Types of Timeshares
A major difference in types of timeshare vacation ownership is between deeded and right to use timeshare contracts.
Deeded versus right to use contracts:
With deeded contracts the use of the resort is usually divided into weeklong increments and these are sold as fractional ownership and are real property. As with any other piece of real estate, the owner may do whatever he or she desires: use his or her week, rent his or her week, give it away, leave it to his or her heirs, or sell the week to another prospective buyer. The owner is also liable for his or her portion of real estate taxes, which usually are collected with condominium maintenance fees. The owner can potentially even deduct some property-related expenses, such as real estate taxes, from his or her taxable income.
While this form of ownership can offer additional security to the owner as a form of physical ownership, deeded ownership can be as complex as outright property ownership in that the structure of deeds varies according to local property laws. Leasehold deeds are common and offer ownership for a fixed period of time after which the ownership reverts to the timeshare developer. Occasionally, leasehold deeds are offered in perpetuity, however many deeds do not convey ownership of the land, but merely the apartment or 'unit' of accommodation.
With right-to-use contracts, a purchaser has the right to use the property in accordance with the contract, but at some point the contract ends and all rights revert to the property owner. In other words, a right-to-use contract grants the right to use the resort for a specific number of years. In many countries there are severe limits on foreign property ownership, so this is a common method for developing resorts in countries such as Mexico. Care should be taken with this form of ownership as the right to use often takes the form of a "club membership" or the right to use the reservation system. Where the reservation system is owned by a company not in the control of the owners, the right of use may be lost with the demise of the controlling company.
A variant form of real estate-based timeshare that combines features of deeded timeshare with right-to-use offerings was also developed. Under this hybrid system purchasers of timeshare interests, receive a deed conveying an undivided real property interest in a timeshare unit. Each owner's property interest is accompanied by an annual allotment of "vacation points" in proportion to the size of the property interest. Like right-to-use products, vacation points are highly flexible and may be used in different increments for vacation stays at resorts in a variety of accommodations from studios to three-bedroom villas. In addition, vacation points can be exchanged for vacations worldwide or may be "banked" into or "borrowed" from future years.
The most basic unit is a fixed week; the resort will have a calendar enumerating the weeks roughly starting with the first calendar week of the year. An owner may own a deed to use a unit for a single specified week. For example, week 26 normally includes the July 4th holiday and week 51, Christmas and so on. If an owner owned Week 26 at a resort he or she could use that week every year.
Sometimes units are sold as floating weeks. The ownership will be specific on how many weeks the owner owns and from which weeks the owner may select for the owner's stay. An example of this may be a floating summer week where the owner may request any week during the summer season, generally weeks 22 through 36. In this example there would be competition for prime holidays such as the weeks of Memorial Day, Easter, July 4th and Labor Day.
Rotating or flex-week ownership
Some are sold as rotating weeks, commonly referred to as flex weeks. In an attempt to give all owners a chance for the best weeks, the weeks are rotated forward or backward through the calendar, so in year 1 the owner may have use of week 25, then week 26 in year 2, and then week 27 in year 3. This method give each owner a fair opportunity for prime weeks, but it is not flexible.