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April 2020 • Nevada Lawyer 3
25
CONTINUED 0N PAGE 28
You can’t walk through a Las Vegas
casino without being approached by
a timeshare salesman promising a
free gift in exchange for attending a
sales presentation. However, under
Nevada law, any such offers must
inform consumers the offer is part
of a solicitation for a timeshare.
NRS 119A.710(9); see also NRS
119A.700. NRS 119A.710(12)
specically applies the Nevada
Deceptive Trade Practices Act
(NDTPA), codied under NRS
chapter 598, to timeshares.
Some of these solicitations are
legitimate, but some give the timeshare
market a bad rap with hard-sell or
unscrupulous sales tactics. The allure
of timeshare ownership attracts a
diverse consumer base. According to
MarketWatch.com, the American Resort
Development Authority (ARDA) reports
more than 40 percent of timeshare
owners in the U.S. are minorities, the
median age is 39, about 75 percent
have college degrees and the median
income is almost $95,000. See Daniel
Goldstein, “6 things to know before
you buy a timeshare,” MarketWatch,
October 31, 2016.
The concept of time-sharing a
vacation property with other parties
was initially developed in England.
By the mid-1970s, the timeshare had
been adopted by U.S. companies. It is
important for consumers to understand
the dierent types of ownership rights
each type of timeshare aords to be in
the best position to make an informed
decision about purchasing a timeshare.
The rights to a timeshare fall into
two categories: deeded ownership
and a “right to use.” With deeded
ownership, the resort property is
collectively owned by timeshare
owners. The interest is considered real
property. The consumer may rent, sell,
exchange or pass on the unit to heirs.
With right to use arrangements, the
consumer buys a personal property
interest. Typically, under a right to
use contract, the consumer’s ability to
transfer, sell or relinquish the timeshare
is more restrictive than a deeded
timeshare ownership.
Timeshare arrangements fall
into several dierent categories. In a
xed-week model, the consumer has
the right to a unit during a specic
week of the year. If the timeshare is
deeded, a consumer may, for example,
own a 1/52 interest in the vacation unit
corresponding to the one week per year
the consumer is entitled to use the unit.
In a oat-week timeshare, consumers
can use the unit during a particular
season of the year, reserving the time
in advance. With fractional ownership,
consumers purchase a large share of
vacation ownership time, usually up to
26 weeks. Timeshare ownership can be
either for the rest of a consumer’s life, a
number of years specied in the contract,
or until sold if allowed by the contract,
or end at death. See Beth Ross, “Buying
a Timeshare: Pros, Cons, and Form of
Ownership,” https://www.nolo.com/
legal-encyclopedia/buying-timeshare-
pros-cons-form-ownership.html, visited
January 15, 2020.
Many developers and resorts
subsequently adopted a point-based
timeshare model invented by Disney
Resorts, sometimes called a “Vacation
Club.” Point systems are right to use
timeshares in which consumers purchase
points, rather than real property, that
can be exchanged for the right to use
a vacation unit. The number of points
needed varies depending on the length of
stay, location and popularity of the resort.
The price of purchasing more points
after initial costs and fees often surprises
consumers when booking a vacation.
Timeshare 101
for Attorneys
BY SHERI ANN FORBES, ESQ.
April 2020 • Nevada Lawyer
28
CONTINUED FROM PAGE 25
In all timeshare models, owners
are responsible for yearly maintenance
fees, much like HOA fees, to keep up
the property. In the case of deeded
ownership, the fees pay property tax.
Owners are obligated to pay the fees
whether they use their yearly allotted
vacation time. The maintenance fees
can increase yearly, and in some cases,
can outstrip the rate of ination. The
language in the contract regarding
how the annual fees are determined
is important to evaluating the relative
value of the timeshare oering.
Unlike the stereotype timeshare
sales pitch, timeshares are not likely
to appreciate in value.
More often than not,
timeshares depreciate
in value right after
purchase. See Beth
Ross, “Buying a
Timeshare: Pros,
Cons, and Form of
Ownership.” Some
timeshare owners
report not being able
to even give away their
timeshares. Developers
and resorts build the
cost of marketing and
promotions to get
consumers into the sales presentation
into the cost of a timeshare oer. As
much as 55 percent of the price of
timeshares sold directly by the resort
developer is the cost of getting potential
buyers to attend the sales pitch. Daniel
Goldstein, “6 things to know before
you buy a timeshare,” MarketWatch,
October 31, 2016. Thus, timeshares
make poor investments, and any
promises or guarantees that timeshares
will appreciate are not only overblown,
but could violate NDTPA. NRS
598.092(5); NRS 598.0913(15).
Timeshare sales meetings are
notorious for high-pressure sales tactics.
Consumers and former sales agents
have reported incidents where one
agent after another sits with potential
buyers applying hard-sell techniques
to get to yes, and then rush buyers
through the paperwork and signatures,
claiming any “discounts” arrived at are
“today-only” pricing. Arguably, such
techniques, depending on severity, could
constitute a violation of the NDTPA.
