Rescinding With Credit Card and No Down Payment

One of our users left the following comment on our 10 Steps to Successfully Rescind Timeshare article:

I signed with RCI and Legacy, its past the cooling off period, but I haven’t paid the down payment yet. Does that mean the contract is still valid? should I just cancel the card and not pay? would that cancel my contract?

credit cardIt would make things a whole lot easier if you could simply cancel your credit card to get out of your contract, but unfortunately that is not the case. According to credit.com, once the seller has your credit card information, they will also be in possession of your social security number. So once you cancel the card, the account will then be referred to a collection agency, at which point they can report it to a credit reporting agency. You will still be responsible for payments and if you do not make them on time, it could hurt your credit score.

It is also likely that your down payment by credit card was processed very quickly by the seller when you signed the contract and that what you now have yet to pay is the bill from your credit card issuer. The good news about making such a purchase on a credit card, however, is that you have the right to dispute the charge if you feel the seller misrepresented the product (in this case, the timeshare) or did not deliver what was stated in the contract. There is a time limit for disputes, however, usually around 60 days. Read your credit card agreement so you know how much time you have.

How to Transfer Timeshare Ownership

If you’ve decided to either gift your timeshare to a family member or sell your timeshare, you will transfer timeshare ownershipneed to transfer ownership of your timeshare to the new party. A transfer of ownership is handled in a formal, and often complex, process. Because of the nature of the process, it might be in your best interest to hire a closing company to take care of the paperwork for you. You can, however, handle the process yourself if you choose. If you decide to do it yourself, follow these steps to ensure a smooth transfer of ownership:

  1. Make sure you are up-to-date with all payments. You might also want to call the resort to see if they charge any fees for transferring the timeshare. If so, you and the buyer of your timeshare will need to figure out who will pay those fees.
  2. If it is required by the resort, you might also need to fill out a membership transfer application before continuing with any legal paperwork.
  3. Draw up an earnest money contract. A timeshare transfer is a real estate contract, and should be just as detailed. Be sure to include:
    – the name of the resort and unit number(s)
    – the weeks in which the timeshare is available
    – whether those weeks are fixed, floating, or tied to a points system
    – interest information (fee simple, estate for years, membership, etc.)
    – who is responsible for maintenance fees, special assessments, and delinquent fees
    – what will happen in the case of default
    – names, contact information, and signatures of all parties
    – any other relevant terms of the sale
  4. If it’s a deeded timeshare, you will need to get a new deed with the county clerk’s office in the county where the timeshare is located. Both parties should sign the deed in front of a notary public, and then have copies made for each party. Submit the original notarized deed to the county clerk’s office, along with any required recording fees or tax fees.
  5. Send a copy of the recorded deed along with a covering letter to the timeshare management company detailing the transaction, including information like the designation of the timeshare, internal account numbers, the week, unit number, and season as well as the social security number and contact information of the purchaser.

If you or the other party is uncomfortable with navigating this process without the help of an attorney or closing company, you may want to reconsider your strategy. Otherwise, be meticulous when filling out your paperwork and you should be able to transfer your timeshare fairly easily.

What to Look for in a Timeshare Contract

If you’ve attended a timeshare presentation and have decided to make a purchase, it is wise to take your time to read and understand all of the timeshare contract documents you will be signing. In fact, you have the right to do so. This contract-signing scenario will likely be taking place after several hours of sitting through a sales pitch – when you’re tired and vulnerable – but remember how much money is at stake here. Don’t rush through the process and make a hasty decision just to get it over with. Take your time, read the documents, and make a well-informed decision. Here’s what to look out for in the contract itself:

  • Public offering statement – Along with your purchase contract you will receive a legal document called a public offering statement, which is a very detailed history of the project that contains extremely important information such as owner rights and maintenance fees. Do yourself a favor and read this document! It will outline everything you need to know about what exactly you’re purchasing so you aren’t surprised later. timeshare contract
  • Rescission or “cooling off” period – Each state has a different rescission period (usually around 5-7 days) that allows you to cancel a timeshare contract and (sometimes) get a refund. Rescission is dependent on the state laws where the timeshare property is purchased, which is not necessarily your home state. Each set of documents accompanying a timeshare sale will include a form explaining how to rescind. It will probably be titled something like “Notice of Mutual Right of Cancellation of Time Share Purchase.” More information about timeshare rescission here.
  • Verify verbal promises – If the salesperson made certain promises during the presentation, ask that it be included in your contract before you sign on the dotted line. If they refuse to put their verbal promises in writing, take this as a sign about what kind of company they are. Unless you’ve signed the purchase contract, you can still walk away at any time.
  • Obtain copies – Do not walk away without copies of ALL contract documents. Some salespeople at the resort might offer to mail copies to you later so you don’t have to worry about carrying them along the rest of your vacation…don’t fall for this! Take the documents and review them once again when you get home. If you decide to change your mind, you might still be within the legal rescission period.
  • For a list of further detailed questions you might want to ask yourself before purchasing a timeshare, see this article. Many answers to these questions will be found in the public offering statement document.

No matter where your head is at with purchasing a timeshare, beware of the pressure you will likely experience during and after the presentation. If you are at all unsure about signing the paperwork or have questions about what it is you’re purchasing, don’t sign! You have the legal right to take time to think about a decision that requires such a considerable financial commitment. If you feel uncomfortable or see any red flags, listen to your instincts and just walk away.