Trusts [Europe]

 

Timeshare Trust Companies

It is the trust companies who became involved in timeshare, as a result of a problem which existed in unincorporated associations, which timeshare owners know as 'clubs'. An association of people can be incorporated (say a company) or unincorporated like a cricket club or golf club. The key differentiations is that 'incorporated' it is a personality as itself (a person) and 'unincorporated' it has no personality thus, is not a legal person, accordingly cannot own any assets, like the rights to occupy property timeshare.

The simple solution some say would be to incorporate the club.

A property consists of two parties - the equitable interest and the right to occupy it (example you buy a property live in and own it, or you rent it out don’t live there but you still own it).

When a timeshare developer elects to construct a timeshare resort they will build holiday units (say apartments) within a resort and then consider how many rights will be created in each unit. Taking the bi-annual systems, in a 2 calendar in 1 unit, 104 weeks could be created therefore 104 in part bi-annual systems are available for sale. In single week systems you will only have 52 weeks. If you create a club, you could extend membership in the club which will become an efficient vehicle to administrate all the obligations and benefits. If many owners become a member of a club the inventory (rights to occupy) can be pooled together and potentially managed more efficiently.

If a club is created and is unincorporated it’s not a legal person therefore, cannot hold property therefore, a trust is created whereby the members of the club agree to place the rights into a trust which will hold the assets unencumbered and for the owner.

Trust companies therefore might be a wise move as it ensures the property and its rights are kept safe.

Worldwide there are several competing trusts who deliver a service to many consumers however mainly converse with the industry.

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