As the timeshare directive becomes law across European states we look at what it will mean to timeshare and fractional purchasers and the protection you can expect to receive.
Directive 2008/122/EC is a European law covering certain aspects of timeshare, long-term holiday products (also known as holiday clubs) resale and exchange contracts and replaces the old timeshare directive, which has been repealed.
Consumer protection under the timeshare directive
The timeshare directive allows for:
- A 14 calendar day cooling-off period from the day of conclusion of the contract or the day when the consumer receives the contract.
- All advance payments are prohibited, including acknowledgement of debts.
- A separate form of cancellation has to be provided to the buyer. Where the consumer has not received the form, the withdrawal period starts from when they receive it.
- The consumer has the right to be provided with pre-contractual information in a language of his choice, provided it is a language of the European Community.
- Additional information, such as the conditions for terminating the contract, the language used, whether the trader has signed a code of conduct and the possibility of out of court dispute resolution as set out in the annex should be supplied or, the consumer should be told where it can be obtained.
- Ancillary contracts are automatically cancelled if the consumer cancels the contract.
- Timeshare or long-term holiday products cannot be sold as an investment.
- For resale, the prohibition of advance payment applies until the actual sale takes place or the resale contract is otherwise terminated.
- For long-term holiday products, payments must be made according to a staggered schedule. Payments, including the membership fee should be divided into equal yearly instalments and the trader must send a written request for payment at least 14 days in advance of each due date. And from the second instalment, the consumer may terminate the contract without incurring any penalty by giving notice to the trader within 14 days of receiving the request for payment.
The UK’s consumer minister Edward Davey said of the timeshare directive: “These products are often sold across borders, so it’s only right that we have protections in place for consumers that also cross borders. Knowing these regulations are in place will boost consumer confidence and business for legitimate traders.”
The Resort Development Organisation (RDO), the trade body dedicated to excellence and fair trading in the European vacation ownership industry, welcomes the new regulations under the timeshare directive and highlights that the new conditions for holiday clubs are particularly strict; payments must be divided into equal annual instalments for the length of the contract and the buyer has the right to cancel each year when the annual payment is due. As a result of these tighter controls within the directive RDO believes much of the activity of these clubs will cease as they will be unable or unwilling to operate in a regulated environment.