|Ethical Guidelines for Resales
ARDA has developed guidelines on resales activities. These guidelines should be followed by ARDA members. The following key points on resales issues are provided for your information. A complete text of the guidelines is posted following these points.
ARDA member guidelines provide that a firm engaged in timeshare resales activities shall not require an appraisal of the timeshare interest as a condition of accepting the listing. (Interpreting Guidelines Section IX)
- Advance or Up Front Fees
Some resale companies charge up-front or advance fees for resales activities. The legality of these fees depends on your state law. You should check your state law before paying any advance fees. You may wish to consult with a state government agency such as the Department of Real Estate, or the Bureau of Timesharing to determine the legality of such fees in your state. If your state does not prohibit up-front fees, the ARDA member guidelines provide that prior to taking an up-front fee, the resales firm must provide the owner with a written statement explaining the purpose of the fee and whether other fees will be incurred. (Interpreting Guidelines, Section IV B).
- Information on Company’s Efforts to Sell Your Timeshare.
ARDA guidelines state that a resales firm should provide you with information on steps that the firm will take to sell your unit, if you make such a request in writing. (Interpreting Guidelines, Section III D.)
Certain timeshare resales activities are unethical and unprofessional and therefore are contrary to the letter and intent of the ARDA Code of Standards & Ethics. Pursuant to authority defined in the ARDA Code of Standards & Ethics Section I and Section IV (C) (2), the ARDA Board of Directors issues Interpreting Guidelines as follows:
I. Timeshare Resales Activity Definition.
The term "timeshare resales activity" encompasses any oral or written solicitation for the resale of a timeshare or interval ownership interest including, but not limited to, the following: through any print or electronic media advertising, direct mail advertising, firm literature or promotional materials, telemarketing and direct marketing through personal solicitation, face-to-face personal communication, any video tape or audio visual program, transaction description, or listing of other transaction document description, disclosure, closing, sales or other service.
II. General Provisions. An ARDA member engaged in timeshare resales activity shall:
A. Physical Location. A firm engaged in timeshare resales activity shall maintain a commercial business location with a physical address accessible to the general public and shall promptly notify and keep informed its customers and clients of the current physical location and telephone number of its place of business.
B. Disclosure of Timeshare Resales Firm Acting as Seller or Purchaser of Timeshare Resale Interest. A firm engaged in timeshare resales activity shall make full written disclosure to all parties when that firm acts as a purchaser or seller of a timeshare resale interest in a transaction, prior to the execution of any contracts or other legally binding agreements.
C. Disclosure of Compensation. A firm engaged in timeshare resales activity shall not accept compensation from more than one party to a timeshare resale transaction unless written disclosure is made to all parties to the transaction prior to the execution of any binding contracts or agreements.
III. Information. Statements made in connection with timeshare resales activity, including all solicitations:
A. Accuracy. Shall not knowingly convey false, untrue, deceptive or misleading information through oral or written statements, testimonials, photographs, audio visual programming, electronic media or any other means; and
B. Completeness. Shall not knowingly include information which would cause the statements to be deceptive or misleading, and shall not knowingly omit information which would cause the statements to be deceptive or misleading, or which would materially and adversely affect prospective buyers’ or prospective sellers’ decision making; and
C. Market Value. A firm engaged in timeshare resales activity shall not knowingly convey false, untrue, deceptive or misleading information to a timeshare owner of the resale market value of a timeshare interest; and
D. Sales Steps. A firm engaged in timeshare resales activity shall state in writing, when requested by the seller, the steps that will be taken to promote the sale of the seller’s timeshare interest.
IV. Advance Fee.
A. Refund. An agreement by a firm engaged in timeshare resales activity to refund any advance or up-front fee to the seller of a timeshare interest when the sale is consummated shall clearly disclose any conditions that may exist for the refund to occur, such as whether the refund is based on the final selling price of the timeshare.
