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Timeshare Laws

RDO / Timeshare Laws

The timeshare, long term holiday products, resale & exchange Directive

Buyers of timeshare have been protected through Europe wide legislation since 1997 and in 2011 an updated Directive (2008/122/EC) was introduced, giving consumers enhanced levels of protection. As this is a ‘maximum harmonisation’ Directive, the same obligations on business apply across the whole of the European Union and consumer can make more informed choices.

The new Directive applies to the sale and marketing of the following types of contract:

  • ‘Timeshare contract’ – a contract of a duration of more than one year under which a consumer, for consideration, acquires the right to use one or more overnight accommodation for more than one period of occupation. This includes, for example, timeshare rights in accommodation within a pool of accommodation or which allow use of accommodation within a pool of accommodation
  • ‘Long term holiday product contract’ – a contract of a duration of more than one year under which a consumer, for consideration, acquires primarily the right to obtain discounts or other benefits in respect of accommodation in isolation or together with travel or other services.
  • ‘Resale contract’ – a contract under which a trader, for consideration, assists a consumer to sell or buy a timeshare or a long term holiday product ‘Exchange contract’ – a contract under which a consumer, for consideration, joins an exchange system which allows that consumer access to overnight accommodation or other services, in exchange for granting to other persons temporary access to the benefits of the rights deriving from that consumer’s timeshare contract

The key elements of the new Directive are:

  • A 14 calendar day cooling off period must be provided – on a standardised form – wherever people buy in the European Union. If it transpires that the trader has failed to provide all of the relevant key information then the period can be extended for up to 3 months and 14 days from the start date. If the consumer receives the missing information within 3 months from the start date the withdrawal period ends 14 days after that date.
  • Contracts and all other supporting documentation must be accurate and honest. Important key information must be provided in advance of a contract being agreed and on a standardised form.
  • The Directive establishes that consumers can elect to receive pre-contractual information and the contract itself in the language of the Member State in which they are resident or of which they are national.
  • All ancillary contracts such as an exchange agreement or a linked loan or finance agreement are automatically terminated if the consumer cancels during the cooling off period.
  • The Directive goes further for long term holiday products as payment for such contracts must be made in annual instalments of equal value. Additionally, such contracts can be terminated without penalty as from the moment the consumer receives the invitation to pay the second instalment.
  • There is an absolute ban on upfront fees either directly or to third parties, so deposits may not be taken during the cooling off period. The trader is not permitted to accept any consideration (eg guarantees, reservations of money on account, acknowledgment of debt) in advance of the end of the withdrawal period.
  • Timeshare cannot be sold as an investment.
  • In 2015, the Commission adopted a report assessing the Timeshare Directive’s application. According to the report, the Directive has had a ‘positive impact’ on consumers’ protection and there is no need to modify any of its provisions.

    There has, however, been a sharp increase in the number of problems experienced by consumers in relation to long term holiday products, showing that both compliance and enforcement must improve. Awareness raising efforts amongst Member States are recommended.

    A full copy of the Directive, can be viewed at http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32008L0122&from=en