Key consumer protections for time-share buyers stripped from bill, AG’s Office laments

PHOENIX — State lawmakers decided against allowing new opt-outs for people who bought timeshares to get out from under what is often a lifetime obligation.

On a voice vote Monday the state Senate gave preliminary approval to new requirements about what would-be purchasers have to be told. The measure would provide a 10-day cooling-off period between when buyers sign an agreement and when it sticks, often for life.

But the version of House Bill 2639 that survives after multiple committee hearings and floor debate no longer provides the opt-out provisions envisioned by Rep. Shawna Bolick, R-Phoenix.

Gone is language that would allow a buyer to cancel within 14 days after actually getting to use the property to see if it’s all that was promised.

And there is no longer a provision to allow someone to simply surrender the property after 10 years, even after paying the entire price of the time share, if they can’t find someone else to buy it.  

“We’re disappointed that the timeshare industry killed a lot of the pro-consumer parts of this bill,” said Katie Connor, spokeswoman for the Arizona Attorney General’s Office.

“They’ve got a lobbying presence here and around the country,” said Amanda Rusing, who lobbies for the Attorney General’s Office. “It was very disappointing to have to remove all of the stronger, pro-consumer provisions.”

But Rep. Travis Grantham, R-Gilbert, who chairs the House Regulatory Affairs Committee, said some of the industry’s concerns make sense.

Sen. Michelle Ugenti-Rita, R-Scottsdale, who chairs the Senate Commerce Committee, said the legislation, which now awaits a roll-call vote, does include some additional requirements for what needs to be disclosed to prospective buyers.

“That way the person is empowered with information,” she said. “They can ultimately make a decision on whether they want to purchase a timeshare or not.”

She said there are limits to what protections the state can provide.

“At some point, these are adults that come to a meeting of the minds and want to sign a contract,” Ugenti-Rita said, adding that buyers have some responsibility to know exactly what they are signing.

But Rusing said they’re not really getting that. She pointed out that the original version of HB 2639 would have required that consumers be given a copy of the contract at least 24 hours before they would be able to sign it. She said that would give them a chance to read through it, ask questions and, if appropriate, seek legal advice, all before putting pen to paper.

Some timeshare companies offer free or reduced-price vacations to prospective buyers if they’re willing to listen to a sales presentation. That has led to complaints about high-pressure sales tactics.

Existing law gives buyers seven days after signing a contract to back out. The original version of HB 2639 would have doubled that.

Grantham said he understands the need for time, saying people need to “go home, sober up, kind of get out of vacation mode and review what you did.”

But the cooling-off period in the bill was shortened from 14 days to 10.

More significant, said Rusing, is that 10-day period is after a contract is signed. She said that is is no substitute for the now-scrapped requirement to ensure that consumers have 24 hours to look over the contract before signing. Once people sign a document, they often are reticent to cancel, Rusing said.

The original bill also would have required a disclosure of estimated annual and lifetime assessments and other costs, including taxes and utilities, to give buyers an idea of future financial obligations. That is now gone.

“It was too difficult for any timeshare developer to forecast what the fees may be,” Grantham said. He said everything from floods to hurricanes can damage properties, requiring more extensive repairs than originally estimated.

Rusing testified during a committee hearing it’s important that people get a chance to experience what they bought — or what they think they bought.

“They thought they were buying the opportunity to use a beach-front villa,” she told lawmakers. “And what they end up with is a condo where, if you hang your head out the window on a sunny day, you can kind of see the ocean.”

She sought language that provided 14 days to cancel after the buyer’s first use.

There would have been some protections for sellers, including permission to charge a cancellation fee of up to 10 percent of the purchase price, and allowing sellers to charge regularly scheduled assessments for one year after cancellation.

“That’s not reasonable,” Grantham said. A lot of times people buy timeshares that aren’t even completed yet,” sometimes trying to get in years ahead of actually seeing a complete product “because they want to get in while the getting’s good.”

That provision would create a financial hazard for developers, he said, because it would allow everyone who bought a share — and provided the money for financing the project — could suddenly back out once it was completed.

Also gone is another provision for cancellation after 10 years, with a requirement for the timeshare to have been paid off and to have no overdue assessments or unpaid fines or penalties.

Rusing told lawmakers that buyers are often so desperate to get out that they advertise their timeshares for as little as a penny, only to find out that no one wants to assume the future liability. She said that has created a market for scam artists who claim they can free people from their obligations — but who usually want an up-front fee.

“It just doesn’t make sense,” Grantham said of that option. “Can you imaging buying a car and having that kind of agreement, or buying a house? Nobody would sell anything.”

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