A listing of commonly-used terms relevant to the timeshare industry.
An annual meeting of owners at a resort deals with matters such as the resort’s operational budget, the adoption of accounts, the appointment of officers, and any other related business. Detailed provisions relating to the calling of such meetings can usually be found in the club’s constitution.
The Annual Percentage Rate (APR) is a measurement of the total cost of borrowing money (also known as "total charge for credit"). It makes it easier for customers to compare between different credit products on offer.
The method of calculating the APR is set out by the Financial Services Authority and in the Consumer Credit Act and all lenders have to use the same method. The APR is usually a little higher than the annual rate of interest because the APR takes into account other contractual charges, e.g. any fees payable to Lender.
There are certain assumptions made when calculating the APR; for example, interest rates will not change in the future, all monthly repayments will be made on the due date and the loan will not be repaid early.
Through the exchange companies, you can deposit or ‘bank’ your timeshare for something similar at another location anywhere in the world. See also Exchange System.
When you buy timeshare, you have the right to a contract and other important information in your own language. Your contract will include basic information such as the purchase price, charges relating to the use of common facilities, a description of the property and the names and addresses of the parties to the contract.
Cooling off period
This is the period of time during which you are legally entitled to cancel your timeshare contract without penalty. The minimum required in the European Economic Area is 10 days, although a number of countries such as Austria, Belgium, Cyprus, Germany and the UK, offer a longer cancellation period.
Consumer Credit Act (CCA)
The Consumer Credit Act (1974) is consumer protection law that requires businesses that offer goods or services on credit or who lend money to consumers to be licensed by the Office of Fair Trading.
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Many resorts can provide or arrange finance for you to buy your timeshare. If you cancel your contract during the cooling off period, your credit agreement, ie the contract used to agree the terms and conditions of a loan regulated under the Consumer Credit Act, is automatically cancelled.
The Escritura System is a system of timeshare sometimes used in Spain and Portugal whereby the consumer is given an escritura (or title deed) as proof that he/she is the owner of a particular week or weeks in a specific property.
Through the exchange system, owners can trade their week or points for different accommodation at a comparable resort around the world. Owners place their week into the exchange company’s pool of available accommodation and choose a resort and week from the same pool.
Financial Services Authority (FSA)
The Financial Services Authority (FSA) is an independent organisation, set up by the UK government. It has statutory (legal) powers under the Financial Services and Markets Act 2000.
The Financial Services Authority is responsible for regulating financial services and firms in the UK by setting the standards that they must meet. The FSA can take legal action against firms if they fail to meet the required standards.
For further information, go to www.fsa.gov.uk
Under this system you own rights to a specific week, usually in a specific apartment/villa which you can either return to each year or swap through the exchange system for something similar in another part of the world and in another time period.
In the ‘floating system’ (which includes points clubs) you own occupancy rights to a week or longer, within a season. Each year you have to book the specific week that you want, subject to availability.
Fractional ownership gives buyers ownership of, or occupancy rights to, a property for an agreed number of weeks each year.
Many fractional deals are in fact timeshare but some are share based. A number of individuals buy a long lease for a percentage of a property, while the freehold is held by the management company.
Others have a short lease period of as little as five years, after which the property will be sold, with the profits shared between the owners.
Five Star Resort
This is the designation used by Interval International for resorts that offer the highest levels of accommodation and services. It is the equivalent to RCI’s Gold Crown rating.
Gold Crown Resort
is is the designation used by RCI for resorts that offer the highest levels of accommodation and services.
If you are unable to use your timeshare or points, your exchange company or resort may be able to issue you with a guest certificate so that friends or family members aged 18 years or older, may take your holiday in your place. A fee for this service normally applies.
A Holiday Club, which may also be known as a Discount Travel Club, should not be confused with a holiday or vacation club run by a timeshare operator – timeshare operators are bound by strict legislation and invest money into building quality holiday resorts.