B. Law. A firm engaged in timeshare resales activity shall not collect any advance fee where prohibited by applicable law.
V. Transaction Records A firm engaged in timeshare resales activity shall maintain records of completed timeshare resale transactions, including, but not limited to, the actual sales price paid.
In connection with any preliminary review or investigation under the Code of Standards and Ethics, the Ethics Committee may request the firm to obtain an audit report prepared by a licensed accounting firm. Such report shall verify and document the firm's activities over a specific time period in the areas of marketing, advertising, listing, selling and closing of timeshare transactions.
VI. Approval and Endorsement. A firm engaged in timeshare resales activity shall neither state nor imply that the firm is approved, endorsed or in any way affiliated by a resort, a resort management company or a resort’s owners’ association or its Board of Directors unless such approval, endorsement or affiliation is rendered in writing by the endorsing, approving or affiliating entity.
VII. Resort Notification. A firm engaged in timeshare resales activity shall include in any contract with a timeshare seller or purchaser a statement as to whom is responsible for providing notification to the resort and the applicable exchange company regarding any change of ownership of the timeshare interest.
VIII. Fee and Cost Disclosure. Prior to accepting or processing any advance or up-front fee permitted by applicable law, a firm engaged in timeshare resales activity shall provide to the timeshare owner a written statement and explanation of: the purpose of such fee; and whether any additional fees or costs will be incurred by the timeshare owner.
IX. Appraisals. A firm engaged in timeshare resales activity shall not require an appraisal of the timeshare interest as a condition of accepting the listing.
X. Occupancy and Use Rights. A firm engaged in timeshare resales activity shall not accept either the use or occupancy rights to a timeshare interest for any purpose without first providing the timeshare owner full written disclosure of all applicable terms and conditions relating to such acceptance of use or occupancy rights from the timeshare owner.
XI. Escrow Accounts. Escrow accounts, if any, shall be maintained by any firm engaged in timeshare resales activity in full accordance with all applicable laws and regulations.
XII. Closing Company Disclosure. When requested by the buyer or the seller of a timeshare interest, a firm engaged in timeshare resales activity shall promptly disclose the title company, escrow company, attorney or other party who will be conducting the closing and recordation of transaction documents.
XIII. Resort Information Disclosure. Prior to or simultaneously with the execution of transaction documents, a firm engaged in timeshare resales activity shall notify the seller in writing if the seller has an obligation under any applicable law or regulation to state or identify any specific conditions or circumstances at the resort that may affect the purchaser’s decision to purchase that specific timeshare interest, and the nature of what must be stated or identified.
XIV. Unit Occupancy Disclosure.
A. When. The sales contracts used by a firm engaged in timeshare resales activity shall clearly state the first year in which the purchaser will receive the actual use rights and occupancy of the unit as determined by the resort or the resort management as well as any exchange companies.
B. Cooperation. The exchange company, the resort, and any management company shall cooperate with the firm engaged in timeshare resales activity in providing its use and occupancy criteria promptly to the firm requesting the information.
XV. Resort Documents. To facilitate and expedite the negotiation, contracting, closing and funding of timeshare resales, firms engaged in timeshare resales activity, resorts, resort property management companies, owners’ associations, exchange companies, mortgage companies mortgage servicing companies, and all other applicable ARDA members shall endeavor to provide the timeshare purchaser the following resort information: the current actual maintenance fee; yearly ad valorem real estate taxes if billed or collected separately, and any other documents relating to the timeshare plan that are required to be provided to the timeshare purchaser under applicable law. For purposes of this paragraph, a firm engaged in timeshare resales activity may reasonably rely upon information about the resort provided in writing by the resort’s management company, its owners’ association or its Board of Directors.
- Compliance With Applicable Law. A firm engaged in timeshare resales activity shall comply with all applicable real estate brokerage and licensing regulation laws.
