Attorney Richard Asato, a founding partner of the Imanaka Asato law firm, joins producer/host Coralie Chun Matayoshi to discuss types of time share plans, the difference between a “deeded” timeshare versus a “non-deeded” timeshare interest, protection against pressured sales tactics, purchaser rights including 7-day right of recission, required written disclosures, and who pays for major renovations.

Q.  What is a timeshare interest?

A timeshare interest is an interest in timeshare unit or plan which entitles the owner/holder of the interest to use and occupy a timeshare unit on a periodically recurring basis, usually each year.  For the rest of the year, other people who have also purchased timeshare interests in the plan, use the property. The amount of time that you are allowed to use the property (interval) depends on how much of a share you purchased (e.g. a 1/52 share typically allows you to use the property for a one week interval per year).  Each owner/holder of a timeshare interest receives the right to reserve and then use a specific unit for a specific time period based on the reservation and use rights associated with the timeshare interest that they purchased. 

Q. What types of Timeshare Plans are there?

There are various types of timeshare plans.  The early types of plans are typically single site plans where buyers have a timeshare interest in a unit within a particular resort and are allowed to reserve and occupy a unit at that specific resort on a recurring basis, usually every year.  More recent timeshare plans similarly offer timeshare interests in units at a single site, however, the developer will also make available to such buyers as part of the timeshare plan, the right to reserve accommodations in other resorts that the developer operates.  There are also timeshare plans today where buyers do not purchase a timeshare interest in a unit at a single site, but instead receive a timeshare interest in a club comprised of multiple resorts that the buyer then has access to as part of the timeshare plan.  In addition, timeshare developers often affiliate their plans with third-party exchange companies in order to allow timeshare owners to exchange their use rights for their timeshare plan for accommodations in other resorts that are affiliated with the exchange company. 

Q.  Who sells Timeshare Interests?

Timeshare interests are sold by timeshare developers as well as companies that specialize in timeshare resales.  Timeshare owners also sell their timeshare interests to third-party buyers.

Q.  What if I am interested in potentially buying a timeshare but I’m worried about being pressured to buy if I attend a sales presentation?

If you are required to attend a timeshare sales presentation in order to claim a prize or gift, the sales agent must provide you with a written disclosure with (1) a full description of the exact prize or gift, including its cash value; (2) the terms and conditions attached to the prize or gift; (3) a statement that you must attend a sales presentation; and (4) information about the timeshare project to be offered for sale, including the type of ownership (deeded or non-deeded), and price ranges. If you attend a presentation, you have the right to receive any promotional device promised.  You are under no obligation to commit, even if you received an incentive or promotion

[DCCA RICO Owning or Buying a Time Share in Hawaii brochure].

Q.  What is the difference between a “deeded” timeshare versus a “non-deeded” timeshare interest?

     A “deeded” timeshare interest is the same as buying real property in “fee simple”.  The real property interest you receive pursuant to a recorded deed transfers a portion of a unit or the timeshare property, not the entire unit or timeshare property.  A “non-deeded” or right to use interest gives you the contractual right to use the property when it’s your turn to use it, but you do not receive a real property interest in unit or in the time share resort.

Q.  I’m ready to buy – what rights do I have under Hawaii law?

      As a purchaser, you are entitled to true and accurate information of all material facts about the timeshare interest in question. This includes:

  • the amount of time or period of time the unit will be available to you;
  • the location or locations of the offered time share unit;
  • its size, nature, extent, qualities and characteristics;
  • the nature or extent of any services incident to the time share unit (for example, housekeeping services); and
  • the conditions under which a purchaser may exchange occupancy rights between units in different locations.

[DCCA RICO Owning or Buying a Time Share in Hawaii brochure].

Q.  Are there certain disclosures that need to be in writing?

Hawaii law requires time share sellers put certain disclosures in writing. Any disclosures you receive should include:

  • The name and address of the time share plan and the person or company developing the plan, and the name and address of any plan manager, along with a description of his or her duties and authority.
  • A description of the time share units, including the developer’s schedule for completion of all buildings, units and amenities, and dates of their availability.
  • A description of the condominium property regime and any pertinent provisions of the condominium project instruments.
  • A description of any limitations or conditions on the transfer of a buyer’s time share interest.
  • A statement whether the time share plan is an ownership plan (deeded) or a use plan (non-deeded), along with a description of a buyer’s rights and responsibilities under any use plan.
  • A statement there is a seven (7) calendar day period of mutual rescission.
  • A statement that every sale or transfer made in violation of Chapter 514E, HRS, is voidable at the election of the purchaser.
  • A notice of any liens, title defects, or encumbrances on or affecting the title to the units or plan.
  • A notice of any pending or anticipated material suits the developer should have knowledge of.
  • A statement of the total financial obligation of the purchaser, including the initial price that’s stated in the purchase contract and any additional charges.
  • An estimate of any dues, maintenance fees, real property taxes, or similar periodic expenses, and how they were computed.

