What Are the Four Types of Timeshare Purchase Contracts?

Before we get into the different types of timeshare purchase contracts, let’s talk a little bit about the travel industry. Today’s online marketplace presents consumers with a multitude of modernized options. Whether you’re looking for a rental car or lodging, marketing and sales pitches are everywhere. Knowing what you need and want prior to purchasing a vacation package is important. We say this because many aspiring travelers are told what to do and sold on things they don’t necessarily need. While it’s easy to assume travel agents and online resources are in place to help you find the best deal, that’s not always the case. Taking the time to research travel options on your own will help you avoid making a decision you may later regret.

When it comes to making a decision on travel, a number of factors should play a role in your decision. Are you looking to book a one-time-trip? How many people are you traveling with? If you travel or plan on traveling often, would points or rewards programs be of any interest? Are your travel arrangements mainly for business or are you wanting to entertain your family for a week or so? Are you willing to make a perpetual commitment to vacation every year? Determining the details of your travel arrangements will help you participate in a purposeful search that will inevitably save you a lot of time and money. It’ll also help you know exactly what you want so you’re not swayed by thoughtful marketing efforts or thirsty sales teams.

A majority of today’s travelers seem to always be torn on lodging. Whether they’re deciding between hotels and resorts or vacation rentals and travel clubs, the choices can be difficult to navigate. This is when consumers normally turn to each accommodation for insight on their packages. What many fail to realize is, the conversation they’re having is essentially a sales pitch. Especially when it comes to discussing timeshare purchase contracts. In order to garner true insight on every option, a little more effort is required. 

Although the thought of spending countless hours finding answers on your own might sound depressing, we promise it’ll be worth your time. For the amount of money most Americans spend on vacations, finding the perfect experience should be everyone’s number one priority. One misleading sale can alter the entire trip and impact the whole family.

With all of that in mind, we want you to know that we understand how frustrating it can be when you’re trying to get a straight answer on travel packages. Even online reviews are suspect these days. Some of the most miserable destinations can seem extraordinary on the surface. Many people simply want to have confidence in purchases of this magnitude. So, because public information has a tendency to be questionable at times, we’ve committed to educating aspiring travelers the best we can. At the end of the day, you deserve to be able to make an informed decision.

While you might assume we’re against fractional ownership, that just isn’t the case. There are plenty of resorts out there that provide vacationers with ample arrangements. But the buyers that enjoy their paradise take the time to make informed decisions. No matter how you travel, it’s important that you avoid the mirages. At the same time, before you can begin to consider different sales pitches, you have to understand what every solution entails. Since we’re all for fostering happy timeshare owners, we wanted to go over the four types of timeshare purchase contracts. By the end of this article, it’s our hope that you’re able to make a confident and enjoyable decision if you are considering fractional ownership for your vacations.

1. Fixed Week Timeshare Purchases.

The first two types of timeshare purchase are both deeded agreements. This basically means the acquisition is owned by the buyer. Think of it like buying a house but only being able to use it for one week per year (or multiple weeks if more than one interval is purchased). These timeshare purchase contracts are perpetual (which means obligations last for life), however they can be sold and transferred once the mortgage is satisfied. In this scenario, the buyer owns the rights to the same unit during a specific week every single year. 

Fixed week timeshares are fairly predictable and owners usually have set expectations every year. Even though knowing what to expect can be a good thing, there are some drawbacks to being locked into this type of property. Buyers don’t exactly have access to much flexibility, which can foster boredom over time.

One of the biggest perks of owning this type of timeshare is the simple fact that fixed-rates give timeshare owners the ability to rent out their block of time or trade with other owners that have similar properties. Fractional owners with purchases in highly desirable locations typically benefit the most. But convenience always comes with a high end price tag.

