Buying into a timeshare gives you the right to use a property for an allocated period of time each year. A timeshared property is jointly owned or leased by multiple persons and therefore, as opposed to other forms of tourist accommodation, timeshare contracts are performed in a long run prospective.

Holiday clubs are a variation of timeshare agreements which have sprung up in recent years. Aggressively sold in popular tourist destinations, holiday clubs usually promise luxury holidays at knock down prices to club members. However, these promises are not always fulfilled. Increases in membership/maintenance fees have also given rise to complaints. Many consumers feel that it is ultimately cheaper to book their holidays independently or through a travel agent than it is through membership of a holiday club.

Legal Protection

European Directive 94/47/EC was introduced in the mid-nineties to legislate on timeshare agreements. Over the years, a number of timeshare-like products appeared in the market to circumvent it. In order to close off the ability of certain traders to weaken consumer protection, the EU introduced new legislation – Directive 2008/122/EC on the protection of consumers in respect of certain aspects of timeshare, long-term holiday product, resale and exchange contract. This replaced the previous Directive and was transposed into Irish law by S.I. No. 73 of 2011.

Prohibition on Advance Payments

In relation to the products covered by the Directive, the trader is prohibited from demanding or accepting an advance payment from the consumer before the expiration of the withdrawal period. This prohibition also extends to the provision of guarantees, reservation of money on accounts, explicit acknowledgement of debt and payment of any other consideration to the trader or to any third party.

Cancellation Rights

The consumer has the right to withdraw from this contract without giving any reason within 14 calendar days from the conclusion of the contract (or, if the contract is provided at a later date, from the day when the consumer receives the contract). The consumer must notify the trader in writing of his or her decision to withdraw. Any ancillary contracts will be automatically terminated on withdrawal.

If certain information detailed in the Directive is missing, the period is extended a further three months. Moreover, if a separate standard withdrawal form is not filled in by the trader and provided to the consumer in writing, the period is extended to a year.

Information Requirements

The Directive is primarily concerned with information on the contract, which must be provided by the trader to the consumer so that the latter can make an informed decision. This information must be provided free of charge and in writing (or another durable medium). Consumers should also be allowed sufficient time to give full consideration to the information furnished.

Consumers are entitled to have this information and the contract itself provided in a language that they are familiar with – however, it must be an official language of the EU. In the case of a timeshare contract, consumers can also request a certified translation of the contract in the official language of the country where the property is located.

The following information should be supplied in all cases:

• Details of the trader
• Description of the product and nature and content of the right(s) acquired
• The exact period in which such right(s) can be exercised, including the start date and, if necessary, its duration.
• The price and other associated charges
• Cancellation rights and prohibition of advance payments
• Details of any code of conduct the trader has signed up to
• Where applicable, the possibility for out-of-court dispute resolution.
• Indication of the language(s) available for future communication (e.g. handling of queries and complaints)

Additional information required in timeshare and long-term holiday product contracts:

• A summary of the key services and applicable fees (e.g. water, electricity)
• Common facilities and associated charges

Specific Provisions relating to timeshare agreements:

• Detailed description of the property and its location
• If the property is under construction, a completion date
• Whether there are any charges, mortgages, or encumbrances against title (where applicable)
• How the property is to be managed
• Maintenance and repair of the property
• Conditions for terminating the contract

Specific provisions relating to long-term holiday product contracts:

• Payment should be made according to a staggered payment schedule. The payments, including any membership fee, must be divided into yearly instalments, each of which must be of equal value. Traders are required to send a written request for payment at least fourteen calendar days prior to each due date.
• From the second instalment onwards, the consumer may terminate the contract without incurring any penalty by giving notice to the trader within fourteen calendar days of receiving the request for payment.
• Traders are required to indicate any recurring cost that the consumer can expect to incur in order to obtain access to the accommodation, for travel and any related products
• Consumers must also be provided with an appropriate and correct description of available discounts and offers, as well as information on the restrictions in future bookings (e.g. availability)

Specific provisions relating to resale contracts:

• Any advance payment by the consumer is prohibited until the actual sale has taken place
• Conditions for terminating the contract

Specific provisions relating to exchange contracts:

• Consumers must be provided with an explanation of how the exchange system works and an indication of the value allotted to the consumer’s product in the exchange system
• A set of examples of concrete exchange possibilities should be provided, together with an indication of the number of resorts available and limitations
• Conditions for terminating the contract

1. Beware aggressive sales techniques

Companies selling timeshares often invite people to presentations using different luring techniques. Consumers are typically approached at holiday resorts and offered a scratch card which invariably reveals a prize. To avail of the prize consumers are told they have to attend a nearby office to listen to a “short” presentation. These presentations often turn into lengthy sales pitches and consumers can be put under pressure to sign a contract without proper consideration of its terms and conditions.

2.   Consider the financial consequences

A timeshare could turn out to be a burden on your finances in the long run, particularly if it incurs additional expenses or there are difficulties reselling it. Consumers should consider the financial implications very carefully before signing up.

3.  Be extremely wary of suspicious resale companies

These companies may claim to have potential purchasers wishing to buy at lucrative prices but quite often, the resale does not take place. Consumers may also be persuaded to buy a better product on the understanding that the resale company will sell their current product. This may lead to consumers ending up with two timeshares/holiday club memberships if no resale takes place!

4.  Independent legal advice

Consumers are strongly advised to seek independent legal advice before signing a timeshare/holiday club agreement or resale agreement.

5. Be extremely cautious of companies employing aggressive sales techniques

A reputable company will allow you to take a copy of the contract home and give you time to consider your options.

6. Terms and Conditions

If you have already signed up to a timeshare or holiday club and wish to cancel it, check the terms and conditions of your contract carefully. Put your request to cancel in writing to the company immediately. You may also wish to consider contacting your credit card company to see if it can offer any assistance.

For more in timeshares and long-term contracts, click here.

For more information or advice, please contact our office.