This article broadly looks at property time-share and the legislation regulating it. The problems and complaints by consumers trapped in the empty and misleading promises advertised to them by the time-share industry are also addressed. In part one, the article gives a broad outline of what the Property Time-Sharing Control Act entails and specific definitions that describe the various elements of the industry.
Part two will look at the National Consumer Commission Report of 2018 and its recommendations as well as the legal consequences of contracting into a time-share agreement and the recourse available to consumers who, because of misrepresentation want to cancel their agreements.
Property time-sharing became very popular in South Africa in the 1980s and later, the use of the point-system as an alternative to Time-Sharing schemes which offered fixed accommodation for a specific time during the year. The point-system gave members more flexibility in their choice of holiday accommodation. The need to create legislation to regulate the industry and protect the consumer arose and the legislature enacted the Property Time-Sharing Control Act in 1983. (“the Act”)
The purpose of this Act was to regulate the alienation of time-sharing interest within a property time-sharing scheme by regulating the contents of advertising and formalities pertaining to the contracts.
What constitutes a “time-sharing interest”? It is the right (incorporeal) to/ or interest in the exclusive use or occupation of accommodation during a determined or determinable period(s) during any year. The occupancy rights must be recurrent (yearly) to qualify as a time-sharing interest.
The definition of “accommodation” in the Act is wide enough to cover apartments, free-standing houses, caravans, tents and even private nature reserves, therefore buildings and land need not be of a permanent structure to qualify as accommodation. This definition does however not cover boats and yachts.
The definition of a “time-sharing scheme” in the Act refers to “any scheme or arrangement or undertaking in terms of which time-sharing interests are offered for alienation or are alienated and the use of such interest is regulated or controlled”. Alienation for the purpose of the Act refers to the selling of the Time-Shares.
The legal basis of the scheme can be in terms of sectional titles, share blocks, memberships or clubs. A scheme involving the alienation of time-shares and the management of their use, therefore, qualifies as a property time-share scheme irrespective of their size and legal basis.
The main objective of the Act was to maximise consumer protection in terms of disclosure requirements as to certain information when advertising a time-share interest.
Newer legislation in terms of the National Credit Act (“NCA”) and the Consumer Protection Act (“CPA”) has direct implications for the application of the Act and the time-share industry as a whole.
In 2018 the National Consumer Commission (“NCC) investigated the vacational ownership and time-industry after various consumer complaints were submitted to the Consumer Protection Tribunal.
The majority of the complaints received and raised during the enquiry related to the inability to cancel these so-called “life-long” contracts with clubs, the forfeiture of points on a cancellation or transfer/reselling of the interest, unavailability of accommodation, misrepresentation of what is actually being sold during the sales presentations and escalating membership fees which was advertised as non-escalating fees to potential buyers.
The NCC made substantial recommendations on the matter, including the need for newer legislation that regulates the time-share industry in South Africa, in order to bring consumer protection in the timeshare/vacation ownership industry in South Africa on par with the rest of the world.
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)