What is timeshare?
A timeshare interest is right to occupy and use accommodations, facilities, or recreation sites. The three most common forms of timeshare interests are: 1) fee simple ownership in the underlying real estate; 2) lease or license arrangements permitting ownership rights for a specified period of time; and 3) point systems.
In a fee simple ownership arrangement, the purchaser has an undivided interest in fee simple that gives the purchaser an exclusive right to occupy the premises during a designated time period. The purchaser receives a deed to the property and the rights that accompany deeded ownership. Deeded ownership allows the timeshare owner to receive title to the property, as well as the right to rent, assign, sell, contribute, bequeath, or otherwise transfer the property to a third party.
In comparison, under a lease timeshare arrangement, otherwise know as a “right to use” arrangement, the timeshare purchaser does not obtain any ownership interest in the resort property, but rather receives the right to use the timeshare unit for a specified period of time, after which the title to the timeshare property reverts to the developer. The “right to use” form of ownership essentially conveys to the purchaser a license, lease, or similar type of contractual right governed by the terms of the timeshare agreement.
The third form of a timeshare interest is point systems, also referred to as “Vacation Clubs,” which give members access to different resorts within a defined resort group. Point systems are similar to lease and license arrangements because they allow the purchaser to use the property or properties for a certain amount of time each year during a specified season for a stated number of 66 years. In point systems, owners purchase points that can be used to access various types of accommodations, resort locations, amenities, and other travel services. Unlike a lease, this type of arrangement is purely contractual; therefore, property law remedies are unavailable to a point system purchaser.
A common characteristic of all timeshare forms is that each requires payment of annual maintenance fees. Owners share both the use and the ongoing costs of upkeep of the timeshare resort property. Yearly maintenance fees are established solely by the resort owners.