What We're Reading - 'Timeshares and Fractional Ownership: How Condos and HOAs Fit In'

Recently, co-op and condominium news and resource site The Cooperator ran a piece entitled “Timeshares and Fractional Ownership: How Condos and HOAs Fit In.” The article offers a thorough, well-researched perspective that may be of interest to anyone curious in the shared vacation ownership industry.

What are a few takeaways from the article worth pointing out?

For one thing, it’s worth considering that timeshare ownership can be expensive, and quite different from condo ownership in many significant ways.

As The Cooperator points out, “the basic [timeshare] arrangement requires the buyer to pay a fee for the timeshare,” often between $50,000 to $500,000 – and that’s before “the buyer pays an annual fee” (which, as we’ve noted before, tends to rise, year over year, regardless of the rate of inflation).

With that expense in mind, it’s also interesting to note the distinctions The Cooperator draws between condos and timeshares when it comes to matters of financing. As writer A.J. Sidransky puts it in The Cooperator:

“Financing a timeshare is not easy. To some extent it depends on what the ownership structure is, and who the buyer/borrower is…That financing often depends on the existing relationship the borrower has with the banking institution. It’s more a function of who you are than what you’re financing…

…most timeshare financing is provided by the seller, and still requires a down payment of at least 10 percent. Interest rates on this type of financing tend to be high, around 13 percent annually.”

At the same time, one expert interviewed for the piece concludes that, in most cases, “there really isn’t any tax benefit” to timeshare ownership. What’s more, the article also notes that many timeshare developers  have adopted a “right to use” model, in which “there aren’t any property interests at all” – meaning that a buyer does not actually own a deeded piece of real estate (and, by extension, will not gain any of the benefits that come with real estate ownership, such as resale value).

And, as one expert puts it to Sidransky, it can be difficult to extract oneself from a timeshare interest in time, as “they are not easily transferable if you find they don’t meet your needs.” As this interviewee puts it:

“There’s a systemic problem… There’s no actual representation to deal with, and it costs the owner lots of time and money to deal with them. [Timeshare companies] can be located anywhere. A few have representatives that make threatening statements to timeshare owners, stating that they will come after you for any deficiency on resale of your unit, or even come after your estate or kids… When it goes bad, it goes really bad.”

So, what’s the bottom line? We’ll leave it to The Cooperator:

“All considered, timeshares are a multifaceted product. Perhaps the best approach for a potential buyer is to consider them less as an investment and more as a lifestyle choice – a way to make taking a meaningful vacation a little easier.”

To put it another way? In many ways, when it comes to timeshares and fractional ownership, it pays to remember the Latin phrase “caveat emptor” – or “let the buyer beware!”

For more, we encourage you to read the full article from The Cooperator, available here

Led by Attorney Michael D. Finn with 45 years of experience, the Finn Law Group is a consumer protection firm specializing in timeshare law. Our lawyers understand vacation ownership as well as the many pitfalls of the secondary market of timeshare resales. If you feel you have been victimized by a timeshare company, contact our offices for a free consultation. Know your rights as a consumer and don't hesitate to drop us a line with any questions or concerns.


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Finn Law Group maintains this website exclusively for informational purposes. It is not legal or other professional advice and does not necessarily represent the opinion of Finn Law Group or its clients. Please carefully review our full disclaimer (link) before proceeding. Review our privacy policy (link) here.