Buying a Timeshare Unit as Real Property

Now when you purchase a condominium in a timeshare development you are buying the ownership rights for a period. Usually that period is a week, but in some developments it can be as high as twenty-six weeks. It is usually for a specific week each year but many developers offer the flexibility of a floating week. A floating week is deeded within a specific season and you are allocated the actual date on a first to register basis.

Regardless, you still receive a title deed to Real Property. You also pay a smaller percentage of the upkeep costs for common areas as a timeshare owner but are accorded all the rights of a proprietor, for the defined period.

One advantage of this type of ownership is that when a timeshare is purchased as Real Property it can be used as security for a mortgage loan.

The Co-operative and Right to Use are another form of ownership popular in Timeshare developments. Sometimes, in areas outside the United States, Real Property is not an option for timeshare ownership due to local restrictions on foreign investment. Another form of ownership is as shares of stock in a corporation. The corporation in turn owns the complex, or resort development. Shares, or stock certificates, are Personal Property and cannot be used as security for a mortgage loan.

Your entitlement to use a unit in the facility, for a week or more per year, is usually then governed by a proprietary lease or other formal agreement between you and the Company.

There are numerous variations on this type of ownership. One is where the Company owns numerous developments and you have rights to use an unspecified unit at a number of facilities on a pre-agreed basis.

Or where the Company issues a proprietary lease for a right to use over an agreed period without the issue of stock to individual unit holders.

Another is where the Corporation issues points that can be converted into a weeks’ stay at one or a number of resort facilities owned by the Company.

In most of these cases you will still be levied maintenance fees for the “common” property, just as though you were the owner of Real Property. Also the lease, or right to use may be for a limited period. After the period expires all rights revert back to the owner.

Now, timeshare is a world-wide industry, with nearly six million families co-owning a vacation property. Over two million of these families are in the United States. Developments in exotic locations by Fortune 500 companies such as Disney, Marriott, and Hilton are adding to those numbers daily.

This is now a mature industry with a solid pool of buyers, sellers, spot renters and mainstream lenders who make for predictable market forces. It has expanded to include yachts, houseboats, camping resorts and lavish recreational vehicles.

There is also an exchange industry that has grown up with this burgeoning timeshare ownership. This world-wide interconnected network has its own currency, or points system based on location and demand. The system enables you to trade your Hawaai timeshare week for a week on a lavishly appointed motorized river barge in Britain, for example. Your week in Florida for a week in Cancun. Your week in Belize for a week on the beach in California, et cetera.