What is Timeshare?

Timeshare, in many cases, is misunderstood by the general public for a variety of reasons. 

However, timeshare is a description of a form of holiday ownership. Once acquired by a consumer, you own a right, (either directly or through a “club”) to use a week(s) (or longer) in an apartment, complex, boat, home, villa or holiday resort in accordance with the contractual period which could be many years or in many cases in perpetuity.

What’s in a name?

Timeshare, throughout recent years, has become discredited in respect to its image and its brand. Consequently, timeshare sellers have migrated away from the use of the word “timeshare” so as to disassociate themselves from the discredited image and those timeshare companies have started to use other titles to describe what in essence is a timeshare. Such migrated phrases like “Holiday Club”, “Fractional Ownership”; “Destination Club”; “Vacation Ownership” etc.  All of which are timeshare.

The timeshare industry asserts that there are over six million individuals/families who own timeshare worldwide – many of which are genuinely satisfied with their ownership.

What is a timeshare and how does it work?

Timeshare accommodation can be of a higher standard than hotels or rented accommodation. Most resorts have extensive leisure facilities (generally free to use).

All timeshare resorts are self-catering.

Accommodation is dependent and particular to each resort and/or each building. Some range from modest studios, through to large apartments and villas with appointments to a very high standard. As previously stated, timeshare accommodation can also consist of boats, barges, etc and is described as including a variety of accommodations in recent authorities in the UK courts.

The timeshare industry competes within the holiday industry and in particular, the self-catering and package holiday divisions of the holiday trade. In the main, it competes with package holidays and villa rental. Timeshare, however, proffers to its customers on sale of a timeshare that it has an advantage over other types of holidays as it might offer better long-term value for money.

Timeshare comes in two basic forms:

Fixed week – Where you own rights to a contractually specified week(s), usually in a specific apartment/villa, which you can either return to every year or swap through the exchange system such as but not limited to RCI and/or Interval International.  

Floating system – (which includes points clubs). Instead of owning a specified week, you own a week (or a time period which may be longer than a week) within a seasonal band of the time periods. Each year you have to book the specific week that you want, but this is “subject to availability”.

One of the major strengths of timeshare is the certainty it provides. The accommodation and associated facilities are held in trust and/or are registered in a public register for the lifetime of the right to use. This being so and provided the consumer continues to pay the contracted fees on time, including obligations of the holiday club membership, the consumer has the contractual certainty of the holiday each and every year.

If at some stage, the consumer tires of its timeshare ownership and has a desire to pass on the rights and obligations to another, it can generally do so.

Most timeshare owners use the exchange system which provides a large/diverse choice (nearly 6,000 resorts in all the popular destinations worldwide) to exchange to another resort, knowing that the other resort chosen is of a similar standard to that which the timeshare owner owns.

If and when, a person acquires timeshare, generally a one-off payment is made to the seller of the timeshare and each consecutive year of ownership, the consumer pays fees which discharge the day to day liabilities for the accommodation i.e. to be kept clean, in good order, local taxes paid etc.. These fees are payable whether or not the consumer makes use of its ownership rights.

Good resorts are administered by the owners through a club, consisting of a committee. This ensures the owners have the opportunity to maintain the resort in accordance with their collective wishes.

Regrettably, the activities of a number of traders have tarnished the industry following questionable practices. As a direct result of the worst members of the timeshare industry, the word “timeshare” has lost credibility with the general public, resulting in both the honest and the dishonest traders claiming their product is “not timeshare”. Because of this practice, legislation is in force so as to remove the veil for consumers so that they are informed. Therefore, the claims of some who pass off products under different names, all generally, under the law, are a timeshare. The Timeshare Consumer Association, has listed below, descriptive terms which all are compatible with the timeshare industry.

Vacation Club

•  Holiday club
•  Multi-ownership
•  Holiday ownership
•  Fractional ownership

The above confuses consumers, yet each company using this confusion claim membership of organisations such as ITRA, OTE, RDO, TATOC, RBA and the Timeshare Council. This practice is not helpful to consumers with respect to the safe purchasing of timeshare holidays.

This website upholds the good principles of Sandy Grey and commits and dedicates itself to helping consumers to get the best out of timeshare and to avoid the many pitfalls.

Consumers ought to be fully aware of the new Timeshare Regulations 2010 that came into force in most EU countries on 23 February 2011.

