TATOC The Timeshare Association

When you purchase a week of timeshare, points in a timeshare points-club or other long-term holiday ownership products an initial purchase price is paid to the vendor for which you receive the right-of-use of the product for a given number of years.

Full details of this right-of-use will be in the contract and/or governing documents. In addition to the initial purchase price ownership also requires the payment of an annual charge – often referred to as the resort Maintenance Fees or Management Fees. These fees are collected each year and are used for the management and maintenance of all the resort accommodation, grounds and facilities. A small amount is often included in the fees to act as a 'reserve fund' or 'sinking fund' to cover unforeseen eventualities or any major refurbishment that may become necessary.

When purchasing a timeshare or similar product from a developer, resale agent or private vendor the documentation you will be asked to sign will include a legal commitment to comply with the governing document of the product (often called the Constitution or Regulations). This includes a commitment to pay the ongoing annual charges.

Maintenance fees vary considerably and are dependent on the specific resort/product and the size/amount of timeshare purchased. Details of the maintenance fees, how they are set, when they are payable, how they can be changed, etc. will be in the Constitution of the timeshare resort or Club. Maintenance fees are set each year in line with the Constitution and the resort will write to owners with invoice and payment details. It is best practice for resorts/clubs to announce fees well in advance and to provide owners/owner committees with budgetary information justifying the level of fees set for the year. Resorts frequently offer incentives for early payment and have the right to apply interest/penalty charges for late payment.

If you have any questions about the maintenance fees for your timeshare product firstly look carefully at your ownership documents for information. If you need any further information speak directly to your resort or owners committee representative.

MANAGEMENT FEE CHANGES
Each year management companies undertake a budgetary calculation to determine the cost of running and maintaining the resort/club for the following year. This calculation forms the basis of the management fees set for that year. Almost always costs increase because of inflation, wage rises, etc. and as a result management fees can increase on a yearly basis. Good management by the Management Company and good communications with owner's committees keeps increases to a minimum.

It is best practice for resorts/clubs to announce fees well in advance and to provide owners/owner's committees with budgetary information justifying the level of fees set for the year. Details of the maintenance fees, how they are set and how they can be changed will be in the Constitution of the timeshare resort or Club. Some constitutions place a 'cap' on how much fees can increase, but some do not. Check you resort/club constitution for information or speak to you resort/owner's committee.

SPECIAL LEVY
Although annual maintenance fees are used to manage and maintain a resort it sometimes happens that additional money is required to meet some considerable and unexpected expenditure. It could be some major refurbishment or building work is required or shortfalls sometimes result from changes in taxation rules or currency exchange rates etc. When this happens a resort/club will inform owners there will be a 'special levy' explaining what it is for, how it has been calculated, and how it will be collected.

Resort constitutions usually provide for this eventuality and you should check your ownership documents for further information. If your resort/club has an owners committee contact them for information, although it is likely they will already have written to owners.

When a Special Levy is raised it is a requirement for all owners to make payment in the same way as applies to annual maintenance fees.

NON-PAYMENT OF FEES
If you have any problems with your timeshare ownership, or if you have difficulty in paying annual fees for any reason, make immediate contact with your resort and owners committee. Simply stopping the payment of fees is never the best course of action. Stopping payment of fees could have legal and financial consequences, your use of the facilities will be withdrawn and penalty charges may be applied to your account. Your account may be referred to a debt collection agency and legal action may be taken against you.

Please see the TATOC Consumer Helpline Guide No 61.

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