State lawmakers are not going to help those who bought timeshares get out from under what is often a lifetime obligation.
On a voice vote Monday the state Senate gave preliminary approval to some new requirements about what would-be purchasers have to be told. More to the point, it provides what amounts to a 10-day cooling-off period between when buyers sign an agreement and they’re struck with it, often for life.
But the version of HB 2639 that survives after multiple committee hearings and floor debate no longer provides the opt-out provisions that had been envisioned by Rep. Shawna Bolick, R-Phoenix.
Gone is language that allows a buyer to cancel within 14 days after actually getting to use the property to see if it’s all that was promised.
And there is no longer a provision to allow someone to simply surrender the property after 10 years, even after paying the entire price of the time share. Put simply, the buyers remain stuck unless they can find someone else to take it.
But those ran into stiff objections from the timeshare industry. And Rep. Travis Grantham, R-Gilbert, who chairs the House Regulatory Affairs Committee which got first crack at the bill, said some of their concerns make sense.
He’s not the only one.
Sen. Michelle Ugenti-Rita, R-Scottsdale, who chairs the Senate Commerce Committee, said the legislation, which now awaits a roll-call vote, does include some additional requirements for what needs to be disclosed to prospective buyers.
“That way the person is empowered with information,” she said. “They can ultimately make a decision on whether they want to purchase a timeshare or not.”
But she said there are limits to what protections the state can provide.
“At some point, these are adults that come to a meeting of the minds and want to sign a contract,” Ugenti-Rita said, saying that buyers have some responsibility to know exactly what they are signing.
But even the cooling-off period is not as long as first sought.
At the heart of the issue is the practice of some timeshare companies of offering free or reduced-price vacations to prospective buyers if they’re willing to listen to a sales presentation. That has led to complaints about high-pressure sales tactics.
Existing law gives buyers seven days after signing a contract to back out. The original version of HB 2639 would have doubled that.
Grantham said he understands the need for time, saying people need to “go home, sober up, kind of get out of vacation mode and review what you did.”
That, he said, can even include having an attorney review the document.
But the bill, with Bolick’s consent, was shortened from 14 days to just 10.
The original bill also required a disclosure of estimated annual and lifetime assessments and other costs, including taxes and utilities to give buyers some idea of future financial obligations. That is now gone.
“It was too difficult for any timeshare developer to forecast what the fees may be,” Grantham said. He said everything from floods to hurricanes can damage properties, requiring more extensive repairs than had originally been estimated.
More significant, gone is any chance of getting out once that cooling-off period has passed.
Amanda Rusing of the Attorney General’s Office testified during a committee hearing that it’s important that people actually get a chance to experience what they bought – or what they think they bought.
“They thought they were buying the opportunity to use a beach-front villa,” she told lawmakers. “And what they end up with is a condo where, if you hang your head out the window on a sunny day, you can kind of see the ocean.”
She sought language that provided 14 days to cancel after the buyer’s first use.
There were some protections for sellers, including permission to charge a cancellation fee of up to 10 percent of the purchase price and allowing sellers to charge regularly scheduled assessments for one year after cancellation.
“That’s not reasonable,” Grantham said.
“A lot of times people buy timeshares that aren’t even completed yet,” he said, sometimes trying to get in years ahead of actually seeing a complete product “because they want to get in while the getting’s good.”
That provision, he said, creates a financial hazard for developers because it would allow everyone who bought one – and provided the money for financing the project – could suddenly back out once it was completed.
Also gone is another provision for cancellation after 10 years, even with a requirement for the timeshare to have been paid off and there are no overdue assessments or unpaid fines or penalties.
Rusing told lawmakers that buyers are often so desperate to get out that they advertise their timeshares for as little as a penny, only to find out that no one wants to assume the future liability. She said that has created a market for scam artists who claim they can free people from their obligations — though they usually want an up-front fee.
“It just doesn’t make sense,” Grantham said of that option.
“Can you imagine buying a car and having that kind of agreement, or buying a house?” he said. “Nobody would sell anything.”
There was one other change that could be significant.
As originally crafted, the new disclosure documents would have required buyers to be told that if the agreement has not set duration the buyer’s obligations “may extend throughout the course of the purchaser’s lifetime.” That is now gone in favor of saying that any obligations extend through the “duration of ownership,” saying that not every timeshare is a lifetime commitment.