A question posed on so many occasions by timeshare owners is surrounding the thorny issue of the finance taken to purchase their holiday ownership. In all but a few cases, resorts are now offering 100% finance deals to buy your dream lifetime of holidays. At the sales presentation all seems great, the sun is shining, the resort looks nice and the promise of wonderful holidays to come becomes too irresistible, but you can’t afford it. No problem, you can obtain full finance, not even having to pay a deposit from your own resources. Almost before the blink of an eye, a loan agreement is in front of you with the words “just sign here and here and here” with lightning speed you now own the holiday package of your dreams……and a great big rock around your neck for the next 10, 15, 20 years.
When you finally get round to putting your sensible head back on your shoulders the cold light of day suddenly dawns upon you……..WHAT HAVE WE DONE!
You now decide to cancel the timeshare, not impossible, it will probably cost you but at least you will be rid of it, happy days….not so. Whilst you may get out of the timeshare contract and be free of the annual maintenance payment burden, not so the finance. Just because you have changed your mind you will not be free of the finance. No finance companies will cancel the finance just because you changed your mind. As far as they are concerned you had 14 days from signing to do that and you chose not to so tough luck!
There is however a glimmer of hope in the form of Section 140 of the Consumer Credit Act 1974. The pertinent section relates to unfair relationship (clause D). This by no means is an easy piece of legislation to work with, however there have been a number of successful cases.
Gowling WLG a global law firm published an article on lexology.com legal website. This is in relation to the case of Link Financial Ltd v Teresa North Wilson, a summary is as below:
“So held the High Court in Link Financial Ltd v Teresa North Wilson. Wilson entered into a fixed sum loan agreement with Link Financial Ltd (Link) to fund the purchase of a holiday timeshare. The purchase price was just over £20,000. Wilson had falsely provided details of her income despite being unemployed at the time. The timeshare agreement provided that if Wilson failed to make any payment due under the agreement within 14 days’ notice to do so, the vendor could rescind the agreement and forfeit all money paid by Wilson.
Wilson failed to pay management charges and loan instalments. The agreement was rescinded and Link sought to recover the sums due under the loan. Wilson claimed there was an unfair relationship under s140 of the Consumer Credit Act 1974 (s140) because of the forfeiture provision in the related purchase agreement.
At first instance the court held there was no unfair relationship. This was because there had been no high-pressure selling, no contravention of the Timeshare Act 1992, Wilson was an educated woman who had understood the agreement and she had lied about her income. Judgment was given against Wilson for £41,000 (which included interest and costs).
Wilson appealed, arguing that the agreement was unfair because the effect of rescission and forfeiture meant she could not rely on the capital value of the timeshare to reduce the loan debt.
The High Court allowed the appeal. The relevant clause in the timeshare agreement was unfair and gave rise to an unfair relationship, despite the findings made by the judge as referred to above. Wilson should have been able to use the capital value of the timeshare to part repay the loan. As there was no expert evidence available as to the capital value, it was ordered that no further sums should be paid by Wilson.
Things to consider
The onus was on Link to prove that the agreement was fair, not on Wilson, and it had failed to do so. Although Wilson’s dishonesty as to her income was relevant, that was not the basis upon which the agreement was rescinded and therefore, its causative weight and relevance was much lower than it might otherwise have been. It was only one of the factors taken into account.”
A question posed on so many occasions by timeshare owners is surrounding the thorny issue of the finance taken to purchase their holiday ownership. In all but a few cases, resorts are now offering 100% finance deals to buy your dream lifetime of holidays. At the sales presentation all seems great, the sun is shining, the resort looks nice and the promise of wonderful holidays to come becomes too irresistible, but you can’t afford it. No problem, you can obtain full finance, not even having to pay a deposit from your own resources. Almost before the blink of an eye, a loan agreement is in front of you with the words “just sign here and here and here” with lightning speed you now own the holiday package of your dreams……and a great big rock around your neck for the next 10, 15, 20 years.
When you finally get round to putting your sensible head back on your shoulders the cold light of day suddenly dawns upon you……..WHAT HAVE WE DONE!
You now decide to cancel the timeshare, not impossible, it will probably cost you but at least you will be rid of it, happy days….not so. Whilst you may get out of the timeshare contract and be free of the annual maintenance payment burden, not so the finance. Just because you have changed your mind you will not be free of the finance. No finance companies will cancel the finance just because you changed your mind. As far as they are concerned you had 14 days from signing to do that and you chose not to so tough luck!
There is however a glimmer of hope in the form of Section 140 of the Consumer Credit Act 1974. The pertinent section relates to unfair relationship (clause D). This by no means is an easy piece of legislation to work with, however there have been a number of successful cases.
Gowling WLG a global law firm published an article on lexology.com legal website. This is in relation to the case of Link Financial Ltd v Teresa North Wilson, a summary is as below:
“So held the High Court in Link Financial Ltd v Teresa North Wilson. Wilson entered into a fixed sum loan agreement with Link Financial Ltd (Link) to fund the purchase of a holiday timeshare. The purchase price was just over £20,000. Wilson had falsely provided details of her income despite being unemployed at the time. The timeshare agreement provided that if Wilson failed to make any payment due under the agreement within 14 days’ notice to do so, the vendor could rescind the agreement and forfeit all money paid by Wilson.
Wilson failed to pay management charges and loan instalments. The agreement was rescinded and Link sought to recover the sums due under the loan. Wilson claimed there was an unfair relationship under s140 of the Consumer Credit Act 1974 (s140) because of the forfeiture provision in the related purchase agreement.
At first instance the court held there was no unfair relationship. This was because there had been no high-pressure selling, no contravention of the Timeshare Act 1992, Wilson was an educated woman who had understood the agreement and she had lied about her income. Judgment was given against Wilson for £41,000 (which included interest and costs).
Wilson appealed, arguing that the agreement was unfair because the effect of rescission and forfeiture meant she could not rely on the capital value of the timeshare to reduce the loan debt.
The High Court allowed the appeal. The relevant clause in the timeshare agreement was unfair and gave rise to an unfair relationship, despite the findings made by the judge as referred to above. Wilson should have been able to use the capital value of the timeshare to part repay the loan. As there was no expert evidence available as to the capital value, it was ordered that no further sums should be paid by Wilson.
Things to consider
The onus was on Link to prove that the agreement was fair, not on Wilson, and it had failed to do so. Although Wilson’s dishonesty as to her income was relevant, that was not the basis upon which the agreement was rescinded and therefore, its causative weight and relevance was much lower than it might otherwise have been. It was only one of the factors taken into account.”
Before any legal practitioner would accept such a case they would need to see all documentation relating to the purchase, most importantly including, the purchase agreement, contract and any other paperwork from both the resort and the finance company, only upon close scrutiny of all these documents will it be established as to whether there is a case to answer.
We cannot stress highly enough that if you feel this may be applicable to you, expert advice is a must. Presenting a court case that fails will involve considerable legal costs which will land on your doorstep, whilst there is no legal aid for this sort of case. An expert qualified lawyer will only go to court if they are absolutely sure there is a case to answer.
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