Timeshare Agreements: Legislation you should be aware of

I wish to enter into a timeshare agreement. Is there any legislation which I should be aware of?

What is meant by a timeshare?

Many people who wish to own a holiday home but who cannot afford to purchase the property outright enter into a timeshare agreement for a particular property. This means that they enter into an agreement with various other customers for one single property. Each customer will then be entitled to use the property for a certain period each year and will have to pay a sum according to their desired usage.

Is it legal to enter into a timeshare agreement?

It is perfectly legal to enter into a timeshare agreement as a customer and similarly it is perfectly legal to develop a time share agreement as an option of renting out a property which you may own as a holiday home and generating some extra income.

It may be legal to enter into a contract of this nature but there are certain requirements specified in the Timeshare Act 1992 which must be adhered to.

The Timeshare Act 1992

What is the purpose of the Timeshare Act?

The timeshare act is put in place to regulate the conduct of someone who sells a timeshare as a professional seller to a private purchaser.

What kind of property does the Timeshare Act relate to?

The Timeshare Act relates only to the property which is designated as accommodation which is taken to mean apartments and houses etc but can also include both caravans and boats.

What if I wish to sell my property as a timeshare but I am not a professional seller?

Many individuals who own a second property as a holiday home wish to create a timeshare out of that property in order to gain some extra income. In this respect the Timeshare Act will not apply as it does not apply to agreements made between private individuals.

When will the Act come into play?

The Timeshare Act will come into play when there is a contract which is draw up for the purchase of intermittent rights of occupancy of holiday accommodation for a period of three years.

What happens if the contract is for less than three years?

If a contract is for less than three years it will not be covered by the Timeshare Act regardless of the fact that it is concluded between consumers and a professional body.

Does the act still cover a sale which takes place outside of the UK?

The Timeshare Act will only apply to a sale which matches one of the following criteria:

  • It is conducted within the United Kingdom
  • It is concerning timeshare accommodation within the United Kingdom
  • It is involving a United Kingdom citizen and involves accommodation which is in a European Economic Area (EEA) country 

Consequently if you purchase a timeshare in a country such as Spain the sale will still be covered by the Timeshare Act due to Spain’s involvement in the EEA. If you purchase a timeshare outside of Europe then it is still likely that the sale will still be covered by the Timeshare Act as often you will be dealing with a UK company which acts on behalf of the property outside Europe. When entering a timeshare outside Europe it may be preferable to do it in this manner to ensure that you benefit from the terms of the Timeshare Act.

What are the obligations which are imposed by the Timeshare Act?

The timeshare act imposes various obligations on the seller of the timeshare. They are as follows:

  1. Cancellation obligations
  2. Cooling-off period obligations
  3. Information obligations

Cancellation Obligations

  • The exact form by which the purchaser can cancel the timeshare agreement without any loss or without giving any reason must be provided to the buyer. This is usually between day one and day fourteen of the agreement with day one being the day that it is signed by both parties.
  • If this notice is not provided to the buyer then they will be able to cancel the contract at any time.
  • As it is often the case that when a customer enters into a timeshare agreement they also enter into a credit agreement they must also be provided with the option of canceling the credit agreement if they cancel the timeshare agreement.
  • The customer must also be provided with a notice stating the rights of cancellation. Within this notice must be the address to which the cancellation notice must be sent to and a blank cancellation notice which the customer can use to cancel the agreement.  If either of these forms are not provided to the customer then they will be able to cancel the contract at any time during the future and will not be required to pay any of the respective cancellation fees.

Should the right of cancellation be immediately noticeable by the customer?

The Timeshare Act 1992 has had various amendments in both 1997 and 2003 and following the latter amendments it is now an obligation of the seller to place the cancellation provisions next to where the buyer signs the contract. This is to ensure that he is fully aware of all the rights to cancel when entering into the contract.

Obligations in relation to the cooling-off period

The buyer of the timeshare must be provided with a cooling-off period whereby they will not be required to pay any money. If the buyer tries to force the seller to pay any money during this period then the buyer will be guilty of a criminal offence for which they will be liable to UK Trading Standards.

Obligations in relation to Information

Under the Timeshare Act the seller of the accommodation must provide the buyer with the following information:

  • A full description of the accommodation
  • A full description on how such things as the maintenance of the complex in which the accommodation is maintained. If the accommodation is not part of a complex the seller will still be required to detail all the information in relation to the buyers obligations of maintenance.
  • A full description of the services available to the buyer and the conditions of their use

What happens if this information is not provided?

If this information is not provided by the seller to the buyer then the cooling off period will be extended therefore meaning that the buyer has longer to think about the timeshare without having to pay any sums to the seller for that period.

If I purchase a timeshare abroad how will I understand the contract?

The language of the timeshare agreement for any accommodation outside of the United Kingdom must be written in the language of the buyer.

Consequently this means that if a timeshare agreement for a property within the United Kingdom is being sold to someone from outside the United Kingdom the language of the country must be written in the language of the buyer.

Who enforces the Timeshare Act?

The Timeshare Act is enforced by Trading Standards. As Trading Standards is operated by local councils the trading standards officer who oversees the contract will be from the area of the buyer not where the accommodation is located.