See NRS 598.0918(2). Fortunately,
Nevada and federal law provide a
cooling-o period for certain consumer
sales. Where the sale occurs in a place
other than the seller’s place of business
(e.g., a presentation hall or conference
room), the consumer has a short period
of time in which to rescind the contract
in full. NRS 598.180 and NRS 598.230;
16 CFR § 429; see also the Federal
Trade Commission website discussing
the FTC cooling-o rule.
Many times, the timeshare
contract will itself contain a
slightly longer cancellation
period. In either case, the
seller is obligated to inform
consumers of their rights
to rescind and not hinder
attempts to do so. NRS
598.280(1); see also NRS
598.250; NRS 598.092(8);
16 CFR § 429.1(b). Once a
remorseful buyer decides to
rescind a timeshare contract,
it is imperative s/he act fast
and follow the requirements
of NRS 598.230 and the rescission terms
of the contract.
Because deeded timeshares are real
property, ostensibly they could be resold.
But the chances of making a prot are
slim. In fact, consumers in the market to
buy a timeshare should look at any of the
reputable timeshare resale sites before
committing to purchasing from a resort
or developer. Owners who no longer
have need for their timeshares may be
willing to transfer title for the cost of the
transfer taxes just to be relieved from
paying maintenance fees.
Right to use timeshares may be
tricky to unload. In some cases, the
timeshare contract does not provide
for, or outright prohibits, transfer
of ownership to another party. The
contract term may only end with the
death of the timeshare owner. Some
timeshare companies will allow owners
to relinquish their timeshare back to
the resort. Whether the resort will pay
anything to the timeshare owner for
relinquishing is questionable, but it is not
likely to be close to the purchase price.
Often, with conditions such as paying o
any loans and being current on all fees,
the company may allow relinquishment.
See Christopher Elliott, “Trapped in a
timeshare? Here’s how to escape,” USA
Today, Dec. 26, 2018.
This problem has created a market
for companies that claim to be timeshare
exit companies or timeshare resale
companies. Unfortunately, some of
these companies are not legitimate and
may demand upfront fees, supposedly
to pay annual maintenance fees while
representing the consumer, only to
disappear into the ether. While legitimate
resale companies do exist, owners
should start with the contract language
and rst inquire with the timeshare
company about relinquishment programs.
Examples to look out for include:
• Resale scammer solicits timeshare
owner claiming they have an
extensive list of agents and buyers
for a hefty fee in advance. Many
times the contract will reveal that
the scammers have only agreed to
advertise the property.
• Scammer claims to have a buyer
for the timeshare owner’s week. A
bogus copy of a sales agreement
may be provided. Scammer
requires the owner send a copy of
the deed, and bank account and
routing numbers. Now that the
scammer has the owner’s bank
account information, the scammer
is in a position to raid the account.
• A scammer claims to the
timeshare owner s/he is a broker.
The scammer claims to have a
renter for the owner’s week. The
broker requires a nder’s fee with
the promise that at the end of the
rental period, s/he will send a
check.
Timeshare 101 for Attorneys
Right to use
timeshares may be
tricky to unload. In
some cases, the
timeshare contract
does not provide
for, or outright
prohibits, transfer
of ownership to
another party.
CONTINUED ON PAGE 31
CONTINUED FROM PAGE 28
Timeshare
101 for
Attorneys
April 2020 • Nevada Lawyer
31
• A scammer claims the
maintenance fees on the
timeshare are going to
increase, and to avoid
it, the owner should
immediately sell the
timeshare. The scammer
requires a large, upfront
fee, but never contacts the
owner again. Other times,
the scammer advises the
owner to stop paying
maintenance fees, causing
the owner to go into
default on the agreement.
Whether a timeshare makes
economic sense for your clients
depends on their individual
goals and needs. In order for
consumers to make informed
decisions, it is important they
thoroughly understand the true
costs, rights and duties of the
product they are being oered.
An attorney’s careful review
of timeshare sales contracts is
invaluable to any client.
Not one time, but every time.
Bank on Accountability
Top 10 – Forbes Best Banks
Bank of Nevada and First Independent Bank are
divisions of Western Alliance Bank, Member FDIC.
Western Alliance ranks top ten on Forbes’ Best Banks
in America list, ve years in a row, 2016-2020.
Your banker should say what
they’ll do and do what they say.
bankofnevada.com
(702) 248-4200
rstindependentnv.com
(775) 828-2000
SHERI ANN FORBES
is a senior deputy
attorney general in the
Bureau of Consumer
Protection unit at
the Nevada Attorney
General's Office, where for the
past eight years she has been
investigating and prosecuting
deceptive trade practices. She
also represents Nevada as a
member of the National Mortgage
Executive Committee, comprised of
Attorneys General Offices around
the country. In private practice, she
focused on business litigation and
appellate law.
