The importance of a deed in timeshare ownership

There are two types of vacation timeshare ownership, deeded and non-deeded.

How important is it to own a deed?

The vast majority of timeshares in the United States are deeded. This is not the case in the rest of the world. Mexico for example has no deeded timeshares because non-Mexican citizens cannot own real estate in Mexico. In Europe, the majority of timeshare resorts are also not deeded.

One of the greatest concerns I have found buyers to have is "what happens if the resort goes bankrupt?" For deeded properties that would be like asking "what happens if the contractor who built your house goes bankrupt?" If the contractor goes bankrupt it would have no effect on your home ownership, it is just his business that went bankrupt. You still own your house.

Deeded timeshare developments are exactly the same as any condominium project - the builder constructs the condos, the condo owners' association runs the project and a management company hired by the association manages the day to day procedures and financial affairs such as the collection of HOA fees and payment of bills.

It is true that the association can run short of enough money to pay the bills, but that doesn't result in the individual owner losing ownership, it results in a special assessment that is shared by all owners, and the resort goes on as usual.

However if the ownership is not deeded, your ownership which is really a lease, can be lost if the company running the resort affairs goes under. This has happened, although fortunately as a percentage of total non-deeded resorts, the number is pretty small.

So the decision has to be made by the purchaser, is owning a timeshare in the region of the world where you like to vacation, even though the ownership is not deeded, worth the risk? The risk is pretty small and most buyers say yes, but it is good to know beforehand the realities of the situation. Some buyers prefer to buy deeded properties only in the United States, and if they wish to travel elsewhere, use the services of an exhange company, such as RCI or I.I.