BBC radio 5 live aired a show on Sunday, 13th March, which addressed the current situation in relation to timeshares contracts in his show BBC investigates.
Adrian Goldberg presented the show and explains that, “the basic idea of timeshare is a simple one, you get a holiday home abroad you can enjoy regular trips to sun kissed destinations enjoying all the benefits of owning a property overseas, without the hassles of manging the upkeep of the place”. This paints a very idyllic picture, but he continues, “What we are not told is that getting out of the contract is not that straight forward, meaning that after you die family members can be saddled with years’ worth of fees for something they never signed up to”.
Currently in the UK alone 600,000 people are timeshare owners, that’s almost half of the ownership base in Europe. With many now having huge difficulty getting out of their contracts.
Ruth Evans, a reporter for the show, adds,
“Remember when this business took off during the 80’s and 90’s? In many cases the customers are now getting older, finding they can’t use their timeshares”. She continues describing the enquiries the show has received while researching, “people with elderly parents who are less mobile, some cases having dementia and can’t even get to their properties anymore.”
Mr Goldberg then questioned if people can’t use the property, will they still have to pay the service charges? Ruth Evans enlightened him, “not just them but their children too, because buried in the small print of the contract is what’s called an in perpetuity clause which means the owner are committed to paying the service charges even if they don’t use their timeshare property and when they die that liability may be passed onto their family members”
The show then examined a particular example where a gentleman had purchased a timeshare for £10,000 and had enjoyed many years of use, but his personal circumstances had changed and he was savvy enough to note that he had wasn’t going to see a financial return from his ownership but simply wanted to return the week to the resort.
This is where he was informed there was no termination clause and he would have to continue to pay the service charges, until he was able to dispose of his ownership. His annual commitment was £1,200 and this was growing every year. Under the contract wording, even if the gentleman was to die, the service charge would still need to be paid as the timeshare would be passed on thru his estate.
The fact of the matter is that timeshare/holiday club contracts are unfair, unbalanced and entirely one-sided in the favour of the timeshare developer to keep people locked in to the ownership. The gentleman had tried to sell his ownership with 2 separate companies both claiming they could sell them, costing him £500 in fees, even though in 2011 the EU banned companies charging an upfront fee, the companies are getting around this wording by instead charging a “marketing fee” this in its self is another story.
But as for the interview, the host then asks questions about in perpetuity clauses with a solicitor who claimed to have represented 100’s of similar cases and that in 99% of situations it’s a similar story with each of them having long term contracts.
He commented that as a younger solicitor he read his first timeshare contract and it took half a day to figure out what the exact terms were – and he does this for a living.
The fact that people are tied in for generations has bought about a whole new scamming situation, were companies are preying on timeshare owners with the promise of the sale of their timeshare. The scammers are preying on the fact that owners are scared of passing on this liability to their families, so they are promising to resell their timeshare but for a very high fee.
Owners are parting with £1000’s per week just trying to alleviate the burden of service charges being left to loved ones, so naively handing over huge amounts of money to resale companies who are happy to take your money knowing no enquires will be made, or paying to be part of a legal case with the class action companies who claim to represent owners from all over Europe, one of the more profitable delay scams in timeshare
Another gentleman also on the show was part of one of these scams and was horrified when he eventually had his day in court, because it was not against the developer but instead he was giving evidence against the people supposedly representing him in the class action. Trading standards had lead an investigation against the company portraying a class action suit, the gentleman was further horrified whilst giving evidence, he noticed that one of the defendants was the actual salesman who sold him into timeshare originally, who had noticed a gap in the market and changed his position and was selling people the idea of getting out of timeshare.
The solicitor explained that desperation had driven these people down the route of these companies, also that the scammers had picked up on the fact that very unsophisticated clients are desperate to get out of these things when told by the industry there was no escape.
They are setting up products which actually aren’t delivering anything other than taking money off them once again, and he predicts that in 5 years’ time more money will have been lost thru these companies than lost in original timeshare investments. These companies even promise to get the clients out of their timeshare and get their money back, he even had a client who had paid £30,000 in fees with the promise of double his money back.
Mr Paul Gardner Bougaard, Chief Executive of the RDO (Resorts Development Organisation) was available to answer questions from Mr Goldberg;
“Isn’t this a problem created by the resorts, if people could get out of their timeshares there would not be this problem?”
Mr Gardner Bougaard responded, “As far as the RDO is concerned, and we represent all the major developers across Europe, they can get out of their timeshares. In our code of conduct, we lay down rules where people can surrender their timeshare, and certainly NO question of them having to pass it on to their children – that’s quite clear.”
Mr Goldberg clarified, “if anybody is a member of your organisation the RDO, there is no question of in perpetuity agreements?”
Mr Gardner Bougaard responded “yes, BUT let’s be clear, perpetuity it’s not in perpetuity, the maximum period of these contract was originally 80 years. When people wanted long term contracts you can’t have a contract longer than that. But all products being sold now are a much shorter term product because the market has changed and people’s expectations have changed, but we have made it quite clear that as far as our members are concerned. If you like, this industry is split into two. It’s the big developers who we represent and it has the owner run resorts who are now effectively owner run clubs. The major difficulty with them is they have difficulty when people throw back their timeshare, but the Timeshare Owners Association, TATOC, is working closely with them to try and help them sort this out and I agree it’s the elephant in the room as far as they´re concerned. But as far as any of our members are concerned, a lot of them will take the week back as long as the maintenance has been paid up to date. Some will ask for two or three years’ maintenance payment and again there is also resale.”
It’s clear at last it’s not in perpetuity its perpetuity, and all RDO affiliate resort members can return there weeks as long as the maintenance fees is paid up to date. In some situations the member may be required to pay two or three year’s maintenance fees.
So if you find yourself with an annual maintenance bill around £1.500 and your lucky enough to owner at any of the RDO affiliate resorts you could be time share free for no more than £6,000 with the final maintenance fee Inc.
Mr Gardner Bougaard, was gracious enough to clarify that “we lay down rules where people can surrender their timeshare, and certainly NO question of them having to pass it on to their children.”
For more information regarding this article or assistance in any other timeshare related issues please contact the TCA on 01908 881058 or email: info@TimeshareConsumerAssociation.org.uk