Timeshare Law in Florida Helps Timeshare Owners & Developers

Earlier this month, the state government of Florida passed bill HB 61 that codifies two tax laws related to timeshares and one financial instrument that can alleviate fears for prospective timeshare owners.

We reported on the HB 61 bill back in April when it was approved by the state House and pending passage by the state Senate.  But here’s a recap to the major points of the now law:

- Timeshare exchanges are not eligible for tax.  Although no state or local government has taxed timeshare exchanges, the clarification was lobbied for by the American Resort Development Association (ARDA) in order to head off any attempt to use timeshare exchanges as sources of tax revenue in this wounded economy.

“Without the consistent and strong support from sponsors, Sen. Mike Haridopolos (R-Melbourne), and Rep. Steve Precourt (R-Winter Garden), HB 61 could not have been enacted,” said Jason Gamel, Vice President of State Government Affairs of ARDA. “This ARDA-backed measure clarified the existing tax status of exchange which had been questioned by some jurisdictions as they searched for revenue in a down economy.”

- The law does set in writing the practice of charging hotel-like taxes on transient use of timeshares.  This means that timeshare rentals must be taxed like hotel rooms.  Taxes on transient timeshare use are already charged in the industry.  So no abrupt change occurs due to this part of the law.

- Lastly, the law gives the timeshare industry access to “debt-cancellation” policies that allow timeshare owners to give back their timeshare in the event of loss of income/loss of job.

Florida House Approves Debt-Cancellation

As an update on the story that was posted on April 6, the Florida House of Representatives unanimously approved (112-0) the measure HB61, a bill to allow developers to sell debt-cancellation policies as part of their timeshare sales.  The bill now moves onto the State Senate for approval.

Debt Cancellation Policies for Timeshares – Buyer Beware

Lobbyists from the time-share industry are pushing for legislation in Florida to allow timeshare resorts sell debt-cancellation policies as part of timeshare mortgages.  The policies would allow owners to return their timeshares due to loss of income.  The policies themselves would have a set cost to be added at the time of sale of a timeshare.

The bill comes at a time when timeshare sales have dipped considerably due to the economy.  Well-known developers like Walt Disney World and Westgate are among those lobbying for the bill to provide prospective owners one less hurdle to purchase a timeshare.

From my perspective, the primary goal is to boost sales and increase the number of buyers.  The debt-cancellation insurance policies are a win-win for the developers as they gain an extra form of revenue from people who are pre-screened for viability of being able to afford a timeshare.  They’ll be able to price the policies accordingly and make profit from the policies as well.  They’re not in business to lose money!

At the same time, they’ll get back a number of buyers that will finance their timeshare purchases.  So, the revenue stream from finance charges will again improve, as will revenue from maintenance fees.  The entire timeshare industry runs on these residual forms of revenue — all from the pocketbooks of the timeshare owners.

For more information, click here for the article from the Orlando Sentinel by By Jason Garcia and Sara K. Clarke