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May 2004 - Beware of buying a time-share condo

Beware of buying a time-share condo

☳ by Adam Aspilla

Many people today are looking for investment for their future retirement, and thousands of investment vehicles are now available in the market to choose from.

 

In choosing for a right investment, you have to study it carefully before making a decision. One of the many investments opportunities is Time-Share Condo Vacation Units. This real estate investment is shared or co-owned by as many as 26 parties – one for every two-week period of the year. The cost of a unit investment, two week’s worth, varies from around $10,000 to $25,000.

 

Exercise Prudence when buying time-share vacation condo.

 

Some of the major problems with time-share schemes:

 

  • The developers/principal owners tend to default if units are not sold-out.
  • Coordinating two-week vacations among all owners for a unit is subject to confusion and mix-ups, even though owners have supposed autonomy over their properties.
  • The previous problem leads to owners “swapping” different units in the same complex with each other, or renting to friends, which leads to even more confusion about who has the two-week-period.

 

With so many people sharing the same unit, there are too many opportunities for property damage – and who is responsible?

 

There is nothing wrong with this type of investment, as long as you know the potential problems you may encounter down the road. Entering into a contract without reading and understanding the provisions of the agreement because of pressure from salesmen could lead you to financial trouble.

 

A good example was a husband and wife invite to attend a meeting through telemarketing. The couple attended the meeting because they were promised that by simply attending, they would be given a VCR. In the meeting, the Time-Share Condo Vacation Units investment was presented.

 

The presentation was so impressive that the couple decided to buy a unit and immediately signed a contract with the corresponding down payment. The purchase price was $15,000, with $2,000 down payment and the balance was at $300 monthly.

 

After 30 days from the time of signing the contract, they read the contract they signed and found that the provisions in the said contract were different from what were presented in the meeting. They tried to cancel the agreement, but were not successful; as a result, they stopped their payments. Now the collection agent is hounding them and if they would not pay their arrears, they would be sued and their wages and bank accounts may be seized through a court order. The worse part was they were not able to get a VCR they were hoping to own, for at the time of the signing the contract the VCR ran out of stock.

 

You have to be prudent in choosing your investment. Do not sign on the dotted line in a rush. Before signing and part away your money, you have to be sure that you read and understood all the provisions of the agreement. If you do not understand the terms fully, don’t hesitate to seek council from knowledgeable people for your own benefit.

 

Remember what Proverbs 24:6 says,
“For by wise counsel you will wage your war.
And in a multitude of counselors there is safety.” 

 

Adam Aspilla is a Senior Financial Counselor of the Debt Clinic of Canada Inc. and the author of the book, You Can Negotiate All Your Debts. He also writes a biweekly column, “What Matters In Life” in “Taliba Newspaper. For free initial, professional and confidential consultation, please call 905-306-7572.