Canadians who dream of having a vacation property may consider buying a timeshare. Before you commit to buying a timeshare unit, it's a good idea to know the facts.

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What is a timeshare?

A timeshare is a form of shared property ownership in which a person buys the right to a vacation property for a set time period—usually once a year. Vacation properties range from resort condominiums to campground sites. The property and maintenance costs are divided among all of the owners.

Note: Timeshare contracts fall under provincial and territorial jurisdiction. If a timeshare purchase takes place in another country, the laws and regulations of that country apply and they may be different from those in Canada. Be sure to check these local laws and regulations before signing any contracts.

Deeded timeshares

Purchasing a deeded timeshare gives the buyer the right to use a specific property during a specified time period each year. It divides the property value like a pie, and each owner gets a deed to a "slice". The deed allows the owner to use the property and to take on costs for the "slice" the owner buys. The owner also shares in maintenance costs.

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 choose to 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, as you would any other property.

Right-to-use timeshares

A right-to-use timeshare refers to a lease-like agreement. In this type of timeshare, the owner's lease expires after a specified time after which property ownership rights expire.

A right-to-use timeshare may include the following options:

  • A fixed timeshare is valid only for a certain weeks, or days, of the year. The rest of the year, other timeshare owners use the same property in the same way.
  • A floating timeshare is valid for a fixed period—such as one or two weeks—but without specific dates set in advance. For example, an owner eligible to stay for a week in the summer can choose the week of the vacation during that season.
  • A rotational timeshare unit combines the benefits of both fixed and floating timeshares. The rotation of holiday stays can go either backwards or forwards in the season or calendar. This rotation gives all owners an equal chance to stay during various times of the year. For example, an owner may stay in June one year, and in December the next. Potential buyers should keep the availability of units in mind when looking into this option.
  • An owner of a lockoff or a lockout occupies a portion of the property and offers the remaining space for rental or exchange. These properties typically have two to three bedrooms and baths.
  • points-based program, or vacation club, lets owners purchase a timeshare in the form of points. These points work like currency that owners can use to buy time at a main location, or other timeshare locations within the company’s network. A timeshare owner can therefore stay at a wide range of sites without committing to a certain time or location every year. Some point-based timeshares may allow owners to save their points for up to two years.

Before you buy a timeshare

You may choose to buy a timeshare outright or pay for it over time.

Keep the following factors in mind before you buy a timeshare:

  • Do your research
    • Find out if the property's a popular vacation spot – this is especially important if you are buying with the plan of swapping your time share with other owners around the world (sometimes for a fee).
    • Ask about availability when you or your family typically go on vacation.
    • Compare prices of other timeshares nearby and find out what perks they offer.
    • Enquire if there are other timeshares or properties you can use with your membership – some timeshares are part of networks with properties in other locations, domestic and abroad.
    • Ask about additional costs, such as finance charges, annual fees and maintenance fees. Note: Maintenance fees can go up yearly.
    • Learn about the terms and length of cancellation rights.
    • Talk to people who have already bought from the company about services, availability, upkeep and reciprocal rights to use other facilities.
    • Request an estoppel certificate, which is a letter from the timeshare resort that explains the status of the property in question. It can explain any outstanding maintenance fees or loans, as well as any special rules or conditions of use for the property.
    • Check with the Better Business Bureau for any complaints against the company, seller, developer or management company.
    • Make sure the property complies with local and provincial or territorial laws for things like smoke detectors, fire exits and fire proofing.
    • Find out if there are any rules regarding if, and when, you can sell your timeshare. Additionally, check if there is a resale market in this location.
  • Seek expert advice
    • Get legal advice about your 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.
    • If you plan to buy a pre‑construction or undeveloped property, look into setting up an escrow account where an independent trusted third party makes payments as project milestones are met. Confirm there are non-disturbance and non-performance clauses to make sure 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.
  • Budget accordingly
    • Make a realistic decision based on how much you will use the property.
    • Compare the total annual cost of the timeshare with your normal vacation expenses.
    • Plan for transfer fees and legal fees at the time of the sale.
    • Be aware that interest rates are usually higher for timeshares.
    • Check the cost of property taxes—they are rated on the type of timeshare property you seek, its location and the resort.
    • Recognize that maintenance fees can cost over $1,000 per year depending on the location and resort.
    • Don't decide to buy based only on an investment possibility. The timeshare can lose value over time and be difficult to resell, especially in places with an oversupply of timeshare options.
  • Get everything in writing
    • Make sure all verbal promises from salespeople are in the written contract.
    • Verify that the contract includes terms regarding the maintenance of the property.
    • Make sure that cancellation rights and the cooling-off period are outlined in the contract before you sign. This period allows you some time to cancel the contract if you change your mind for any reason.
    • Always read the fine print.
    • Check that there are no blank spaces in the legal documents before you sign. Never sign a contract before you have seen the property and are satisfied it exists and meets your requirements.
    • Some provinces or territories have legal requirements to provide specific information in timeshare contracts. Contact your regional office of consumer affairs for more information.

Cancellation rights

Laws in most provinces or territories provide a cooling-off period during which a timeshare contract can be cancelled—for any reason. Cooling-off periods can vary, but are short—typically 10 days.

If the contract leaves out information required by law, or if you have not received a written copy of the contract, you may be eligible for cancellation rights for up to one year after buying. Contact your provincial or territorial consumer affairs office for more information on cancellation rights where you live.

Protect yourself from timeshare high-pressure sale tactics and scams

Most timeshare offers are legitimate, but some vendors use high-pressure selling tactics.

  • Be wary of sales pitches that offer big prizes such as free vacations, cash and new cars just for attending a timeshare seminar.
  • Sometimes even the "free" prizes can have some sort of fee attached to them – be sure you know beforehand about any fees or costs.
  • Resist hard-sell tactics that offer a discount for buying in straight away. Always take information with you and think about it.