- Do not necessarily expect to receive the same amount that you originally paid for your timeshare, particularly if you have owned for less than five years and the interest is not in a well-known resort location. Many factors influence the resale price including season, location, unit size and age. A timeshare should be considered a vacation, rather than a traditional real estate investment, although it is most often legally a purchase of real estate.
- Check with your developer (if they are still selling) or the resort management company to see if they either offer a resale program or are affiliated with a broker to handle resales. If so, ask for the statistics on past resales.
- Check with other owners at your resort. Those who own the weeks before or after you may wish to purchase more time.
- If you have purchased in a resort area, there may be local brokers who handle resales (check the real estate or classified section). If you find one, expect commissions to be in the 10 to 25 percent range. You may also find a broker in your hometown.
- Run ads in the real estate or travel sections of newspapers in the resort area or your hometown.
- You might want to try national publications that have an emphasis on travel/leisure. Check at your library to see which have a classified section for travel/real estate opportunities.
- If you sell your timeshare, be sure to notify both your resort and your exchange company in writing.
- Deal only with licensed real estate brokers. When in doubt of a company’s reputation, ask for references. Also ask to talk to past sellers.
- Never give up the right to use the timeshare accommodations for any purpose while selling.
|Selecting a Resale Company
The following are the procedures that ARDA and its members suggest using when choosing a resale company:
- Be prepared by having all your paperwork in order before proceeding (see checklist).
- Ask what methods the company will use to advertise and promote the property. How can you get regular information on the status of the property? Be sure you know exactly what services the company will perform before making any payments or giving any credit card information.
- If you receive an offer by telephone, resist any pressure to make an immediate decision. Ask the solicitor to put details of the offer in writing and send the information through the mail. Obtain a written contract before making any payments.
- Once you have received the contract, be sure you understand the terms and conditions, including:
- any fees, commissions or other costs you must pay
- whether you can still rent or sell the interest on your own
- how long the contract will be in effect
- exactly what services the company will provide
- who is responsible for documenting and closing any sale.
- Some resale companies charge up-front or advance fees for resales activities. The legality of these fees depends on your state law. You should check your state law before paying any advance fees. You may wish to consult with a state government agency such as the Department of Real Estate, or the Bureau of Timesharing to determine the legality of such fees in your state. If your state does not prohibit up-front fees, the ARDA member guidelines provide that prior to taking an up-front fee, the resales firm must provide the owner with a written statement explaining the purpose of the fee and whether other fees will be incurred. (Interpreting Guidelines, Section IV B).
- Ask if the company holds a real estate brokers license in its home state. Check with the state real estate commission to verify the information.
- Understand that, despite what some rental/resales salespeople tell you, there are no guarantees that your vacation interest can be resold or rented at a particular price or within a certain period of time. Resale of property is not an overnight process. Do not expect immediate results, but don’t hesitate to check on the progress your company is making on reselling or renting.
- If you have a problem, report it to the proper agencies: The Better Business Bureau, state and local real estate commissions and consumer protection agencies, consumer reporters, and state attorneys generals.
- Make sure you get a written contract and understand the terms of the contract before paying any money.
- Be aware that some resale companies require up-front listing fees which are not refundable.
- Be wary of companies offering gimmicks, such as money-back guarantees, in order to get your listing fee.
- Ask questions regarding the company’s background, history or resale success, and who at the resale brokerage will handle the closing.
Even though it’s a vacation, selling a timeshare usually involves the same steps involved in selling real estate, such as a house. Before selling your timeshare, make sure that you have your paperwork in order. The following checklist should help.
the name, address, and phone number of the resort
Copyright © 2001. American Resort Development Association
the deed, and the contract or membership agreement
the financing agreement (if you are still paying for the property)
any title insurance
any information to identify clearly your particular interest or membership
the exchange company affiliation
the amount and due date of your maintainance fee
the amount of real estate taxes (if billed separately)
know whether or not your vacation interest is legally classified as real estate or personal property