Timeshare Property Scam
On the face of it, timeshares can seem like a good idea. You're not buying an entire property at a holiday location, merely a share in one that allows you to use it for a certain number of weeks each year - usually between one and three weeks annually (or rent it out, if you prefer). That cuts your costs and maintenance fees, since they're shared. But what exactly are you buying if you sign on the dotted line - and what did they do to get you there in the first place? One recent scam defrauded 15,000 people out of £12 million over five years.
How It WorksIt almost always starts with an invitation. Sometimes it's straightforward, offering you a gift - one that seems expensive - if you listen to a timeshare presentation. At others times it's disguised - you've won a gift (in a competition you don't remember entering) and it's yours if you attend a presentation.
When you attend, the gift usually proves to be far from what was advertised (in one case the "sports boat" proved to be a rubber dinghy with a tiny motor), and you might well be asked to pay an "administration fee" to claim it that's more than the value of the item. You're also subject to some high-pressure sales tactics - and they really don't want you to leave without putting your signature on the dotted line.
But sometimes the property you believe you're buying simply doesn't exist, or it's far from the quality described. They might also offer to put your existing timeshare (if you own one) on the market for you - for a substantial fee, of course. Some shameless companies even offer paid legal services to those who've been the victims of other timeshare frauds.
How To Avoid Being Scammed
- If you're offered a prize or incentive to attend a presentation, make sure you read all the small print, and don't agree to pay any money for any prize.
- However much pressure you're under from the sales force, never agree to anything on the spot. Refuse to sign anything then and there. Take it home with you and sleep on it.
- Make sure a lawyer reads the contract before you sign it. Make a note of all the verbal promises you were given, and ensure they're in the contract. If they're not, refuse to sign.
- Remember, you can always walk out of the presentation. No one can make you stay. The salespeople might try to stop you verbally, but don't listen. You don't even have to argue with them.
- Think of a timeshare in the same way you'd think of buying an investment property - is it worth the money? Research the market and discover the property values.
- Always ask for references. Not just one or two, but several. After all, you're going to be investing thousands. Make sure you call them all and don't be afraid to ask probing questions. A legitimate company will be proud to have people tell you about their service.
Other Things You Should Know
- Often, the contracts include a clause disavowing any oral promises made at the presentation.
- Remember that maintenance fees on properties will increase over time as work needs to be done (new roof, etc). There might also be special assessments.
- Timeshare properties rarely appreciate in value. The price you pay includes a premium (up to 40%) to cover sales costs. That means it's only worth 60% of what you paid for it. If you re-sell, you probably won't even receive that, and you'll likely have to pay a 20% commission on the sales figure.
- Remember, legally you have a cooling down period during which you can rescind the contract.