Question: I own a timeshare week and want to sell it. One of my friends is in real estate sales and said she would help me. Is there anything different about timeshare sales as opposed to sales of other real estate that I should be aware of?
Answer: A Florida timeshare is most often a period of time when a purchaser of a timeshare interest is afforded opportunity to use a condominium unit under a timeshare plan. Florida's legislature has adopted substantial statutory regulation of condominium sales in Chapter 718 of Florida Statutes, known as Florida's Condominium Act. Accordingly, the Condominium Act applies to condominium timeshares.
Although the Condominium Act has substantial sale regulation and disclosure requirements, the legislature felt a need for more disclosure and regulation in the timeshare industry. In 1981, Florida adopted the Florida Vacation Plan and Timesharing Act (the Act).
The Act recognizes that timeshares are different. It regulates everything from advertising, prizes and promotional offers to exchange programs and management. It has specific requirements for contracts and disclosure by timeshare developers and less comprehensive requirements for resale purchase agreements between timeshare owners and buyers.
With exception of direct sale by an owner, timeshare plans can only be sold by licensed real estate brokers or associates. It is unlawful for any real estate broker or associate to collect an advance fee for listing a timeshare. Some of the larger companies specializing in timeshare resales try to circumvent that prohibition by charging the seller miscellaneous fees or costs.
Prior to listing or advertising a timeshare for resale, a resale service provider is required by law to provide the owner a description of any fees or costs relating to the advertising, listing or sale of the timeshare interest, when such fees or costs are due and the ratio or percentage of the number of listings of timeshare interests for sale versus the number of timeshare interests sold by the resale service provider for each of the previous two calendar years. The statute states that failure to disclose this information in writing constitutes an unfair and deceptive trade practice under Florida Statutes, providing the property owner with a cause of action for damages and attorney's fees. Any contract in violation of the disclosure requirements is void and anyone paying money to a resale service under a void contract is entitled to a full refund.
The statutory provisions referenced above are intended to protect the time share owner at time of resale. There are additional contract and disclosure requirements to protect buyers. Resale contracts must include the following:
- Amount of the current year's assessment for common expenses and the annual due date:
- Warning that the assessment can be increased by the managing entity;
- Whether the assessment includes ad valorum real estate tax and, if not, the most recent annual assessment for ad valorum real estate taxes;
- Itemization of any delinquency in payment of common expenses or ad valorum taxes and the per diem charge for interest or late charges;
- Warning that the buyer should review the declaration of condominium or covenants and restrictions, the association articles and by-laws, current year operating and reserve budgets, and any rules and regulations affecting use of the timeshare.
The contract must also explain that the buyer has ten (10) days within which to cancel the contract and obtain a refund of any deposit. The buyer cannot waive the cancellation right and no resale contract for a timeshare may require closing before expiration of the ten (10) day cancellation period. In contrast, the buyer of a resale condominium has only 3 days to cancel the contract from the time the buyer receives certain condominium documents and the contract can provide for closing at any time.
The contract must also disclose the year in which the buyer will first be entitled to occupancy of a time share period association with the timeshare being sold.
If a resale purchase agreement does not comply with the statute, the contract is voidable at option of the buyer. The buyer may void the contract and obtain a refund up to one year after closing.
Timeshare purchases are often impulsive and the legislature has attempted to protect all parties in the resale market. Because the statute is complex, it is possible that a real estate sales agent without substantial experience in the timeshare industry may not be aware of the disclosure and contract requirements. Failure to comply with the statutory mandates results in a contract voidable by the buyer, even after closing. You will be well advised to retain an attorney to be sure all contracts and closing documents comply with Florida law.
By: William G. Morris, Esquire