Sandra and Alan were on holiday in the Pacific Islands where they attended a presentation about buying a timeshare. A timeshare allows you to share the ownership of holiday properties, contributing to the costs in return for guaranteed time at the holiday resorts. Sandra and Alan decided to join and paid a $10,000 deposit. They then needed to borrow $60,000 to complete the purchase.
Sandra and Alan applied to borrow the $60,000 and signed a contract under which they would have to pay $5,454 a month for 11 months. The timeshare’s loan provider accepted their application.
Sandra and Alan also signed an agreement acknowledging that they were aware they could withdraw from the purchase either within 7 days of receiving all the documents or if their application for finance was unsuccessful.
About six weeks later Sandra and Alan’s relationship ended and Sandra asked the timeshare provider to cancel the contract because they could no longer afford the purchase. Sandra also asked the timeshare provider to refund the $10,000 deposit they had paid.
Initially, the timeshare provider refused to release Sandra and Alan from their obligations or refund the deposit but, after receiving a hardship application, the timeshare provider reconsidered. The timeshare provider agreed to release Sandra and Alan from their contractual obligations and refund half of the deposit they had paid.
Sandra said that she and Alan could no longer afford to repay the $60,000 loan and wanted to cancel the contract. As they would be receiving no benefit from the transaction, they asked the timeshare provider to refund the $10,000 deposit they had paid.
The timeshare provider said they were not obliged to release Sandra and Alan from their contractual obligations and considered their offer to do so and refund half the deposit paid to be very reasonable.
We reviewed the documents Sandra and Alan had signed. Because more than 7 days had passed and their finance application had been successful, we explained to Sandra that that she and Alan did not have any right to cancel the contract and receive a full refund of the deposit.
In our view, the timeshare provider’s offer to release them from their contractual obligations and refund half of the deposit they had paid was reasonable and we encouraged Sandra and Alan to accept it.
Sandra and Alan accepted the timeshare provider’s offer, resolving their complaint.
Insights for consumers
Timeshares are long-term commitments under which you take on contractual obligations. When you are considering whether the investment is right for you, take some time to think about your long-term plans and be aware that sometimes the unexpected happens. You may not be able to withdraw from the investment as easily as Sandra and Alan.