeframe, this is your easiest and cleanest way out.

Negotiation

If you miss the right-to-cancel window, you can still try to negotiate your way out directly with the timeshare company. Some larger timeshare developers have deed-back (or buy-back) programs in which they’ll purchase the property back from you.

This works out nicely for the developer because they will, of course, buy it back for less than you paid, then turn around and sell it to someone else. It can be hard to stomach the financial loss, but if it means avoiding decades of high fees for an unwanted vacation property, it might be worth losing some money on the deal.

The timeshare developer may also offer a voluntary surrender program.

Resale market

Another way out is to resell your timeshare on the secondary market. A major caveat here: Each contract is different, so review it thoroughly to understand when and how you can sell your timeshare. If you financed your purchase instead of paying cash upfront, you’ll also need to pay off the timeshare loan before you can resell it.

And good luck: The resale market is tough. Don’t expect to recoup what you paid when you sell. To make the process easier, you can use a timeshare listing company, but thoroughly vet each company you’re considering before moving forward.

Timeshare exit company

If you really feel trapped by your timeshare contract and had no luck on the resale market, your last resort should be a timeshare exit company, such as Stonegate.

Much like timeshare companies themselves, the timeshare exit market is rife with scams. Only move forward with a company if its pricing is transparent, it has stellar customer reviews, and it offers an escrow payment option.

We’ve thoroughly vetted several companies to come up with our list of the best timeshare exit companies. This is a good place to start.