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General: Timeshare Fractional Ownership Scam - Peter Esders, Chebsey & Co

Timeshare Fractional Ownership Scam

Regular readers will know that a particular bugbear of mine is the lack of knowledge by the industry as to the difference and similarities between Timeshare and Fractional Ownership. I won’t go into the details again, but for those who haven’t read my previous articles I believe that Timeshare is a form of Fractional Ownership but that Fractional Ownership is not necessarily Timeshare. It is often said that Fractional Ownership means that you own a share in the property whereas Timeshare you only own time. I know that when you buy some Timeshares you actually get a title deed to the property and that in some Fractional Ownership you just get a certificate setting out your entitlement to part of the property. I therefore know that the common understanding of the differences is actually not necessarily the case.

As part of my job, I spend a lot of my time helping people who have problems with Timeshare. Often they have been pressured into buying in the first place and they want us to help them get out of the contract. In other cases they have been trying to get rid of their timeshares and fall foul of scams associated with that. The most common scam associated with selling timeshare is the one where they get you to pay an upfront fee to sell your timeshare and then nothing happens and you loose the money that you have paid. Then there is the scam where you are persuaded to trade in your timeshare for a better one which will sell more easily. Several thousand pounds later you end up with an even bigger problem than you had in the first place.

The latest scam comes on the back of the increase in the popularity of Fractional Ownership. Fractional Ownership has been seen as the saviour of the International Property Market – a new way of buying where you only have to pay for part of the property and share the costs between the various different owners. The Timeshare scam has arisen because Timeshare people, unlike most people who sell Fractional Ownership, actually understand what the difference between Timeshare and Fractional is and also understand what the various different laws say. They can then use this to their advantage.

In order to explain the scam I am going to have to be a bit technical, so please bear with me. The European Timeshare Directive sets out a definition of Timeshare. Each country within the EU has implemented the European Directive in their own way – in the case of the UK into the Timeshare Act. The definitions of Timeshare are slightly different in each country but should be consistent with the Directive. If a property is being sold by fractions falls within that definition it is Timeshare. If a property being sold by fractions does not fall within that definition it is what is being Called Fractional Ownership.

The scam has arisen from the definition of Timeshare in the UK Timeshare Act. This says, broadly speaking, that a Timeshare period should not exceed one month. Now that Fractional Ownership is becoming popular and is being seen as a credible alternative to full ownership the timeshare salespeople have jumped aboard the bandwagon and using this to their advantage. Imagine the scenario – you have two timeshare weeks. You no longer want them and they are worthless. A salesman persuades you that if you buy another two then you will no longer have “timeshare” and will have the new miracle product “Fractional Ownership”, which you will see is a good investment and is the latest thing in the International Property World. “Fantastic – where do I sign up?” you think to yourself and before you know it you have spend out several thousand pounds more.

This scam typifies the things that worry me about Fractional Ownership. Timeshare companies understand the laws. They understand how to use and abuse them. Most people selling Fractional are very ignorant about their own product and what it is. The two have met in the middle now that Timeshare salesmen are selling products as Fractional Ownership. If I thought that people didn’t understand the differences and similarities between Timeshare and Fractional Ownership before, the situation has just got a lot worse.

Peter Esders

Peter Esders is a UK Solicitor who studied Spanish law in Spain and who has been dealing with Spanish law for over 15 years. He can be contacted at Chebsey & Co, 51 London End, Beaconsfield, HP9 2HW www.chebsey.com Tel; 01494 670440

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