Previously I wrote a guide discussing the ownership of undivided interests in real estate.  Occassionally, people mistakenly purchase an undivided interest in real estate with the belief that they are buying a timeshare.  There is a difference.  Specifically, a timeshare is a contractual agreement that gives you the right to occupy and use a piece of real estate (campground, condo, apartment, cabin, etc.) for a limited, and generally pre-arranged, period of time.  In contrast, an undivided interest is the right in common to co-occupy and use at all times the property in question.  An undivided interest is not a substitute for a timeshare, but may be subject to a timesharing agreement.

There are two basic types of timeshare plans:  Deeded and Non-Deeded.

A Deeded Timeshare:  A deeded timeshare is an actual ownership interest in a parcel of land.  In effect, it is an undivided ownership interest subject to a timeshare agreement.   You own the property in common with the other owners, but you only get to use the property as agreed in the timeshare agreement.

A Non-Deeded Timeshare:  A non-deeded timeshare is more analogous to a rental or lease.   You do not own the property, but get to use the property as agreed in the timeshare agreement for a certain period of years.

There are a number of considerations you should take into account when purchasing a timeshare.  

Why A Timeshare?  Why This Timeshare?:

What is the purpose of your purchase (e.g., investment, vacation, etc.)?  And how long do you plan to use the timeshare?  If it is for investment, you should have an exit strategy--i.e., when, where, to whom, and for how much are you going to sell the timeshare?  Generally a deeded timeshare would be a better investment than a non-deeded time share and is more easily transferable (of course, one should check into any restrictions on resale of deeded timeshares, or subleasing for non-deeded timeshares).  A non-deeded timeshare, however, may be better if you're looking for something for the family to enjoy.  For example, maybe you want a Florida condo for a week each of the next three summers--but who knows where you might want to go after that?  With a three year non-deeded timeshare...after your interest expires you're free to move on just like any other rental agreement.

Make Sure You'll Be Able To Use The Timeshare When You Want It:

Make sure you have it in writing as to when you'll be able to use the timeshare...don't listen to the salesman...listen to the words on the contract.  A significant problem I know many people run into with timeshares is that more interests are sold than can reasonably be supported by the property.  For example, if you're buying a one week timeshare in a single condo and 51 others are being sold...you've got 52 interest competing for 52 weeks...and you're going to have stiff competition for the peak vacation times.  If more than 51 others are sold you may get "locked-out" of the timeshare if you don't book far in advance.  Be you have it in writing as to how use is prioritized--i.e., how is usage scheduled?

Think About Resale: 

Additionally, with deeded timeshare you need to be very careful to review any limitations on resale, and with non-deeded timeshares you need to look at limitations on subleasing.

If you're buying for investment you should also think carefully about who you're going to be in competition with when you get to the point of resale.  Are you still going to be in competition with the person who sold you the timeshare who still has 100 units to sell?  If so, it's unlikely you'll be able to undercut him on price.  Do local realtors list timeshares?  If not, you may have a difficult time marketing your timeshare (even with the advent of eBay!).

Go Home, Wait Two Weeks, If You Still Want It Then Buy It:

When you're on vacation you just plain don't think like you do back home.  If you're in the bahamas you reason that sure, we'll make it here twice a year for the next 20 years...so this timeshare is going to more than pay for itself.  The timeshare salesman is unlikely to discourage overly optimistic thinking.  Occassionally, there is a deal so good that it will never come along again--and two weeks is too long to wait--but those deals are few and far between...and I'd venture to say even fewer and further when it comes to timeshares.  My suggestion:  Get the information.  Go home.  Wait two weeks.  If you still like the place, the price, the convenience...and feel you just can't live without it...snap it up.  Otherwise, put your money somewhere else...you earned it.

CAVEAT:  My father and I are both attorneys licensed and practicing in Texas.  My father is also licensed in California and Nebraska.  We run an internet land sales business (www.halfvalue.com).  We write these guides for informational purposes only.  They are not made for the purpose of legal advice.  If you are involved in a legal dispute, you should contact an attorney licensed to practice in the relevant jurisdiction.