When shopping for a vacation property, you might encounter a few timeshare options. After all, despite its many flaws, the timeshare industry offers some popular types of vacation ownership —one being a right-to-use timeshare. To learn more about this particular option, you've come to the right place. Below, we'll discuss what right-to-use timeshares are, how they work, and the pros and cons of owning one.
Timeshares are vacation properties under fractional ownership agreements. With most timeshares, you buy the right to use a specific unit for a specific week each year. One shared property can have up to fifty-two owners. And since you own a fraction of the property, you pay a fraction of the cost.
Find out more about how timeshares work here.
Not all timeshare ownership agreements are the same. You can own or lease a timeshare. Each has different benefits and privileges. These two ownerships are known as deeded timeshares and right-to-use timeshares.
Deeded timeshares are similar to traditional real estate ownership. You own a percentage of the property with a deeded timeshare agreement. Upon purchasing, you should receive a title deed detailing your ownership interest. Deeded ownership is often written in perpetuity, meaning you own it indefinitely unless resold or willed to someone else. Those rights fall under deeded timeshare agreements.
Non-deeded, or right to use (RTU), timeshares work differently. Rather than owning property, you lease a timeshare for a set time like you would personal property. Therefore, you don't "own" the timeshare but instead, have the "right to use" it until the agreement’s expiration date. With RTU timeshares, owners don’t receive a title deed and have restrictions on some ownership rights, such as being able to sell or rent.
Right-to-use timeshares differ from deeded timeshares and often are not considered real estate. When you purchase an RTU timeshare, you agree to retain the ownership for a set period before transferring it back to property developers. These timeshare lease agreements last anywhere between 20 and 100 years.
Once your leased agreement reaches its expiration date, you no longer have the right to use the property. However, it also means you are no longer responsible for further expenses. With deeded timeshares, owners can often end up in poor financial situations because extra expenses (such as timeshare maintenance fees, assessment costs, and taxes) are perpetual. With RTU timeshares, having a designated time can prevent more debt.
As with any vacation ownership, there will be advantages and disadvantages. Below are a few features for RTU timeshares that make them stand out in both regards:
Alas, the biggest downside to timeshares is they seldom become worthwhile. If you purchased a timeshare that did not turn out as expected or felt pressured, Wesley Financial Group, LLC ("WFG") might be able to help! Check out what their past clients have to say and to learn more about their timeshare termination services, schedule a free consultation today.
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