Being familiar with these regulations the consumer can establish their rights. We do not emphasise enough that the above regulations proffer to the consumer full protection from some of the scandalous practices of some timeshare companies. However, they do assist consumers. Our consumer association hopes to use these regulations as a springboard to bring into force other measures to regulate the industry to the benefit of not only consumers but the industry as a whole including, but not limited to, individuals and personnel working within the timeshare industry. This quest will be carried out in a pragmatic way so that each will receive enhancement and betterment for the product sold and enjoyed.

International Timeshare Treaties

As explained, timeshare contractual documents, terms and conditions are authored by resorts of which consumers were not invited to or given an opportunity to express what they wanted the contract to deliver.

For the avoidance of doubt, consumers should not submit to any legal jurisdiction other than their homeland law. If a resort fails to action timeshare matters in your domiciliary, they are obliged to inform the court of your position. Not to do so would deprive the court of reasonable information.

If parties are unable to agree on the jurisdiction, the court will be aware that you are an EU citizen and protect you under its laws and regulations.

Consumers should refer to EU Regulation 44/2001 (commonly referred to as the Brussels Regulation) which regulates jurisdiction for all EU member states and/or the Lugano Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (the Lugano Convention) regulates jurisdiction between the EFTA states on the one hand (Switzerland, Iceland and Norway (Liechtenstein did not ratify The Lugano Convention)) and EU member states on the other.

International judgments are moot in the UK unless the resort country has a money treaty with the UK. Consumers and resorts should be aware that no such money treaty exists between the UK and many countries.

As no treaty may exist with respect to an enforcement order for judgments, resorts may be unable to enforce a debt against a consumer in the UK.

To have effect in the UK a resort is obliged to seek the High Court’s indulgence in the registering of the debt and against a consumer.

A resort is therefore required to seek permission from the High Court of Justice in England.

Upon receipt of a request, the High Courts are obliged to be satisfied that particular conditions have been met.

Full, complete and translated documents are required as well as particulars of information.

If an application is received, judgment may be registered, however at all times and whilst in the jurisdiction of the UK resorts will have to concede to all English rules and CPR procedures.

The action to enforce any judgment in the UK is an action in Common Law. In contrast to the Brussels Convention, The Common Law rules are more onerous and very restrictive.

For a non EU judgment to be enforced in the English courts they must be satisfied that: –

1. the foreign court had jurisdiction to render the judgment;
2. the judgment accords to the English rules of private international law

The subject matters in timeshare disputes are very testing, and an application for summary judgment in the UK attracts a very high barrier of proof from the resort.

It is, therefore, a test of fairness, conduct and reasonableness which is tested by the UK courts.

Misrepresentation

What is a Misrepresentation?

Distortion, fabrication, falsification, mutilation or adulteration of what is true. Colouration, slanting stretching, twisting or exaggerating reality.

We are subjected to misrepresentations from comedians to Disney, from beauty to dating sites. The issue in law is whether or not the false representation injured the party subject to the misrepresentation or falsehood.

Misrepresentations therefore, are a complete or partial false statement of fact made to another, which (whilst not being a term of the contract) induces the another to enter into a contract/arrangement.

Not all misrepresentation are actionable claims and part of the recipe is that the party who is subject to the misrepresentation is exposed to injury.

Wrongful Statement of Fact

An actionable misrepresentation must be a false statement of fact, not wrongful opinion; or future intention; or misinterpretation of law.

By way of explanation:

•  A Statement of Opinion – We are all entitled to an opinion, therefore, a false/wrong statement of opinion is not a misrepresentation of fact. This principle was established in Bisset v Wilkinson [1927] AC 177. That said, where the sales representative is giving a statement and he was in a position to know the truth or the true facts and it can be proved that he could not have reasonably held such a view, then his opinion can and should be treated as a statement of fact. This principle was outlined in Smith v Land & House Property Corp. (1884) 28 Ch D 7. That said, all litigants should understand that some expressions of opinion are merely sales puffery. That is to suggest for instance “if you fly xxx airline it will result in others considering you to be beautiful”. In Dimmock v Hallet (1866) 2 Ch App 21, the description of the land as ‘fertile and improvable’ was held not to constitute a misrepresentation.
•  Statement as to the Future – A false statement made by a timeshare person as to what he will do in the future is not a misrepresentation and will not be binding on the represented unless the statement is incorporated into a timeshare contract.

However, if a person knows that his promise has induced another to enter into a contract and knows that the promise will not in fact be carried out, then the resort will be liable as expressed in Edgington v Fitzmaurice (1885) 29 Ch D 459 and Esso Petroleum v Mardon [1976] QB 801.

