Timeshares: Deeded VS. Right-to-Use

Fun in the sun, or snuggling in the snow; timeshares can make the dream vacation home reality for families of modest incomes. You may not have a private heliport or personal driver to whisk you away to your retreat, but there are still many options to carefully consider. To begin, what is the type of timeshare agreement you are entering into - a deeded timeshare or a right-to-use timeshare?

Deeded Timeshares

The American Resort Development Association, a trade association representing the interests of vacation and resort owners, found in their 2003 Study of U.S. Timeshares more than 90% of timeshare buyers purchased deeded timeshares. Deeded timeshares break up the vacation property value like a pizza: each owner gets a deed to a slice. The deed authorizes two things-the ability to use the property and the financial responsibility of the property-both in relation to the "slice" an owner purchases.

Deeded timeshares operate similar, but not identical, to real estate property. Timeshare owners can use the property themselves, rent it out, give the time away, or exchange it for another item or service of value. Read the contracts carefully, and be sure the ownership includes not only the building, but also the land. Land rights will make the resale value far more lucrative. Also, expect strict rules about use and care of the property. Remember you "share" this vacation home, so personal preferences may be sacrificed.

Right-To-Use Timeshares

A trend in timeshares is the less expensive right-to-use timeshares. In this scenario, the developer or primary company keeps a vested interest in the timeshare property. Interests are sold to buyers in a lease type agreement. Rights to use the property expire after a certain number of years, typically 15 to 30 years. The lease can still be sold, exchanged with others, and time at the accommodation gifted to friends and relatives. However, the value of such timeshares decline as time nears expiration.

There are benefits to right-to-use timeshares over deeded interests. First, most right-to-use timeshares allow buyers to use their weeks at a variety of hotels, condominiums, and vacation destinations all over the world. It is true deeded timeshares can often offer exchange programs with other timeshare companies. However, right-to-use timeshare companies frequently own, or partially own, multiple properties making it far easier for the buyer to vacation hop each year. Many deeded timeshares have flexible week scheduling, or point systems to divvy out owners' vacation time, but it's not always included.

The variety in timeshare products creates a vacation package for almost every unique financial situation. Deeded timeshares offer vacation opportunities for generations to come. Right-to-use timeshares offer families timeshare opportunities with a smaller investment. Also, an owner may not wish to be responsible for a timeshare in the later years of life, so an expiration of obligation may be ideal. Give all timeshare decisions careful consideration, so you can enjoy the rest and relaxation timeshares offer, and avoid the headaches of "surprise" contract terms.