|
What is
Timeshare?
( It is spelled as one word, not two words: TIMESHARE. )
Types of Timeshare Programs:
There
are three basic types of Timeshare Programs: Fee simple, Leasehold Right-to-Use ('RTU'). Also included in the mix are Points
systems, which are essentially a type of RTU, and fractional/private residence clubs.
Fee Simple:
In this system you purchase an actual deeded interest in real estate, which is recorded with the land court or
other proper authorities and for which you receive a title in perpetuity.
Leasehold: This ownership option
provides the same basic ownership rights, protections, obligations and interests etc. as the Fee Simple system
with the primary exception being that Leasehold, unlike Fee Simple, is not in perpetuity and has a specified expiration
date (which may include a first right to renew the ownership interest prior to the expiration of the leasehold).
Right-to-Use ('RTU'): In this system you purchase the right to use a particular unit or unit size each
year, but you do not have an ownership interest in the real estate. Traditionally, your right to use that property
will expire after a stated number of years, and the property will revert to the developer or the owner of the leasehold
property. Legal ownership is typically vested in a trust company. This is the prevailing type of timeshare ownership
in the UK and Mexico and many other countries outside of the USA. (See below for a description of Points systems)
Within those types of timeshare, there are a few sub-types:
Fixed week:
Where you own rights to a specific week, often in a specific condo/villa (this is called fixed week/fixed unit).
This is your "home resort" , which you can either return to every year (same week every year) or trade
through an exchange system for something similar in another part of the world, though not necessarily
in the same week that you own. The advantage to fixed week/fixed unit ownership is the assurance that your specific
timeshare unit will be waiting for you faithfully at the same time each year.
- •
An example of fixed unit/fixed week would be that you purchase Christmas week in Unit 152B-- every year you automatically
have that week in that unit assigned to you.
•
An example of a fixed week that is not in a fixed unit would be that every year during Christmas week you get the size of unit
you purchased (i.e. a 2-bedroom ocean view), but not necessarily Unit 152B.
Floating (or Flex) time: Instead
of owning a specific week, you own a week (or a time period which may be longer than a week) within a specific
range of time. Usually you will not purchase a specific unit (i.e. Unit 152B) but instead will purchase a unit
size. It is then your responsibility to contact your resort each year to book the week you want to use. This works
on a first-come-first-served basis, subject to availability, so the most desirable weeks are taken up quickly and
it behooves you to make your plans as early as your resort allows. Also, if you intend to exchange your week through
one of the exchange companies, you must first reserve your time at your resort before the exchange companies will
accept it for deposit in the "exchange bank" .
- •
An example of floating time
would be that you choose a 2-bedroom villa (not necessarily a specific unit) that is available to you any time
between, say, June 1 and September 1.
Points/Club Membership: In this system you purchase a specific number of "points"
or "credits" that represent a unit size and a time period. These points are then used like money to purchase
the vacation time, resort and unit size you desire. (In some point systems you can also use your points to purchase
airfare, cruises, hotel stays, etc.) The deed, if any, is generally held in trust by the developer or its designated
entity.
Developers assign an arbitrary number of points to establish value for a particular
unit size and type, season and week, and the point system for each resort/company is unique. (A vacation in a specific area in a unit of a specific size and type might require
1,000 points in one club and 100,000 points in another club, with the price of the total points required usually
being very similar.)
The point values assigned are based on many criteria: Large
units require more points than small ones high season dates require more points than low season dates resorts or
areas in high demand require more points than than those with low demand.
- •
An example of a points program would be that you choose a 2-bedroom ocean view unit during Christmas week in
a popular location. That property and time period is then converted to a predetermined number of points, which
you can use to purchase vacation time during any time of year, at any of the company's resorts, in any available
unit (subject to availability).
In this system, the more points you purchase, the more flexibility
you have to vacation when and where you want to, within the confines of the company's resort locations. The flexibility
of points means you can usually break up your vacation time into smaller units than a week, taking a 3-day weekend
and two 2-day vacations, for example.
A potential drawback to most points based timeshare, especially
when used to purchase airline tickets and other products, is that the point values are not inflation proof. While
your week of timeshare may be exchanged for two airline tickets this year, next year it may only be good for one
airline ticket. Similarly, a company might build a new resort which requires more points to purchase than its older
resorts, thus requiring established points members to purchase more points if they want to use the internal exchange
into that new property.
Fractional/Private Residence Club:
Fractional ownership offers individuals the opportunity to buy partial ownership of an upscale place in a resort
area. If it sounds a lot like a timeshare, that's because it is. The main difference is in the number of weeks
sold and the quality of the property.
The arrangements for basic fractionals usually divide the ownership into fourths, eighths, or 13ths, with each
owner having an equal number of days a year to use the unit. The owners typically buy their shares from a management
company, which handles maintenance and schedules everyone's time.
The big differences between regular timeshares and fractional ownership properties are prices, financing and fees.
While timeshares can be had for a few thousand dollars, fractional ownerships routinely run $100,000 or much more,
with maintenance fees to match.
A Private Residence Club takes fractionals one step further.
These are usually ultra-luxury properties which offer a wide array of special services to club owners, well above
and beyond what is typically offered by high-end condominium resorts. This concept establishes exclusivity and
a sense of belonging, similar to the country club lifestyle. Depending on the individual property, services typically
might include having a luxury car at your disposal while visiting a staff to stock your kitchen with groceries,
run errands and do the housekeeping your own private splash pool and hot tub, preferred tee times, a butler and/or
personal concierge, private chefs, nannies, fly-fishing guides, etc.
|