The first timeshare in the United States was started in 1974 by Caribbean International Corporation based in Fort Lauderdale, Florida. It offered what it called a 25-year “vacation license” rather than ownership. The company owned two other resorts the “vacation license holder” could alternate their vacation weeks with, one in St. Croix and one in St. Thomas; both in the U.S. Virgin Islands. The Virgin Islands properties began their timeshare sales in 1973 with owners Hillie Meyers, Don Saunders, and Arthur Zimand.
The contract was simple and straightforward. The company, C.I.C. (Caribbean International Corporation), promised to maintain and provide the specified accommodation type (a studio, one bedroom, or two bedroom unit) for use by the “license owner” for a period of 25 years (until 1999 from 1974, for example) in the specified season and number of weeks agreed upon, with only two extra charges: a $15.00 per diem (per night) rate, frozen at that cost for the life of the contract and a $25.00 switching fee, should the licensee decide to use his/her week/weeks at one of the other resorts. The presentation’s logic was based on the fact that the cost of the license and the small per diem, compared with the projected cost of hotel rates climbing in the next 25 years to over $100.00 per night, would save the license owner many vacation dollars over the span of the license agreement. The license owner was allowed to rent or give his week away as a gift in any particular year. The only stipulation was that the $15.00 per diem must be paid every year whether the unit was occupied or not. This “must be paid yearly fee” would become the roots of what is known today as “maintenance fees”, once the Florida Department of Real Estate became involved in regulating timeshares.
The timeshare concept in the USA caught the eye of many entrepreneurs due to the enormous profits to be made by selling the same room 52 times to 52 different owners at an average price in 1974-1976 of $3,500.00 per week. Shortly thereafter, the Florida Real Estate Commission stepped in, enacting legislation to regulate Florida timeshares and make them fee simple ownership transactions. This meant that in addition to the price of the owner’s vacation week, a maintenance fee and a homeowners’ association (HOA) had to be initiated. This fee simple ownership also spawned timeshare location exchange companies like Interval International and RCI so owners in any given area could exchange their week with owners in other areas.
Problems associated with the lack of accessibility of the timeshare often arise, especially with the advent of floating use plans and/or ‘points’ systems requiring reservations far in advance, or requiring the consumer to book accommodations far inferior to those marketed upon the sale. From a purely legal standpoint, the unilateral transition from a deed system to a points system, which has become increasingly popular among developers, can be regarded as an unlawful confiscation of real property. If you are in this situation, feel free to contact us at your earliest convenience in order to discuss your legal options.