Types of Timeshare Programs
Timeshare programs come in a variety of types with a variety of rights but the rules are fairly well understood and easy to describe.
When: Fixed, Floating & Rotating Weeks
If the timeshare offers a fixed week, then ownership affords you to right to use the timeshare, usually a fixed unit, on a particular week each and every year. If you own week 20, then every single year you are guaranteed the right to occupy a unit, a specific one if you have a fixed unit, on Week 20. Each week is counted based on the check in day, so if the check in day is a Friday then you get the unit from the 20th Friday to the 21st Friday.
Benefits: You are guaranteed your unit for a specific week, especially valuable in high demand areas during peak seasons.
Drawbacks: You lack the flexibility for travel planning (which may be a good thing) since your week never changes. The higher the demand is for a particular week, the more you can be expected to pay.
If the timeshare offers a floating week, then you get the right to use the timeshare for a week during the specified season, called a float season, subject to availability of your unit type. If there is no availability, you are out of luck. Resorts vary in terms of lead time for reservations so check the fine print to see how soon you can reserve a week.
Benefits: Flexibility to plan your trip as you need to within a float season.
Drawbacks: If you plan to travel during peak season, you will need to plan in advance to secure a spot. You may also lose your week if availability dries up.
Fixed and floating weeks are the most common but some resorts offer a rotating week system. With a rotating week system, your usage week will change from year to year on a fixed schedule. If your schedule is every two years, then you may get Week X in year one, Week Y in year two, but then Week X again in year three.
Benefits: More guests have the opportunity to use the resort during the peak season, which will lower the purchase price.
Drawbacks: Depending on the complexity and length of the schedule, this could become hard to manage and remember. Also has the same drawbacks as a fixed week outlined above.
What: Ownership vs. Right To Use
Timeshare “ownership” comes in two forms: actual deeded interest and a lease, or “right to use” arrangement.
With an actual deeded interest, there is a fee simple transaction with the owner taking rights as a fractional owner of the unit. The deed is recorded with the local government and allows the owner the ability to transfer the deed, through sale, donation, bequest, etc.; just like their own home.
A “right to use” arrangement is different, and popular with vacation clubs, in that it’s more like a lease in that it allows the owner the right to use a unit for a specified period of time. After that time, usage rights return to the actual owner of the property. The owner of the lease has the right to give away, sell, or donate the contract but the expiration will remain the same. This is also popular in places where countries have restrictive property laws that restrict the ability of foreigners to own property.
The biggest difference between the two ownership types has to deal with ownership and operation of the resort itself. With deeded timeshares, the timeshare owners are the owners of the resort and usually operated it through an HOA. With “right to use” timeshares, the developer owns the property. The potential exists for the developer to raise maintenance fees, impose assessments, or essentially do whatever they want. With an HOA, the owners must vote and make their own decisions.