New legislation approved in Florida this month seeks to protect consumers from unscrupulous timeshare resellers, who are often accused of taking advantage of owners desperate to sell their timeshares.
Complaints against timeshare resellers have grown as more timeshare owners look to sell their units. In many cases the timeshares have lost anywhere from 50 to 70 percent of their original value. Many sellers are elderly and easy targets for fraud.
Resellers have been accused of taking money for services they never offered, misleading sellers and scamming potential clients.
Florida is one of several states responding to a lack of consumer protection in the timeshare resale industry. Colorado, Texas and Nevada have already passed legislation targeting resellers; legislation is pending in Massachusetts and South Carolina.
The Florida bill "added three very important protections for owners and associations," Jason Gamel, vice president of state government of affairs for ARDA, told WPC.
Under the Florida bill, businesses that resell Florida timeshares must first provide the owner a written agreement outlining terms and conditions of the services offered. They must also place all funds from the consumer into an escrow account until the transfer is complete, with records kept for five years.
The bill covers all timeshares in Florida, regardless of where the owner lives.
"This new law will further enhance safeguards for timeshare owners and associations, and strengthens our collective efforts to protect consumers." Franz Hanning, chief executive of Wyndham Vacation Ownership, said in a release.
The bill is mostly seen as a step forward for the industry. But it may not be enough.
The bill "addresses the symptoms, not the problems," Jason Tremblay, co-founder of Sellmytimesharenow.com, told WPC.
Resellers offer an option to owners who often don't have a way to sell their timeshare. It's important to give timeshare owners viable exit solutions, he said.
"Anything that inhibits a timeshare owner from selling is not good," Mr. Tremblay said.
There are several complex issues raised by the regulation efforts. For example, timeshares are often transferred to an LLC, which may not pay the homeowner association fees connected with the timeshare. The legislation in Florida signed into law earlier this month by Gov. Rick Scott allows homeowners association to take action against transfer companies who knowingly transfer to someone who doesn't intend to pay fees.
ARDA, which represents the vacation ownership and resort development industries, will analyze the effects of the bill to determine if further legislation is needed, Mr. Gamel said. For now, he believes it is a good start to improve the process for consumers.
"Fraudulent players will be weeded out hopefully within the next couple of months," he said.