June 3, 2020
By Irene Roberts
The timeshare Public Offering Statement (POS) is the first line of defense for consumers who experienced misrepresentations or lack of disclosure during timeshare sales presentations. In some states the POS is called a Disclosure Statement. Most timeshare contracts are perpetual and, unlike a primary residence, cannot be easily sold.
Meanwhile, attorneys and time-share owners have questioned a provision that reduces liability for time-share developers if they make errors in contracts. Errors or omissions that are considered "nonmaterial" would not allow purchaser-cancellation rights after 10 days. Stargel said the legislation is meant to keep time-share owners from getting out of their contracts by finding minor flaws in them. It is meant to cover only technicalities, she said, not major problems. https://www.orlandosentinel.com/business/os-timeshare-bill-20150312-story.html
The Public Offering Statement contains pertinent information concerning the terms of the product offering, financial matters, owners association, managing entity, and other important information that will help you decide if the timeshare is right for your family. This document should be provided prior to, or at the time of purchase. The state statutes of both states in which we purchased required that the purchaser be provided the POS and given an opportunity to read the document before signing a contract.
My husband and I first purchased a timeshare in Virginia 2018. Virginia requires that the purchaser be given a current POS. The POS we were given contained the prior year’s budget. Why was this important? The previous year’s budget showed a deficit of approximately $8 million. The 2018 budget showed an almost $1.5 million increase in the deficit to over $9.5 million. This was an increase in the deficit from the prior year by almost 20%! Had we been given the current POS, it would have been a red flag.
The Virginia Time Share Act also requires full disclosure of any pending lawsuits. The POS we received stated there were no lawsuits pending. We later learned there were lawsuits pending.
We made a second purchase in 2018 in North Carolina. It was not until after the state rescission period expired that we felt realized what we purchased was not what was presented. We had not even been given the POS at this purchase!
The North Carolina Time Share Statute states that a POS must be given to every purchaser before the purchase and must include specific language above our signatures. We did sign a “Receipt for Documents” form, but the form did not have the required language above our signatures. Furthermore, the first item listed on the acknowledgment form was the POS. There were two boxes. One box was to acknowledge receipt of a Hard Copy of the POS, and the other for CD. Neither box had been checked. When I disputed our purchase, including the fact that we had not been given the POS, the company responded that we signed the form, and denied our request for cancellation, despite the boxes not being checked or containing the required language. This violated a state statute. The company lamely argued that we must have received the POS, since we signed the “Receipt for Documents” form.
The rescission paragraph in the North Carolina contract stated that the purchaser had “five days from the date of the receipt of the contract, or the POS, whichever date is later, to rescind the contract.” Since we did not receive the POS, we assert that our rescission period never began. We did not receive the POS in one state and were not provided with a current POS in another state.
A contract is not considered executed until both parties sign and receive a signed copy. Our contract was not signed by the seller at time of purchase. We did not receive the signed contract with the signature page until over a month later, along with a certificate of points and the rescission paragraph. At the time, I wondered why the rescission paragraph was sent with these documents. It is my belief that the rescission period should begin when the signed copy is received.
If you are disputing a timeshare contract, keep track of dates and keep copies of all correspondence. If you speak to a company representative or regulator by phone, keep a telephone log. Before you submit a timeshare complaint I suggest you do the following:
1. Pull up the Time Share Statute for the state in which you purchased. If there is anything that occurred that does not comply with the state statute, print the applicable portions and include copies in your complaint.
2. Within the statute, look for the specific section that defines the POS and its requirements. If your POS does not meet the requirements, include those deficiencies in your complaint, and quote the applicable state statute.
3. Find out if sales agents in the state you buy require a real estate license. If they are required to have a license, you can file a complaint against the sales agent and the principal broker with the state’s Real Estate Commission or Division.
4. Remember, everything told to you during the sales presentation has to be in writing. Anything important must be written into the contract.
Hopefully, some will read this before buying a timeshare, and not after the rescission period has expired! If you are not provided time to review the POS, don’t buy. A timeshare purchase can be a great way to enjoy quality vacation time. Unfortunately, the internet is filled with complaints about unfair and deceptive timeshare sales practices and companies that claim they can get you out of them. Contact me through our Contact Us tab if you have questions about your disclosure documents.
