What is a Timeshare and How Does It Work

What is a Timeshare and How Does It Work



A timeshare is a shared kind of vacation property ownership where several buyers own or rent portions of usage for the same property, usually in one-week intervals.

The timeshare concept is utilized for various assets, including units available in vacation resorts, condominiums, apartments, and campgrounds.

Understanding the Working of a Timeshare

Timeshares allow the customer to use a vacation property only once a year for a specific period, usually in one-week blocks. Timeshares adhere to one of these models:

Set Terms

A fixed-period timeshare allows a timeshare purchaser to have exclusive use of the property for a particular week or weeks every year.

The primary benefit is that the purchaser can schedule a yearly vacation at a consistent time annually. On the other hand, it could be challenging to adjust the dates for the set time in casework or school schedules shift.

Floating Vacation Ownership

A floating-period timeshare allows for the exclusive use of the property for a week or weeks at specific periods or any time during the year.

Although more adaptable than the fixed-period system, the floating date model can result in the days you require already taken, especially during peak seasons, and may require early booking.


This system uses points to indicate timeshare usage. The price of reserving a hotel room will be influenced by factors such as the resort’s location, the size of the accommodation, and the dates chosen.

Similarly, the points can vary but can be used at one or more resort hotels. People who have points can utilize them for exchanges within a single company’s resorts (internal exchange) or with other resorts (external exchange).

Although the points system offers consumers more vacation options, there can be significant variations in the homes available and the value of points at different year periods.

Types of Timeshares

Timeshares are usually organized as shared deeds or shared leases.

Joint Ownership

Shared-deeded ownership offers a percentage of the physical property according to the period bought. For instance, a resort condominium sold in timeshare portions of one week may have 52 deeds.

Purchasing one week would grant a 1/52 ownership share in the unit, whereas two weeks would provide a 1/26 share, and so on. Ownership interest that is shared and deeded is often retained indefinitely and can be sold or passed down to other parties.


Shared-lease timeshares allow you to use a particular property for a set or flexible period annually for years.

In this arrangement, the timeshare developer keeps ownership of the property deed, unlike the shared-deeded model, where the buyer receives partial ownership through the deed.

Property transfers or resales are also more limited compared to a deeded timeshare. Consequently, rented timeshares generally have a lower worth compared to owned timeshares.


While timeshares may not suit everyone, they offer benefits for anyone seeking a handy and dependable vacation destination.

Nevertheless, there are several apparent drawbacks that investors should think about before getting into a timeshare deal.

Big companies hold many timeshares in popular holiday spots. Timeshare buyers might be reassured that they can vacation in the same place each year without any unexpected issues.

Timeshare complexes typically offer resort-style amenities and services and are professionally overseen.

When comparing a standard hotel room to a timeshare property, the latter is usually more significant and provides more amenities, making for a more pleasant stay.

Timeshares could be a good option for individuals who like to vacation in a familiar location each year without the stress of exploring new destinations for their next trip.


The disadvantages of a timeshare include the huge recurring expenses, which increase when considering the significant initial investment and yearly maintenance fees, with the latter typically rising proportionally each year.

With a deeded timeshare, the owner is also responsible for paying a portion of the monthly mortgage.

Consequently, the total costs of owning a timeshare could be high when compared to staying for a week in a similar resort or hotel in the same area without owning a timeshare.

There is limited flexibility in altering a fixed week timeshare; a floating week needs to be booked well ahead of time as confirmation is typically based on a first-come-first-served basis, and even then, it might not be available during peak times of the year.

Moreover, a timeshare agreement is legally binding; the owner cannot quickly terminate a timeshare contract due to alterations in their financial or personal situation.

Selling a timeshare can be pretty challenging, mainly if the contract permits resale, and this lack of flexibility might discourage a potential buyer.

A timeshare being resold could sell for a significantly lower price than its original cost for two main reasons: timeshares typically lose value rapidly, and there needs to be more timeshare owners wanting to sell and several buyers interested in purchasing.

How can I determine the value of my timeshare?

Timeshares have prices determined by size, amenities, location, and the ease of swapping or exchanging locations. The worth of your timeshare is established by comparing the prices of similar timeshares listed for sale or rent on various internet marketplaces.

How Can I Purchase a Timeshare Inexpensively?

Purchasing a “pre-owned” timeshare is usually the most economical option. Consider the continuing fees and expenses like upkeep and alteration and the buying price. Additionally, make sure to avoid the fraudulent individuals readily available in the secondary market.

How can I dispose of my timeshare without negatively impacting my credit?

If you cease paying your timeshare fees, the timeshare company may inform credit agencies about your failure to pay, which could negatively impact your credit score.

If you cannot continue paying for the timeshare, consider selling it or discussing a new agreement with the timeshare business to protect your credit.

The Bottom Line 

Timeshares enable individuals and families to purchase the privilege of using a property for a set period each year.

Although they are popular among frequent travelers, timeshares also have significant drawbacks, such as continuous maintenance fees, limited freedom in choosing dates and destinations, and potential challenges in reselling or canceling.

The timeshare market has many dishonest individuals, especially in the resale and exit areas. Therefore, owners and potential buyers must be careful and research comprehensively.


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