2. Floating Week Timeshare Purchases.

Although some travelers don’t mind investing in a timeshare interval that’s limited, most prefer a little flexibility. Because of this, most timeshare companies provide floating week packages that give buyers an ability to reserve weekly intervals at any point during a given period of the year (the length of the interval can be longer than a week if you’d like). While a floating week gives fractional owners more freedom than the fixed week version, it can be extremely difficult for some buyers to find dates and times that fit their preferences. In other words, the draw can be quite deceiving because the best locations are rarely available. Time is of the essence if you want to book a desired fraction of time in one of the best destinations. 

Although floating week purchases sometimes work out wonderfully for buyers, many of these programs include selfish shareholders that hold priority when it comes to reserving prime dates and times. Whether their loyalty is being rewarded or they’ve been offered certain perks by the property, it’s a hassle for new buyers either way. So if you’re going to invest in this option, make sure the salesman is able to prove availability during certain dates exists. We’d even encourage you to get this in writing if you can. Otherwise, considering one of the other timeshare purchase contracts might be more appealing.

3. Right To Use Timeshare Purchases.

When it comes to international timeshare travel (especially in Mexico), Right-To-Use (RTU) contracts are extremely popular. With this type of arrangement, the buyer is able to lease timeshare properties for a given amount of time each year. Unlike most deeded agreements, this timeshare purchase contract isn’t perpetual. Buyers are able to sign up for and use the property for a set number of years, kind of like a membership. 

Despite the developer maintaining ownership of the property, some buyers or leasees are still responsible for the same obligations deeded fractional owners have. While they may not have to pay on the timeshare mortgage, some of them still have to cover taxes, maintenance fees and assessment costs. If you do your research, you can find a resort offering RTUs that only charges maintenance fees if the timeshare is used. Either way, most buyers don’t have to wait long to get out of this contract if things don’t work out. Since the contracts typically have a term of 10, 15 or 25 years, the purchase will always expire at some point in time. So there may not be a need to invest in legal timeshare cancellation services if the purchase doesn’t match the expectations of the sales pitch.

4. Points Club Timeshare Memberships.

Timeshare point memberships have become the new era of fractional ownership. Point membership clubs are commonly compared to floating timeshares but tend to be viewed as the more convenient option. They give buyers the ability to stay at various locations depending on the total number of points they have (which gives them purchase value). They can also accumulate points by buying specific timeshare purchase contracts on secondary markets or even buying them directly from the resort‘s club program. The points are used like currency and time slots at the property are reserved on a first-come basis. If you happen to be the first to stumble across an amazing deal, it can be tremendously worthwhile.

At the same time, points club memberships have become the cause of numerous lawsuits because timeshare developers and sales teams are overselling the product. While the resort may promise access to new properties, or those being built, it’s not always the full truth. There’s not always a way to tell what’s being built or what you can anticipate from your membership. Truth be told, availability is currently bottlenecking at numerous resorts.

Therefore, if you’re going to buy into a points club program, you really need to do your research on the companies you consider. You’ll be glad when you do because point based contracts are typically tied to a perpetual agreement or deeded ownership. You could be waiting a long time to use the property and still be on the hook for everything. This makes it a lot easier to give into less desirable options just to get your annual usage out of the timeshare purchase contract.

Our Final Take on the Types of Timeshare Purchase Contracts:

Timeshare ownership is a big decision. While your options may be intriguing, always remember that one large purchase can set you way back financially. It can also make you more susceptible to relentless predatory agencies that lurk on the industry. In order to protect yourself from victimization by unethical companies, you must find the time to research the industry and understand how to effectively maneuver timeshare ownership.

If neither of these timeshare purchase contracts make sense, there’s no reason to force it. As we said before, there are plenty of options that can satisfy your short term needs. Every day, we talk to dozens of timeshare owners that regret their decision. Being forced to pay more money just to get out of a timeshare contract is never any fun. It’s best that we do what we can to help you avoid the scenario altogether. 

If you’d like to learn more about how we help fractional owners exit timeshares, you can fill out a qualification form below or schedule a free consultation.