Sometimes to get through a long, cold winter Canadians dream about a sunny destination vacation. This may mean going on a cruise, taking an all-inclusive trip or owning a vacation home. Other people may consider buying a timeshare, sometimes referred to a vacation plan or vacation club. Before you purchase a timeshare it is a good idea to know the facts.

What is a Timeshare?

A timeshare is a shared property ownership where a person buys the right to occupy a piece of property, such as a condominium in a resort area, for a set period of time. These are also referred to as vacation plans or vacation clubs.

In a timeshare, the property is divided among many owners so the cost of its maintenance and upkeep is also divided. Yet unlike standard real estate investments, timeshares can lose value over time, especially where there is an oversupply of property and time share options.

Timeshares are special types of contracts, and therefore fall under provincial and territorial jurisdiction. But many timeshare purchases take place in another country, so you should find out about what laws apply. The laws and regulations of a foreign country may be very different than those in Canada.

Before You Buy

Many timeshare offers are legitimate, but some use high-pressure selling tactics. Here are a few tips:

  • Be wary of sales pitches that offer big prizes such as free vacations, cash and new cars just for attending a timeshare seminar
  • Resist hard-sell tactics that offer a discount for buying in immediately. Always take information with you and think about it
  • Obtain legal advice about rights and obligations in both the location of the timeshare and in Canada before you sign any contract. Consult with a lawyer who is independent of the company selling the timeshare
  • Get advice from the local real estate board before agreeing to anything if you are purchasing a timeshare outside of Canada
  • Be realistic. Make your decision based on how much you will use the property
  • Compare the total annual cost of the timeshare with your normal vacation expenses
  • Ask about availability during your vacation periods. Ask what other timeshares or properties you can use with your membership
  • Talk to people who have already bought from the company about services, availability, upkeep and reciprocal rights to use other facilities
  • Check with the Better Business Bureau for any complaints against the company, seller, developer or management company
  • Check that the property complies with local and provincial or territorial laws for things like smoke detectors, fire exits and fire proofing. Never sign anything before you have seen the property and make sure it actually exists and meets your requirements
  • Research the property’s popularity as a vacation spot
  • Find out if and when you can sell your timeshare

Always read the fine print. Sometimes even the “free” prizes can have some sort of fee attached to them.

Knowing Your Options

There are two main categories of timeshares: the deeded timeshare (where you buy the property outright) and the right-to-use timeshare.

A deeded timeshare divides the property value like a pie–each owner gets a deed to a “slice”. You buy the right to use a specific unit at a specific time every year. The deed allows the owner to use the property and to assume part of the financial responsibility of the property—both in relation to the “slice” the owner purchases. The owner is also responsible for a share of maintenance and upkeep.

A deeded timeshare can be an option if you plan to keep it for a lifetime and use it often. Because you own the property you can use the property yourself, rent it out, or give the time away to friends or family. You can even leave the timeshare as an inheritance, like you would a home or other properties.

You can also have a “right-to-use” timeshare, which refers to a lease-like agreement. In this type of timeshare your lease expires after a specified time and you have no property ownership rights in the property. A “right-to-use” timeshare may include the following options:

  • Fixed timeshare: This kind of timeshare is only for a particular week or days of the year. The rest of the year, other owners use the same unit in a similar manner.
  • Floating timeshare: A floating timeshare is for a fixed period of time such as one or two weeks, but there are no specific dates determined in advance. For example, if the owner is eligible to stay for a week in the summer, they can choose the week.
  • Rotational timeshare units: This combines the benefits of both the fixed and the floating type of timeshare. The rotation of holiday stays can go either backwards or forward in the season or calendar, giving opportunity to all owners to stay during various times of the year. For example, if your stay is in June one year, it could be in July or even December the next year. Availability of units is something to keep in mind when investigating this option.
  • Lockoff or Lockout: You occupy a portion of the unit and offer the remaining space for rental or exchange. These units typically have two to three bedrooms and baths.
  • Points-based programs: These timeshares allow owners to trade units for a set time with another owner who has a unit of equal size at a resort owned by the same company. The point-based timeshare may allow you to stay at a wide range of sites without being fixed to a certain season or the same resort. Some point-based timeshares may allow you to save your points for up to two years. In most cases, you can use your points to buy in to larger units or more time at a more popular resort depending on availability. Most exchange companies charge a fee when units get traded.

Note: You are likely expected to pay fees and taxes no matter whether you use your unit or someone else’s unit. Maintenance fees can cost from $200 up to $1000 per year depending on the location and resort. Property taxes are also rated on the type of timeshare property you have, its location and the resort.

