Eliza Theiss 
Editor’s Note: This article has been edited and updated. Expert insight was provided by Lisa Ann Schreier, author at The Timeshare Crusader.
A timeshare is a property that has divided ownership and rights. As a type of vacation ownership, most timeshares are condo-style resorts in which numerous people have bought rights to use a property or a collection of properties. Each buyer has an allotted period of time in which they can make use of their purchase. This can be a specific week in the case of fixed systems, but most U.S. timeshares operate on a floating system, meaning that the buyer owns a non-specific week within a range of dates. Timeshares can also operate on a point basis, wherein buyers can use their points to vacation at all timeshares that participate in that specific point system. Most timeshare properties require a minimum purchase of a one-week ownership and buying weeks during the location’s high season will cost more than weeks during the off season.
Who technically owns a timeshare?
Though there are several possible legal structures for timeshare ownership, the two most common are shared deeded ownership and shared leased ownership.
- Shared deeded ownership. Each owner owns a percentage of the actual property. The percentage a person owns correlates to how much time they have purchased. The owner will receive a deed for their percentage of ownership and this will specify when the owner can use the property. This type of timeshare ownership results in many deeds being issued for each property. For example, if one property was sold in one-week increments then there would be 52 total deeds issued.
- Shared leased ownership interest. The developer holds the deeded title to the property and is the legal owner. However, each owner of a timeshare owns a leased interest in the property. Each lease agreement gives the owner access to their property for the timeframe agreed upon at purchase. Shared leased ownership generally expires after a certain number of years and is rarely transferable upon death. Owners of shared lease timeshares may not be able to sell or transfer their timeshare to another person.
A number of timeshare programs do not offer ownership or right to use of a particular unit or even a particular resort. Instead, the buyer purchases timeshare points that can then be used at a variety of resorts owned by the parent company or resorts that are part of a larger exchange network.
Why do people own a timeshare?
While there are some buyers who choose timeshares as a cost-effective alternative to buying a vacation home, overall people interested in timeshares and vacation homes are entirely different sets of consumers. Generally speaking, people who buy a timeshare choose it as an alternative to renting a hotel room for vacations. Although much more cost-effective than a vacation home, a timeshare still comes with maintenance fees.
Potential timeshare owners must always factor these obligations into their budget, as the average annual timeshare maintenance fee clocks in at nearly $900. The annual maintenance fee includes insurance, maintenance, management, taxes and HOA fees among other costs, regardless of whether the owner makes use of their timeshare or not.
How to approach timeshares?
The vast majority of people purchase a timeshare because they do not want to go to the same place each year. Instead they make use of internal or external timeshare exchange systems, which allows them to vacation at a variety of different resorts within the system. Most timeshare buyers only need two weeks annually, but the timeshare market also includes a segment known as fractional timeshares, which caters to people who vacation four or more weeks annually.
While most timeshares are willable and sellable, they must not be thought of in terms of investment, as the resale market is both swamped and depressed. As such, those looking resell their timeshare must be prepared that they will only receive a small fraction of what they originally paid. This, of course, also means that with the right research potential buyers can get a great deal on the secondary timeshare market.
Editor’s Note: This article has been edited and updated. Expert insight was provided by Lisa Ann Schreier, author at The Timeshare Crusader. Lisa has been involved in the timeshare community since 1998. Author of ‘Surviving A Timeshare Presentation…Confessions From The Sales Table’ and ‘Timeshare Vacations For Dummies,’ Lisa is also a contributor at Elliott.org, RockStarFinance.com and Senior.com. You can follow Lisa on Twitter at @LisaLooksAt