To become a member of a Holiday Club, members of the public pay a fee – generally around €3000 – giving rights to reserve holidays and travel at discounted rates. However many complaints have been made that the discounts are no greater than those available on the high street and that it is not easy to book accommodation of your choice. And, unlike timeshare operators, many fail to offer basic consumer protection, such as a cooling off period.
The management of a resort may be carried out by an owners’ committee, a specialist management company or the developer itself. The management company is responsible for the day to day running of the resort and for raising the annual fees to operate the resort.
These are the costs involved to operate the resort and the fee, which is normally set by the management company, is divided up amongst the resort owners. The costs include cleaning and maintenance, staff salaries, taxes, insurance and the operation of any common facilities (eg swimming pools, restaurants, tennis courts). A portion of the management fee is set aside to build up reserves to pay for the non-recurring costs such as furniture and appliances.
An owners’ committee will be made up of a number of volunteers elected by their fellow timeshare owners at the Club’s AGM who serve on the committee for a specified period of time. In some clubs, the developer is allowed to have one or two representatives on the committee.
Not all clubs or resorts have owners’ committees but for those that do, the committee’s powers can vary from one club to another. Some may just act as an advisory body to the developer but others may play a far more active role, having the power to do all things that may be necessary for the general management of the club.
Points are a form of holiday currency. Members of a Points Club use their Points to pay for holidays, selecting their holidays from accommodation that is in the club’s stock of accommodation. Each unit of accommodation is valued in Points, based on the apartment size, season, location, demand and the quality of the resort. In some Points schemes, members may be able to save or borrow their Points from year to year.
A resale agent acts are a broker between a private buyer and a private seller. Many owners sell their timeshare through a resale agent, who will charge a fee for this service. The timeshare trade body, RDO, has a number of resale agents in membership, all of which sign up to a code of conduct. The new Timeshare Directive (brought in February 2011) prohibits the taking of upfront fees and resale companies must provide a 14 day cooling off period.
A portion of the annual management fee may be set aside to build up reserves to ensure that facilities and furnishings are updated every few years or so.
Resort Development Organisation (RDO)
OTE (Organisation for Timeshare in Europe) changed its name to RDO (Resort Development Organisation) on 25th March 2009 to reflect developments in the vacation ownership industry. RDO represents the timeshare and fractional industry as well as all other vacation ownership concepts such as private residence clubs, condo hotels and destination clubs. Its members, which include resort developers, exchange companies, management companies, trustees, resale companies and finance companies, all sign up to a code of conduct that protects consumers’ rights. RDO offers a free conciliation service to members of the public who have dealt with one of its members and an Alternative Dispute Resolution service is also available.
Timeshare means buying the right to spend one night or more in a holiday property each year for one year or longer.
There are many names for timeshare including holiday ownership, vacation ownership, fractional ownership, shared ownership and multi ownership.
If you buy a timeshare in the European Economic Area, you are protected through the European Timeshare Directive. This ensures you have a 14 day cooling from the day the contract is signed throughout Europe. You are not required to pay any money to the vendor during this time and the documents and contract should be in your own language.
The trust system is common in the United Kingdom but is also recognised in many other parts of the world.
The trustee, usually an independent third party, is the legal owner of the title to the holiday ownership occupancy rights throughout the period of the project, preventing the developer from selling or mortgaging those rights or doing anything else which might adversely affect the consumer’s enjoyment of his holiday ownership/club membership throughout the lifetime of the timeshare agreement. It also protects consumers’ entitlement to the occupation rights in the unlikely event of a developer going bankrupt.
An unsecured loan is a loan where no security is provided. Unsecured loans are also referred to as personal loans.
Disclaimer: the contributors to this web site accept no responsibility for the information provided, although best endeavours have been used to supply factually accurate advice and guidance. Variations may apply between resorts, timeshare clubs and due to national laws.
This information is not a substitute for taking professional legal advice to cover your particular situation.