How Do Timeshares Work?


Quick Answer

A timeshare is a real-estate investment that requires joint owners to pay a share of the price for a property, rather than paying the full market value. Purchasing a share of the property allows different owners to use the property each year for a designated period of time. With a timeshare, the duration and division of time for the property depends on the owner’s share.

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Full Answer

For most timeshares, there is a 1/52 share required for one week of ownership each year. Timeshares are generally purchased as deeded timeshares. This type of agreement is considered a "fee simple" contract and stipulates that the owner is purchasing a share of ownership. Nondeeded timeshares function as club-memberships. These types of timeshares are referred to as right-to-use properties, and the buyers only have a right to use the property, rather than owing a share. This type of agreement has an expiration date, whereas deeded timeshares provide direct ownership. The property is generally located in resort communities and is considered a vacation property. A timeshare offers a pleasant place to stay while vacationing and eliminates the need to find lodging or accommodations for annual trips. A timeshare is managed by a dedicated organization that maintains the property and helps owners avoid maintenance or property upkeep expenses.

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