[DCCA RICO Owning or Buying a Time Share in Hawaii brochure].

Q.  Once you buy into a timeshare, is that all you have to pay?

      No. In addition to the purchase price, timeshare owners must pay a periodically recurring maintenance fee, usually on an annual basis, that is assessed by the time share association to pay for property maintenance and management.  You may also be responsible to pay for utilities and taxes as part of these fees.

Q.  What if the property needs major renovation or repair like a new roof or pool repair – who pays for that?

      Whether you have a “deeded” timeshare ownership interest or “non-deeded” right to use interest in the property, you may be subject to special assessments that go beyond routine maintenance if the owner’s association does not have sufficient reserves and/or insurance.  It’s like living in a condominium – everyone needs to contribute to common area maintenance and repairs.  The timeshare association and, if the resort is also a condominium, the condominium association, will usually include amounts for reserves in annual maintenance fees so that funds are on hand for anticipated repair and replacement of the major components of the resort.  Similarly, as part of annual maintenance fees, the timeshare association will collect reserves that are used to periodically replace the furnishings, appliances and other contents within each timeshare unit.

Q.  Let’s talk a little more about the 7-day right of rescission.  What do buyers need to know?

Under Hawaii law, the seller and buyer both have the right to cancel a purchase contract within seven calendar days after execution or within seven calendar days after the buyer receives the required disclosure statement, whichever occurs later. If you purchase a timeshare interest in property located in Hawaii but the offer and sale occur outside of Hawaii, the 7-day right of rescission does not apply.  Instead, you must look to the jurisdiction in which the contract was executed for the applicable cancellation period.

Notice of cancellation must be mailed or delivered to the other party at the address specified on the contract. The notice of cancellation is effective upon mailing or delivery. If mailing, consider sending it certified mail and ask for a return receipt so you know when it was received.

Under Hawaii law, failing to honor a valid notice of cancellation constitutes an unfair or deceptive trade practice.

Remember:

  • Don’t feel rushed. You’re under no obligation to commit, even if you received an incentive or promotion.
  • If the property is not developed, get a written statement when facilities will be finished as promised. Under certain circumstances, a developer can use monies for construction costs or take money out of escrow.
  • READ all documents related to the sale before you sign.
  • ASK an attorney to explain any terms you don’t readily understand.
  • TAKE the documents with you especially information about the 7-day right of rescission.
  • DON’T have disclosure statements or any information about how to cancel a purchase mailed to your home.
  • Refinancing a time share purchase is not like refinancing your house. Like buying a new car, you may want to talk to a bank about financing before you buy

[DCCA RICO Owning or Buying a Time Share in Hawaii brochure].

Q.  What if you bought a timeshare in the ‘70s when you were young and able to travel.  Now that you are older, you can’t use the timeshare as often and want to sell.  I’ve seen television ads guaranteeing to get rid of time shares for you – what’s that all about?

Timeshare owners should exercise caution when dealing with companies offering to assist with the disposition of their timeshare interest or freeing them from obligations with respect to the timeshare interest.  Consumers should conduct their own research before engaging such companies to be aware of any costs that may be associated with the services being offered.

If you purchased a “deeded” timeshare interest, it’s like selling your condominium to a willing buyer. You may not get the price you want, but nobody is holding you back from selling it.  If you die and your interest in the timeshare interest passes to your heirs, they can utilize it or sell it.  If you can’t afford the maintenance fees and it’s not worth it to keep your timeshare interest, you can sometimes reach out to the original developer or to the timeshare association to see if they are willing to purchase or simply take ownership of your timeshare interest.

To learn more about this subject, tune into this video podcast.

Disclaimer:  this material is intended for informational purposes only and does not constitute legal advice.  The law varies by jurisdiction and is constantly changing.  For legal advice, you should consult a lawyer that can apply the appropriate law to the facts in your case.