Buying a Timeshare

You may choose to buy a timeshare outright, or pay for it over time like a mortgage. Here are some things to keep in mind:

  • Interest rates are usually higher for timeshares, and most timeshares depreciate in value over time
  • Watch for transfer fees and legal fees
  • Compare prices of other timeshares nearby and find out what perks are offered. Make sure there are terms in the contract about the maintenance of the property
  • If you are purchasing an undeveloped property, use an “escrow” account where an independent trusted third party makes payments as project milestones are met. Make sure there is a “non-disturbance” and “non-performance” clause to ensure you’ll be able to use your unit if the developer or management firm goes bankrupt or defaults on their financing. Contact a real estate attorney who can provide you with more information and advice about these types of arrangements
  • Get everything in writing and make sure spoken promises are in the written contract and make sure there are no blanks on papers you sign
  • Ensure that cancellation rights and the cooling-off period are outlined in the contract before you sign. This period allows you time to cancel the contract if you change your mind for any reason

Selling a Timeshare

Many factors will influence the resale value of your timeshare, including location, resort quality, flexibility of usage, season, demand and, of course, price. Here are some tips:

  • Consider listing your timeshare a month or two before vacation season to attract buyers
  • Price your timeshare competitively. Take the time to compare prices with other similar timeshare units. You can try to sell your timeshare on your own or enlist the help of a real estate broker or resell company. If you use a broker, you will be charged a commission. Fees will also be charged if you use a resale company
  • Factor in related costs. These may include: deed preparation, escrow of funds, timeshare estoppel certificate, closing statements and recording
  • Be sure that you have your paperwork in order

Estoppel Certificates

An estoppel certificate is a letter from the timeshare resort that explains the status of the property in question. It can explain any outstanding maintenance fees, loans and details any special rules or conditions of use for the property.

This document was created with information from the following organizations. For further information, please visit:

  • Consumer Protection BC (video only)
  • Service Alberta (PDF 208Kb)
  • Ontario Ministry of Consumer Services
  • Office de la protection du consommateur (in French only)
  • US Federal Trade Commission
  • Better Business Bureau

Provincial and Territorial Consumer Affairs Offices

Alberta

Service Alberta, Consumer Contact Centre
3rd Floor Commerce Place
10155-102 Street

Edmonton, Alberta  T5J 4L4

Telephone: 780-427-4088
Toll Free: 1-877-427-4088

Email
Websitewww.servicealberta.ca

British Columbia

Consumer Protection BC
#307-3450 Uptown Blvd
PO Box 9244

Victoria, British Columbia  V8W 9J2

Telephone: 604-320-1667
Toll Free: 1-888-564-9963
Fax: 250-920-7181

Email
Websitewww.consumerprotectionbc.ca

Manitoba

Consumer Protection Office, Manitoba Justice
302-258 Portage Avenue

Winnipeg, Manitoba  R3C 0B6

Telephone: 204-945-3800
Toll Free: 1-800-782-0067
Fax: 204-945-0728

Email
Websitewww.manitoba.ca/consumerinfo

New Brunswick

Financial and Consumer Services Commission
225 King Street, Suite 200

Fredericton, New Brunswick  E3B 1E1

Toll Free: 1-866-933-2222
Fax: 506-444-4494

Email
Websitewww.fcnb.ca

Newfoundland and Labrador

Service NL
PO Box 8700

St. John’s, Newfoundland and Labrador  A1B 4J6

Telephone: 709-729-2600
Toll Free: 1-877-968-2600
Fax: 709-729-6998

Email
Websitewww.servicenl.gov.nl.ca/index.html

Northwest Territories

Consumer Affairs, Department of Municipal and Community Affairs
5201-50th Avenue, Suite 600
PO Box 1320

Yellowknife, Northwest Territories  X1A 2L9

Telephone: 867-767-9161 ext 21022
Fax: 867-873-0309

Email
Websitewww.maca.gov.nt.ca/en/services/consumer-affairs

Nova Scotia

Service Nova Scotia and Municipal Relations, Public Enquiries
Mail Room, 8 South
Maritime Centre
1505 Barrington Street

Halifax, Nova Scotia  B3J 3K5

Telephone: 902-424-5200
Toll Free: 1-800-670-4357
Fax: 902-424-0720

Email
Websitenovascotia.ca/sns/access/individuals/consumer-awareness.asp

Nunavut

Consumer Affairs, Department of Community and Government Services
3090 – 9th Street
P.O. Box 440

Baker Lake, Nunavut  X0C 0A0

Telephone: 867-793-3303
Toll Free: 1-866-223-8139
Fax: 867-793-3321

Email
Websitewww.gov.nu.ca/

Ontario

Consumer Protection Ontario, Ministry of Government and Consumer Services
Box 450
1201 Wilson Ave, Station A

Toronto, Ontario  M3M 1J8

Telephone: 416-326-8800
Toll Free: 1-800-889-9768
Phone (TTY): 416-229-6086
Phone (TTY) 2: 1-877-666-6545
Fax: 416-326-8665

Email
Websitewww.ontario.ca/consumerprotection

Prince Edward Island

Consumer Services, Department of Justice and Public Safety
Shaw Building, 4th Floor
95 Rochford Street
PO Box 2000

Charlottetown, Prince Edward Island  C1A 7N8

Telephone: 902-368-4580
Telephone: 902-368-4550
Toll Free: 1-800-658-1799
Fax: 902-368-5283

Websitehttps://www.princeedwardisland.ca/en/topic/consumer-services

Quebec

Office de la protection du consommateur
400 Jean-Lesage Boulevard, Suite 450

Québec, Quebec  G1K 8W4

Telephone: 418-643-1484
Toll Free: 1-888-672-2556
Fax: 418-528-0976

Websitewww.opc.gouv.qc.ca

Yukon

Consumer Services, Department of Community Services
307 Black Street

Whitehorse, Yukon  Y1A 2N1

Telephone: 867-667-5111
Toll Free: 1-800-661-0408 ext. 5111
Fax: 867-667-3609

Email
Websitewww.community.gov.yk.ca/consumer/index.html

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