Legal Brief for March, 2024

Beware Scammers When Selling a Timeshare

I have handled many transactions over the years for clients who are selling a vacation timeshare that they purchased previously.  For those who are unfamiliar with the term, a vacation timeshare involves purchasing a right to stay at a resort, usually located in some warm and distant location, usually for a week or two at a time.  The purchaser pays an upfront lump sum amount for the right to "own" the entitlement each year, and there are also annual fees payable as well in order to help maintain the resort.  The owner of the timeshare can book their stay whenever they wish to during the year, subject to availability.  The owner will usually also have the right to use their allocation at other resorts, subject to an extra charge.

Some unit owners enjoy going back to the same resort year after year, while others tire of the same old/same old or aren't using their annual allotment or find that the annual maintenance charges are getting too expensive.  An international market has developed for the purchase and sale of timshare units.  Most transactions see the seller taking a loss on their original investment, and in many cases I have found the sellers simply want to "get rid" of what has become a nuisance in their lives.

A recent fraudulent timeshare sale transaction was brought to the attention of Alberta lawyers through our professional insurance operator as a caution about the pitfalls for clients and lawyers in respect of handling timeshare sales.

In this case the Alberta owners of a timeshare unit in the Dominican Republic received an unsolicited offer for their unit from a buyer in Mexico.  The "purchaser" had their Mexican "lawyer" contact the owners.  They provided a purchase contract and e-mail communications to confirm the purchaser's interest.  The Alberta owners were pleased to have found a buyer for their unit.  Once they signed off on the purchase contract, they were then advised however that they would need to send money to cover a timeshare transfer fee and also for Mexican capital gains taxes payable on the sale.  The purchaser assured the Alberta owners that these fees were "temporary" and they would in due course be reimbursed for them.

The Alberta owners were initially hesitant to send the funds, but they decided to "just get it done" and so they complied with the request from the purchaser.  Unfortunately they never did get the promised reimbursement of those amounts, and neither did they receive the funds for the sale price they had agreed upon in the contract.  The purchaser turned out to be a fake, who also had co-conspirators fraudulently posing in turn as the purchaser's lawyer, a Mexican government official and a representative of the timeshare management company.  The end result - instead of receiving their sale price they in fact ended up paying out their own money and lost the ownership of their timeshare unit.

As in so many matters these days you need to be very careful who you are dealing with when it comes to legal transactions.  You need to make sure you do thorough due diligence on who you are dealing with, especially if it involves a foreign country.