Many people who cannot afford to purchase a holiday home outright enter into a timeshare agreement for a property with other customers. Each customer is then entitled to use the property for a certain period each year and pays a sum according to their desired usage.
It is perfectly legal for both a customer and a property owner to enter into a timeshare agreement, but there are certain requirements specified in the Timeshare, Holiday Products, Resale and Exchange Contracts Regulations 2010 (which replaced the Timeshare Act 1992) which must be adhered to.
These regulations implemented the Timeshare Directive (2008/122/EC, which was brought in to ensure that the laws relating to timeshares in all EEA countries are standardised.
The regulations apply to the sale and marketing of a timeshare contract between a trader and a consumer under which the consumer pays to acquire the right to use overnight accommodation for more than one period of occupation, and which has a duration of more than one year.
A ‘consumer’ is an individual who is not acting for the purposes of a trade, business, craft or profession and a ‘trader’ means a person acting for purposes relating to that person’s trade, business, craft or profession, or anyone acting in the name of, or on behalf of, such a person.
A trader who breaches the regulations commits a criminal offence and can be fined if convicted.
Under the regulations, the trader must, in good time before entering into the regulated contract, give the consumer key information in relation to the contract, and ensure the information meets the requirements of the regulation.
The key information required includes:
- the identity, place of residence and legal status of the trader(s) which will be party to the contract;
- a short description of the product;
- the exact nature and content of the right(s);
- the exact period within which the right which is the subject of the contract may be exercised and, if necessary, its duration;
- the date on which the consumer may start to exercise the contractual right;
- the price to be paid by the consumer for acquiring the right(s), including any recurring costs the consumers can expect to incur resulting from the right to obtain access to the accommodation, travel and any related products or services as specified;
- the staggered payment schedule setting out equal amounts of instalments of this price for each year of the length of the contract and the dates on which they are due to be paid;
- a summary of key services and facilities available to the consumer;
- whether the trader has signed a code/codes of conduct and, if so, where can it/they be found.
Additional information to which the consumer is entitled includes:
- a correct description of discounts available for future bookings, illustrated by a set of examples of recent offers;
- information on the restrictions on the consumer’s ability to use the rights, such as limited availability or offers provided on a first-come-first-served basis, time limits on particular promotions and special discounts;
- information on the termination of the contract , including the conditions for and consequences of terminating the contract, and any liability of the consumer for any costs which might result from such termination;
- an indication of the language(s) available for communication with the trader in relation to the contract, eg, in relation to the handling of queries and complaints;
- the possibility for out-of-court dispute resolution.
The information must be clear, comprehensible, free and accurate, and sufficient to enable the consumer to make an informed decision about whether or not to enter into the contract.
Rights of withdrawal
The consumer has the right to withdraw from this contract without giving any reason within 14 days from the conclusion of the contract or receipt of the contract if that takes place later. No advance payment by the consumer is allowed during this withdrawal period.
The consumer also has the right to terminate the contract without incurring any penalty by giving notice to the trader within 14 days of receiving the request for payment for each annual installment.
Advertising and marketing
Any advertising related to a regulated contract must indicate how the key information in relation to the contract can be obtained.
A trader must not offer an opportunity to enter into a regulated contract to a consumer at a promotion or sales event unless the invitation to the event clearly indicates the commercial purpose and nature of the event, and the key information in relation to the proposed regulated contract is made available to the consumer for the duration of the event.
A trader must not market or sell a proposed timeshare contract as an investment if the proposed contract would be a regulated contract.
Obligations of trader
Before entering into a regulated contract a trader must draw the attention of the consumer to the right of withdrawal under the contract; the length of the withdrawal period; and the prohibition on advance consideration during the withdrawal period.
Before entering into a regulated contract a trader must obtain the signature of the consumer in relation to each section of the contract dealing with those matters. When a trader and consumer enter into a regulated contract, the trader must provide the consumer with a copy of the contract at the time the contract is concluded.