Own a Piece of Europe

Overseas timeshares can be a bit of paradise -- or a lot of hassle.

If you want to visit Europe regularly -- and still have the flexibility to trade a week for a stay in another locale -- a timeshare is a good option. Standards and flexibility are improving, but a timeshare contract buys you convenience, not an appreciating investment. For example, the Colemans can use a point system to trade their weeks for time at other Marriott timeshare resorts, both in Europe and the U.S. And if they opt not to use one of their weeks, they can convert it to points that they can use at a Marriott hotel.

When we talked to them, the Colemans had traded one of their weeks in Spain for a trip to Hawaii and were lounging by the pool at the Marriott Waiohai resort on the island of Kauai.

rights-uknown

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A timeshare abroad can be heavenly, but you have to be careful when buying one. Just like in the States, some timeshare companies give you the hard sell, and some advertise resorts that aren't completed yet. And some don't live up to their billing.

Plus, regulations for timeshares are different on each continent. Timeshare companies in the U.S. are required to keep cash reserves to pay for unexpected damage to a property, such as wind damage to a roof. "That's not necessarily the case in European countries," says Dave Sampson, a partner at the law firm of Baker Hostetler in Los Angeles and an expert on international timeshares. So you may be hit with an unanticipated repair bill. Also, in the U.S. you own the property, whereas in Europe you have a long-term lease.

Timeshare groups in Europe are trying to emulate the regulations that govern timeshares in the U.S., which are clearer and easier to enforce, says Howard Nusbaum, chief executive of the American Resort Development Association. Meanwhile, an American buying in Europe should do extra due diligence, says Nusbaum.

Better laws have made it easier for buyers. The ten-year-old European Timeshare Directive requires a ten-day cooling-off period, during which you can withdraw from a purchase. It also calls for full disclosure, which means, among other things, that a contract must be written in your native language. In Spain, the law spells out what must be included in contracts, and if anything is missing, the cooling-off period grows to three months.

The cooling-off period is helping to kill the hard sell, says Sue McNicol, head of operations in the United Kingdom for the Organization for Timeshare in Europe (www.ote-info.com (opens in new tab)), an industry trade group that works to raise timeshare standards and ethics. But while progress has been made, work still needs to be done. A survey by the organization Timeshare in Europe found 76% of timeshare owners were satisfied with their arrangements. The independent consumer oganization Timeshares in Europe puts their “best guess” number at 50%.

The easy way to deal with foreign regulations is to buy through U.S. companies, such as Marriott and Hilton. Otherwise, consider hiring a lawyer in your destination city for advice. Just as with houses, timeshares are sold through a multiple listing service that's available to real estate agents. To contact an agent who specializes in timeshares in the area where you want to buy, go to www.tsxchange.com (opens in new tab) and click on "contact us." There are 1,500 timeshare resorts in Europe, so having an adviser with a menu of choices is a good idea.

Price is just one factor in a timeshare's value (for an idea of what timeshares cost, see below). "They all have their idiosyncrasies," says Re/Max agent Jay Kozlowski, a timeshare specialist based in Orlando. For example, some companies exclude timeshare buyers from their point systems if buyers don't purchase from the parent company. Marriott is in that category, but Hilton is not. Buying a resale timeshare is almost always much cheaper than buying a new one; Kozlowski says savings can be 50% or more. Either way, annual maintenance fees are extra and generally run $300 to $1,000.

Swapping and selling

Swapping weeks is one way to squeeze more fun from your timeshare. Parent companies have systems for trading for other properties within their group. For example, Marriott has five European properties, in Spain and France. Hilton has one in Portugal and a couple in the British Isles.

You can also trade outside your group through other organizations. Interval International (www.intervalworld.com (opens in new tab)), one of the largest, charges $238 a year ($84 for membership plus a $154 international-exchange fee) to facilitate a swap for overseas properties. The general rule in swapping is that you can't trade up; the property you swap for can't be more valuable than yours.

Trading is fun, but selling can be painful. Expect to pay a commission of 20% to 30%, whether you sell through the timeshare parent or an independent broker. Some timeshare companies have a right-of-first-refusal clause, which means you may have to sell your timeshare back to them. One ironclad rule: Never pay anything up front for selling services.

Why are commissions so high? The industry says that selling a timeshare takes as much time and effort as selling a house. On a $300,000 house, the standard 6% commission earns the broker $18,000; but a $40,000 timeshare would yield only $2,400.

What a Week Costs

U.S.-OWNED:

Marriott's Village d'Ile-de-France, near Paris.

Two-bedroom unit, off-season: $18,900.

Three-bedroom place in the high season: $49,900.

Marriott's Playa Andaluza, in Spain (www.marriott-timeshare.com (opens in new tab)).

Two-bedroom unit, off-season: $18,300.

Luxury three-bedroom, three-bath unit, high season: $77,300.

EUROPEAN-RUN:

DeVere Resort Ownership (www.devere-resorts.co.uk (opens in new tab)) has four resorts in England and two in Scotland.

Two-bedroom lodge: $15,500 in the off-season, to $42,500 in the high season.

Three-bedroom unit: $20,500 to $47,500.

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Contributing Writer, Kiplinger's Retirement Report