·  Legal News, Analysis, & Commentary


How to Cancel a Timeshare Contract in Mexico

— November 11, 2020

A Client should always read a contract before signing it, ask all your questions about terms you don’t understand or disagree with.

Over several recent decades timeshare resorts have grown into a popular sector of real estate market. A lot of resort companies offer timeshare as an advantageous method to arrange holidays. So, what is timeshare?

A timeshare means you can buy a vacation “place” for a definite period of time. You pay for the property and are actually its owner within the set timeframe. Also known as, Holiday Ownerships, Vacation Ownerships, Timeshare Estates, etc. for many years, many travelers looking for a more affordable, long-term answer to the high cost of luxury vacation clubs and hotels found it in timeshare ownership. For an upfront cost of a few thousand dollars and a yearly maintenance fee, a family could grab a piece of dream – even if for only two or three weeks a year. 

Timeshare does not represent a competition to the hotel industry, but on the contrary, it is complementary it guarantees hotels a constant level of occupation, avoiding the marked differences between the high and low seasons and, in the end, benefits Mexico because permanent flows of tourists are created and new tourists come, who will in turn, be spokespersons for all what Mexico has to offer in the immense range of tourist places and values. In result of these qualities, as the website Tourism and Timeshare Indicators AMDETUR indicates; Mexico is second place worldwide in sales of timeshare and positioned as the leader in Latin America, with annual sales of 4.3 billion dollars behind the United States with almost 10 billion dollars.The timeshare market is very broad and has been evolving in recent years. In Latin America sales are maintained for billions of dollars the equivalent of thousands of weeks sold. Mexico is undoubtedly the leader in this region and stands out with sales of more than 4 thousand million dollars.

The timeshare industry has not been without its problems, timeshare owners must exercise caution as there are many unscrupulous people taking advantage of the buyer’s regrets, offering to resell the timeshare. These offers to sell a timeshare at a cost are most likely a scam.Over the past several years, United States Attorney General offices of many states have issued warnings about Mexican timeshare resale fraud where victims receive a call from a real estate agent claiming to have a buyer for their Mexican timeshare, the purchase and sale of timeshares in Mexico, as well as in other countries, is filled with risks. No matter how legitimate it sounds or the related documentation looks, this is a scam, pure and simple. Nonetheless, now it is protected by virtue of the Federal Consumer Protection Law (PROFECO) Article 64 which mentions:

 “The rendering of timesharing services, notwithstanding the name or the manner in which such pertinent legal act may be presented, consists in placing the use, enjoyment and other rights agreed over a property or part of such property at the disposal of a person or a group of persons in a variable unit within a certain class, during time periods previously agreed upon, and through the payment of a certain amount. In the case of real property, the title thereof is not transferred.”

Attorney Has Identity Stolen in Timeshare Scam
Photo by Hassan OUAJBIR on Unsplash

In a consumer relationship, between suppliers and consumers, according to the Federal Consumer Protection Law (PROFECO) these rights and obligations are irrevocable and cannot be waived in accordance with Article 1,

“This Law is of public order, intended to render a social benefit, and shall be observed in all of the Mexican Republic. Its provisions cannot be waived, and no customs, uses, practices, covenants or stipulations to the contrary shall be asserted against the observance hereof.

Therefore, the importance of establishing as basic principle adequate and clear information on different products and services, information such as, the characteristics, price, correct specification of quantity, composition, guarantees, among others, must be reflected in a timeshare contract. According to the Mexican Legal Encyclopedia of the Institute of Legal Research of UNAM, a contract is a bilateral legal act that is constituted by the agreement of two or more people and that produces certain legal consequences (creation or transmission of rights and obligations).

In this voluntary agreement, there are contracts in which before signing, the supplier and you negotiate the conditions on the purchase that are set out in the contract. On the other hand, there are contracts where the provider previously establishes the clauses for the acquisition of the good or service and you cannot cancel them, called adhesion contracts, as Article 85 declare:

“For purposes of this Law, an adhesion contract shall be understood as the document drafted unilaterally by the supplier to establish, in uniform forms, the terms and conditions that apply to the acquisition of a product or the rendering of a service, even though said document does not contain all ordinary clauses of a contract. For any adhesion contract executed within the national territory to be valid, it shall be drafted in the Spanish language, and its characters shall be clearly readable. Also, it shall not stipulate unreasonable considerations under the care of consumers, unfair or inequitable obligations, or any other clause or text that breaches the provisions of this Law.”

Since most formally established companies handle a pre-designed contract or a contract already formalized and revised, it is necessary to review all clauses so as not to have any doubts about what the company offers and with what terms it is offered, whereas Article 65 state,

“The sale or pre-sale of timesharing services shall only be commenced when the pertinent contract has been recorded with the Agency, and provided that such contract sets out: I. Name and address of supplier; II. Place where the services shall be rendered; III. Clear specification regarding the rights of buyers to use and enjoy the goods, including the periods of time to use and enjoy them; IV. The cost of the maintenance expenses for the first year, and the manner in which the costs for subsequent periods shall be established; V. The exchange options with other suppliers of such services, and if there is an additional cost to carry out such exchanges; and VI. Description of the bonds and guarantees that shall be granted in favor of consumers.”

A Client should always read a contract before signing it, ask all your questions about terms you don’t understand or disagree with. Nevertheless, considering Article 82, as a consumer there can be a request to annul the contract:

The consumer may choose to request the substitution of the good or service, to rescind the contract or a reduction in the price and, in any case, a refund or compensation, when the thing or subject-matter of the contract has any fault or hidden defect that renders it improper for its customary use, diminishes its quality or the possibility to be used, or does not offer the safety that, due to its nature, is expected from such thing or subject-matter, and from its reasonable use. When the consumer chooses the rescission, the supplier shall be bound to refund the price paid and, if applicable, the interest set out in the second paragraph of Article 91 of this Law.”

Nevertheless, there are some exceptions to such contracts, as stated by the Federal Consumer Protection Law (PROFECO) below Article 56:

“The contract shall be perfected five business days from the delivery of the good sold or the signing of the contract, whichever comes later. During such term, the consumer shall be entitled to revoke his consent, without any liability whatsoever. The revocation shall be made by giving notice or by delivering the goods sold in person, through registered mail or through other means to serve such notice in a legally unquestionable manner. The revocation made pursuant this article shall render the transaction null and void, and the supplier shall reimburse the price paid to the consumer. In this case, the freight and insurance costs shall be borne by the consumer. With respect to services, the above shall not apply if the date when the service is rendered is within ten business days or less from the date of the purchase order.”

In conclusion, in this process, whether in the form of a unilateral or bilateral contract as we have explained above, unilateral as the law protects you in Article 56, we have 5 business days to be able to terminate the contract and not generate or create any penalty on the part of any. Likewise, according to Article 85;

“The Ministry, by means of the Mexican Official Standards, may subject adhesion contracts to a prior registration with the Agency whenever they imply or can imply unreasonable considerations for consumers, unfair or inequitable obligations, or high probabilities of nonperformance.”

This is the case on the part of the provider we would not have any penalty, in case it is a service as we explained above, it should only be 10 business days before the date of service is scheduled. Then the indications are to read well what the company with which you are contracting offers you, in this case if it is unilaterally, review the conditions that the company puts so that you can acquire the good or service before performing a contract, on the bilateral side leave specified to the last detail so that you cannot see any problems in the future either by the omission of some clause or some other.

Join the conversation!