Time-share ownership is a fee or leasehold interest in a property whose owners or tenants agree to use the property on a periodic, non-overlapping basis. This type of ownership commonly concerns vacation and resort properties. Time-share arrangements provide for equal sharing of the property’s expenses among the owners.
In a leasehold time-share, the tenant agrees to rent the property on a scheduled basis or under any pre-arranged system of reservation, according to the terms of the lease. Generally, the scheduled use is denominated in weeks or months over the duration of the lease, a specified number of years.
In a freehold time-share, or interval ownership estate, tenants in common own undivided interests in the property. Expense prorations and rules governing interval usage are established by separate agreement when the estate is acquired.
For instance, the Blackburns want a monthly vacation in Colorado once a year. They find a time-share condominium that needs a twelfth buyer. The available month is May, which suits the Blackburns. The total price of the condominium is $240,000, and annual expenses are estimated to be $9,600. The Blackburns buy a one-twelfth interest with the other tenants in common by paying their share of the price, $20,000. They are also obligated to pay one-twelfth of the expenses every year, or $800. They have use of the property for one-twelfth of the year, in the month of May.
Interval owners must usually waive the right of partition, which would enable an owner to force the sale of the entire property.
The development and sale of time-share properties has come under increased regulation in recent years. Developers and brokers face stringent disclosure requirements regarding ownership costs and risks. Other laws provide for a cooling-off period after the signing of a time-share sales contract, and require registration of advertising.
In Florida, anyone selling time-share plans must hold a real estate license unless they are specifically exempted. Owners who occupy the timeshare for their own use are exempt from licensure. Owner/developers who sell timeshares may employ unlicensed individuals to sell the timeshares as long as those individuals are not paid commission on the sales and are not paid based on individual transactions.
If a timeshare plan is located in Florida but is being offered for sale outside of the state but within the United States, the offering or sale is not subject to the provisions of Florida time-share laws. If the timeshare plan is located in Florida but is being offered for sale outside of the United States, the offering is not subject to the provisions of Florida time-share laws as long as the developer files the timeshare plan with the Division of Florida Condominiums, Timeshares, and Mobile Homes for approval or the developer pays an exemption registration fee and files the required information to the Division for approval.
If a timeshare is located outside of Florida but is being offered for sale in Florida, the offering or sale is subject only to certain time-share laws, as specified in F.S. Chapter 721.03(1)(c).
The Florida Vacation Plan and Timesharing Act and Rule 61J2-23.001, F.A.C. F.S. Chapter 721 (the Florida Vacation Plan and Timesharing Act) and Rule 61J2-23.001 0f the Florida Administrative Code require several disclosures to be included when timeshares are being sold.
Listing agreement disclosures. Listing agreements with brokers must be in writing and provided to the signing client at the time of signing. The agreement must include the following disclosures:
- THERE IS NO GUARANTEE THAT YOUR TIME-SHARE PERIOD CAN BE SOLD AT ANY PARTICULAR PRICE OR WITHIN ANY PARTICULAR PERIOD OF TIME.
This disclosure must be included in conspicuous type and located directly above the signature line for the owner of the time-share period. The statement must also be included in any written advertising material used to solicit listing agreements.
- a complete and clear disclosure of fees, commissions, and other costs or compensation that will be paid to or received by the broker
- the term of the agreement with a statement regarding any party’s ability to extend the agreement’s term and a description of the conditions under which the agreement may be extended and at what cost
- a description of the services the broker will provide and the obligations of each party to the resale transaction, including costs and obligations in notifying the managing entity of the plan and any exchange company
- whether the broker has exclusive rights of obtaining a buyer during the agreement’s term, to whom and when proceeds from the sale are to be disbursed, under what conditions any party may terminate the agreement, and the amount of commission or compensation owed to the broker at agreement termination prior to resale closing.
- whether the broker or anyone else may use the subject time-share period, a description of such use rights, and to whom rents or profits from the use will be paid
- the existence of any judgments or pending litigation against the broker due to or alleging a violation of Florida real estate statutes or consumer fraud
Resale contract disclosures. It is considered a violation of Florida real estate license laws if a licensee executes any contract or purchase agreement without complying with the required provisions. The contract or agreement must include the following disclosures, for which the broker may rely on written information provided by the managing entity:
- an explanation of the form of time-share ownership being purchased and a legally sufficient description of the time-share period being purchased
- the name and address of the plan’s managing entity
- in conspicuous type and located directly above the signature line for the owner of the time-share period, the statement:
THERE IS NO GUARANTEE THAT YOUR TIME-SHARE PERIOD CAN BE SOLD AT ANY PARTICULAR PRICE OR WITHIN ANY PARTICULAR PERIOD OF TIME.
- in at least 10-point type, all capitalized, and directly above the buyer’s signature line, the statement:
THE CURRENT YEAR’S ASSESSMENT FOR COMMON EXPENSES ALLOCABLE TO THE TIME-SHARE PERIOD YOU ARE PURCHASING IS ___. THIS ASSESSMENT, WHICH MAY BE INCREASED FROM TIME TO TIME BY THE MANAGING ENTITY OF THE TIME-SHARE PLAN, IS PAYABLE IN FULL EACH YEAR ON OR BEFORE ___. THIS ASSESSMENT (INCLUDES/DOES NOT INCLUDE) YEARLY AD VALOREM REAL ESTATE TAXES, WHICH (ARE/ARE NOT) BILLED AND COLLECTED SEPARATELY.
- if ad valorem real property taxes are not included in the current year’s assessment for common expenses, the statement:
THE MOST RECENT ANNUAL ASSESSMENT FOR AD VALOREM REAL ESTATE TAXES FOR THE TIME-SHARE PERIOD YOU ARE PURCHASING IS ___.) EACH OWNER IS PERSONALLY LIABLE FOR THE PAYMENT OF HIS ASSESSMENTS FOR COMMON EXPENSES, AND FAILURE TO TIMELY PAY THESE ASSESSMENTS MAY RESULT IN RESTRICTION OR LOSS OF YOUR USE AND/OR OWNERSHIP RIGHTS.
- if a time-share estate is being conveyed, in conspicuous type, the statement:
For the purpose of ad valorem assessment, taxation and special assessments, the managing entity will be considered the taxpayer as your agent pursuant to section 192.037, Florida Statutes.
- the terms and conditions of the purchase and closing, including the closing costs and title insurance obligations of the seller and/or the buyer
- the existence of any mandatory exchange program membership included in the plan
Disclosure for Florida timeshare being offered for sale outside of Florida. The following disclosure statement is required within the purchase contract in conspicuous type located directly above the buyer’s signature line.
The offering of this timeshare plan outside the jurisdictional limits of the United States of America is exempt from regulation under Florida law, and any such purchase is not protected by the State of Florida. However, the management and operation of any accommodations or facilities located in Florida is subject to Florida law and may give rise to enforcement action regardless of the location of any offer.
Disclosure of right to cancel. All time-share purchase agreements must include a disclosure that buyers have the right to cancel without penalty or obligation within 10 calendar days after the date of contract signing or the date the buyer received all of the required documents, whichever is later. The buyer must notify the seller of the cancellation in writing. The transaction closing may not take place before the expiration of the 10-day cancellation period. This right to cancel may not be waived.