Timeshares are an extremely common form of property ownership in Nevada, which is not surprising given how important tourism and vacations are to Nevada’s economy. For some people, timeshares can be an excellent vacation option; however, for others they can become a major financial pitfall. Knowing legally what a timeshare is, and what your obligations are going to be once you purchase a timeshare, can help you decide whether a timeshare is right for you.

First and foremost, a timeshare is a form of real estate ownership whereby many different people own portions of a property, usually divided up by weekly rights of occupancy. These ownership rights are called “fractional” interests. Thus, when you purchase a timeshare you will receive (once you’ve paid off any mortgage on your timeshare) a deed of ownership just like you would for any other real estate. If you borrow money to purchase your timeshare interest you will likely enter into a mortgage agreement whereby the lender will take a deed of trust on your timeshare until you pay it off in full.

So far so good; however, as is often the case, the devil is often in the details for a timeshare. First, your timeshare may have an owner’s association which, like any other owner’s association may charge maintenance fees which you will have to pay as long as you own your timeshare. Second, because a timeshare is a fractional ownership interest, unlike normal property, it can be very difficult to sell a timeshare. Often the only way to get out from under annual timeshare maintenance fees is to give the timeshare away.

The final and most important thing to know about timeshares is that since they are not a primary residence (i.e., the place you live most of the time), if you default on the mortgage used to pay for the timeshare, in addition to losing your timeshare, you may also be subject to a deficiency judgment for the unpaid amount on your mortgage. Because Nevada’s anti-deficiency statute only protects people from deficiencies connected to mortgages on a primary residence, there is no protection if you are unable to pay off the loan on your timeshare.

My advice to clients considering a purchase of a timeshare is that they approach it with the same seriousness and consideration they would approach any other real estate purchase. It may be the right thing for your family, but oftentimes it isn’t. You wouldn’t buy a house from someone just because they bought you a free steak dinner would you? The same should go for timeshare purchases.

Clifford Gravett lives in Mesquite and is an attorney with Bingham Snow & Caldwell. He is licensed to practice in Nevada, Arizona and Utah. He can be reached at (702) 346-7300, cliff@binghamsnow.com, or 840 Pinnacle Court, Suite 202 in Mesquite.