Timeshare “Investment” (How to know if you’re being ripped off)

We’ve blogged extensively about the fundamental legal structure of a timeshare: It’s a condominium. A condo allocates outright title to the owner of any given unit with respect to the confines within its walls, and ‘undivided’ ownership in each as to the common elements of the facility, including all the amenities, including the pool(s), etc. Each unit owner shares the cost of maintaining these common elements.

The timeshare legal structure takes this a step further in dividing ownership of any given unit into weekly intervals, in the typical case. Thus the cost of maintaining these common elements should be divided fifty-two times over.

If there has ever been any doubt in your mind as to whether you’re getting a raw deal, just do some basic arithmetic: Perhaps you’re paying $1,000 per year toward annual dues for ‘maintenance’ for a timeshare or vacation plan reservation that gets you a one week stay annually. There are at least fifty two other ‘members’ paying a similar amount for the same unit. If your timeshare is actually characterized as a ‘vacation ownership’ plan, or some other denomination, the principal is the same – at least 52 other ‘owners’ are likely paying for each unit available – each is generally available for one week per owner.

So now for the math: 52 weeks times $1,000 is $52,000 annually. This figure is astronomical. Would the outright owner of any single condo ever expect to pay this kind of money annually for maintenance? Of course not. Not even in the penthouse of the Manhattan Trump Tower.

If you’re getting a little concerned about escalating annual dues with no accountability, please call us free of charge. As licensed attorneys, we have the ability to subpoena books and records associated with your annual maintenance assessment. These maintenance dues are actually in the nature of trust funds earmarked for third parties. Your developer owes you a fiduciary duty to properly manage and account for these funds. And as you can see from the example above, the chances are good that this is not happening.