False Statement of Law

A false statement as to the law is not an actionable misrepresentation.  Each citizen in the UK is presumed to know the law as such a consumer should know the law and should have known the representation was false. This explained, the distinction between fact and the law is not simple and is discussed in Solle v Butcher [1950] 1 KB 671.

Silence

Generally it is difficult to establish silence as a misrepresentation. The consequence of the maxim caveat emptor is that the other party has no duty to disclose problems voluntarily. If therefore a timeshare consumer is labouring under a misapprehension there is no duty on the timeshare salesman to correct that misapprehension “buyer beware”. Smith v Hughes (1871) LR 6 QB 597.

However, there are three fundamental exceptions to this rule:

•  Half-Truths – The timeshare salesmen must not misleadingly tell only part of the truth. In the event that a proclamation that does not present the whole truth the claim may be regarded as a misrepresentation. Nottingham Brick & Tile Co. v Butler (1889) 16 QBD 778.
•  Statements that Become False – Where a statement was true when made out, but due to a change of circumstances, has become false by the time it is acted upon, there is a duty to disclose the truth. With v O’Flanagan [1936] Ch 575.
•  Contracts Uberrimae Fidei – Contracts uberrimae fidei (utmost good faith) impose a higher duty of disclosure of all material facts because timeshare representativse are in a strong position to know the truth. Examples would include finance contracts or loan agreements.

Where there is a fiduciary connection between say the parties to a contract, a duty of disclosure will arise, eg solicitor and client, bank manager and client, trustee and beneficiary, and inter-family agreements.

 Inducement

The false statement must have induced the consumer to enter into the contract. The requirements here are that the misrepresentation must be material and it must have been relied on by the consumer.

A measurable fact is something which would inspire a reasonable person in entering the contract. If one party fails to do this, the contract may be avoided. Lambert v Co-Operative Insurance Society [1975] 2 Lloyd’s Rep 485.

The misrepresentation must be material, in the sense that it would have tempted a reasonable person to enter into the contractual arrangement. However, this is not strictly objective:

Reliance

• The consumer must have relied on the misrepresentation.
• There will be no reliance if the consumer was unaware of the misrepresentation. Horsfall v Thomas [1862] 1 H&C 90.
• There will be no reliance if the consumer did not rely on the misrepresentation but on his own judgment or investigations. Attwood v Small (1838) 6 CI & F 232.

Types of Misrepresentation

Once misrepresentation is established it will be necessary to ponder what type of misrepresentation has been made. There are three basic types of misrepresentation: fraudulent, negligent and wholly innocent. The importance of the distinction lies in the remedies available for each type.

Fraudulent Misrepresentation

This is defined by Lord Herschell inDerry v Peek (1889) 14 App Cas 337 as a false statement that is made

•  knowlingly;
•  without belief in its truth; or
•  recklessly, careless as to whether it be true or false.

Therefore, if someone makes a statement which they honestly believe is true, then it cannot be fraudulent.

The burden of proof is on you the consumer – “he who asserts fraud must prove it”.Tactically, it may be difficult to prove fraud, in the light of Lord Herschell’s requirements.

The remedy is rescission and damages in the tort of deceit.

Negligent Misrepresentation

This is a false statement made by a person who had no reasonable grounds for believing it to be true. There are two possible ways to claim: either under common law or statute.

Negligent Misstatement at Common Law – The House of Lords has held that in certain circumstances damages may be recoverable in tort for negligent misstatement causing financial loss in Hedley Byrne v Heller [1964] AC 465.

Success depends upon proof of a special relationship existing between the parties. Such a duty can arise in a purely commercial relationship where the timeshare salesman has (or purports to have) some special skill or knowledge and knows (or it is reasonable for them to assume) that you the consumer will rely on the representation. See Esso Petroleum v Mardon [1976] and Williams v Natural Life Health Foods (1998) The Times, May 1.

The remedies are rescission and damages in the tort of negligence.

Section 2(1) of the Misrepresentation Act 1967 provides:“Where a person has entered into a contract after a misrepresentation has been made to them by another party thereto and as a result thereof they have suffered loss, then, if the person making the misrepresentation would be liable to damages in respect thereof had the misrepresentation been made fraudulently, that person shall be so liable notwithstanding that the misrepresentation was not made fraudulently unless they prove that they had reasonable ground to believe and did believe up to the time the contract was made that the facts represented were true.”

This provision does not require the consumer to establish a duty of care and reverses the burden of proof. Once a party has proved there has been a misrepresentation which induced them to enter into the contract, the person making the misrepresentation will be liable for damages unless they prove they had reasonable grounds to believe and did believe that the facts represented were true. This burden may be difficult to discharge as shown in Howard Marine & Dredging Co v Ogden & Sons [1978] QB 574.

