Many people who cannot afford to purchase a holiday home outright enter into a timeshare agreement for a property with other customers. Each customer is then entitled to use the property for a certain period each year and pays a sum according to their desired usage.
It is perfectly legal for both a customer and a property owner to enter into a timeshare agreement, but there are certain requirements specified in the Timeshare, Holiday Products, Resale and Exchange Contracts Regulations 2010 (which replaced the Timeshare Act 1992) which must be adhered to.
These regulations implemented the Timeshare Directive (2008/122/EC, which was brought in to ensure that the laws relating to timeshares in all EEA countries are standardised.
The regulations apply to the sale and marketing of a timeshare contract between a trader and a consumer under which the consumer pays to acquire the right to use overnight accommodation for more than one period of occupation, and which has a duration of more than one year.
A ‘consumer’ is an individual who is not acting for the purposes of a trade, business, craft or profession and a ‘trader’ means a person acting for purposes relating to that person’s trade, business, craft or profession, or anyone acting in the name of, or on behalf of, such a person.
A trader who breaches the regulations commits a criminal offence and can be fined if convicted.
Under the regulations, the trader must, in good time before entering into the regulated contract, give the consumer key information in relation to the contract, and ensure the information meets the requirements of the regulation.
The key information required includes:
Additional information to which the consumer is entitled includes:
The information must be clear, comprehensible, free and accurate, and sufficient to enable the consumer to make an informed decision about whether or not to enter into the contract.
The consumer has the right to withdraw from this contract without giving any reason within 14 days from the conclusion of the contract or receipt of the contract if that takes place later. No advance payment by the consumer is allowed during this withdrawal period.
The consumer also has the right to terminate the contract without incurring any penalty by giving notice to the trader within 14 days of receiving the request for payment for each annual installment.
Any advertising related to a regulated contract must indicate how the key information in relation to the contract can be obtained.
A trader must not offer an opportunity to enter into a regulated contract to a consumer at a promotion or sales event unless the invitation to the event clearly indicates the commercial purpose and nature of the event, and the key information in relation to the proposed regulated contract is made available to the consumer for the duration of the event.
A trader must not market or sell a proposed timeshare contract as an investment if the proposed contract would be a regulated contract.
Before entering into a regulated contract a trader must draw the attention of the consumer to the right of withdrawal under the contract; the length of the withdrawal period; and the prohibition on advance consideration during the withdrawal period.
Before entering into a regulated contract a trader must obtain the signature of the consumer in relation to each section of the contract dealing with those matters. When a trader and consumer enter into a regulated contract, the trader must provide the consumer with a copy of the contract at the time the contract is concluded.
Nicola is a dual qualified journalist and non-practising solicitor. She is a legal journalist, editor and author with more than 20 years' experience writing about the law.
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