Understanding Timeshare Fraud – Part 1

Over the next few blogs, I will be writing about the topic of timeshare fraud.  A substantial part of my practice involves representing consumers who have been defrauded in the sale of a timeshare in Tennessee.  I hope these blogs are helpful in understanding some of the factors at play in these types of cases.

Buying a timeshare is a lot like buying a house, except that a timeshare can be harder to get rid of.  In addition to the purchase price, a timeshare owner often becomes obligated for recurring dues, maintenance fees, and/or taxes.  Upon the death of the owner, timeshares are sometimes passed to the owner’s heirs.  In short, the purchase of a timeshare can be a significant transaction involving a lot of paperwork, and can entail expenses long beyond the initial purchase price.  Some purchasers enjoy their timeshares.  Occasionally, though, consumers are defrauded by timeshare developers and/or their sales agents.

Fraud in the sale of a timeshare can take different forms—from misrepresentations by sales agents to improper gifts and promotions to failure to provide required disclosures.  Fortunately, Tennessee law provides various protections for timeshare purchasers.  These protections include the following:

First, pursuant to the Tennessee Real Estate Broker Licensing Act, timeshare sales agents have to be licensed by the State of Tennessee.  As licensees, they are held to a specific standard of conduct.

Second, certain provisions of the Tennessee Consumer Protection Act can apply to timeshare transactions.  The TCPA, as it is sometimes referred to, protects consumers from unscrupulous sales practices, and can allow, in certain instances, a defrauded consumer to sue for rescission, treble damages, and attorney’s fees.

Third, Tennessee common law, or case law, protects those who are fraudulently induced to enter contracts.  In Tennessee, there is a cause of action for common law fraud that is available to a consumer who has been intentionally misled as to a material fact, and who relied upon the misrepresentations to enter a transaction.

Fourth, and most importantly, Tennessee has a statute known as the Tennessee Timeshare Act.  The Timeshare Act provides several important protections to purchasers of timeshares in Tennessee.  Some of the more important of these protections are as follows:

  • The Timeshare Act requires that timeshare sellers provide certain very specific disclosures to purchasers.
  • The Timeshare Act prohibits timeshare sellers from making misrepresentations.
  • The Timeshare Act prohibits certain types of statements from being made (unless certain conditions apply).
  • The Timeshare Act gives purchasers the right to cancel their transaction in certain circumstances.
  • And, the Timeshare Act gives purchasers the right to sue for rescission and damages, and, in some instances, for punitive damages and attorney’s fees.

Future blog posts will discuss these protections in more detail.

The important take-away from this post, though, is that the sale of a timeshare in Tennessee is fairly heavily regulated.  These regulations are in place to protect you, the consumer.  So if you want to purchase a timeshare, enjoy.  If you have purchased and used a timeshare and have just changed your mind, there may not be much you can do.  But if you believe you were defrauded in a timeshare transaction, you may have recourse.  Of course, you will need to have a lawyer evaluate your claims.  All claims are governed by statutes of limitations which could bar your claim if you wait too long to pursue it.

 

– John O. Belcher is a founding member of Belcher Sykes Harrington, PLLC and routinely represents consumers in timeshare fraud cases.  The information above is just a general summary and does not constitute legal advice.  If you would like to discuss your particular timeshare transaction, don’t hesitate to contact Belcher Sykes Harrington, PLLC.

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