Wholly Innocent Misrepresentation

This is a false statement which the person makes honestly believing it to be true.

The remedy is either

•  rescission with an indemnity, or
•  damages in lieu of rescission under the court’s discretion in s2(2) Misrepresentation Act 1967.

Dealing With Resorts

Before entering long-term commitments every consumer should fully understand what they are buying.

In all circumstances it is reasonable to seek counsel and advice from a variety of professionals, so that knowledge can be gained which can be considered and before that all-important decision is made.

To get to that understanding consumers have a need to read and digest all the “terms and conditions” and isolate the benefits and offset those benefits against the burdens contained in the contract.  If those contracts are long-winded, wordy, complex or difficult to understand, then considerable time to consider the contracts is needed before being signed. Some advice is free, can be taken from a variety of sources and legal professionals so take as much time as is needed. What is on offer today will still be on offer tomorrow.

Timeshare is often considered as many consumers successfully reap the rewards of secure, pre-booked and 5-star accommodation at low cost. All timeshare is not bad.  Not all timeshare resorts are out to get you.  If you find that you need to get out of a timeshare contract, for whatever reason, don’t straight away assume that you’re going to be in for a legal battle.

Some resorts have an exit package of their own, so it is always worth making contact with your home resort to see what is on offer and how they will approach your quest for an exit from the club.

However, consumers wishing to exit from their timeshare contract should consider that the resort stands to lose you as their client causing a drop in their income. Consumers need to be aware that resorts are not independent and the advice they give might not be in the consumer’s best interest. If they seek to impose a fine or try and sell another product, the consumer should not engage. If you are being encouraged to enter into other products and your timeshare exit is dependent on you acquiring those other products, again consider whether or not it’s in your best interests as you could acquire an unexpected burden.

Timeshare & Holiday Club Points

The timeshare points club/membership may fall within the definition of “long-term holiday product contracts” as suggested by the Local Government Regulation LGR and as contained in Regulation 8 of The Timeshare, Holiday Products, Resale and Exchange Contracts Regulations 2010 (hereafter “the 2010 Regulations”).  Regulation 8 is in the following terms:

A “long-term holiday product contract” means a contract between a trader and a consumer—

1. the main effect of which is that the consumer, for consideration, acquires the right to obtain discounts or other benefits in respect of accommodation, and
2. which has a duration of more than one year, or contains a provision allowing for the contract to be renewed or extended so that it has a duration of more than one year, irrespective of whether the contract makes provision for the consumer to acquired other services.

Regulation 24 grants a right to terminate a long-term holiday product contract; “without incurring any penalty”.  Under Regulation 24, timeshare consumers are only required give notice of a termination to the other party “no later than 14 days after any day on which [they] receive a request for payment of an instalment…”.

Many of our clients’ contracts appear to fall within the definition of Regulation 8. The following requirements, however, may need to be satisfied;

•  The contract must give our client the right “to obtain discounts or other benefits” in respect of accommodation; that must be “the main effect” of the contract;
•  TTS & Partners operates as a consultancy company that specialises in timeshare-related disputes between consumers and resorts. When contemplating action, the complainants can choose which areas they wish to have that dispute resolved. These areas include arbitration, fast-track courts, multi-track actions, ombudsman, mediation, without prejudices forums etc. Consultants cannot represent consumers in such forums as “fast-track” cases and “multiT-track” cases as they are a contentious business. In the event that a TTS & Partners  client requires such representation, they will refer the client to a recommended legal professional and TTS & Partners will discharge those fees in support of their client. At the same time, the engaged legal proffesional will owe a duty of care to the consumer and as such, will carry out the instruction and TTS & Partners will be merely the funding provider/ Mackenzie Friend.

It was represented and indeed advertised that the main effect of many of the timeshare agreements was to provide them with “the right to obtain discounts or other benefits in respect of accommodation”.The word “benefit” is not defined within the 2010 Regulations.  We should, therefore, give the word its normal meaning.  A benefit is commonly understood, as an advantage or profit to be gained from something. Our clients who acquired the membership in a club with the intention to gain access to discounted holiday accommodation may be protected, as the main effect could have been satisfied and if not satisfied, the main effect of the contract is misrepresented. In both cases the membership is voidable.

The point system club agreement/memberships are, therefore, a long-term holiday product contract covered by Regulation 8 of the 2010 Regulations and therefore can be terminated under the provisions set out in Regulation 24 if a reasonable case is made.