Timeshares in Mexico – Buyer and Seller Beware

September 4, 2015

The lure of sunny weather, beautiful beaches and relative affordability has persuaded many American and Canadian citizens to purchase timeshare vacation packages in Mexico. While such purchases work well for some, many people have lost large sums of money to purchase and resale scams.

Timeshare Purchase

Vacationers are often persuaded by aggressive sales people to consider a timeshare purchase while visiting Mexico. If you are thinking of attending a timeshare presentation or purchasing a timeshare in Mexico, consider the following tips to avoid becoming the victim of a scam:

1. Be wary of free gifts with no strings attached. If someone approaches you during your vacation and invites you to a free dinner or a free stay at a resort, he or she is probably intending to sell you a timeshare. Mexican law prohibits timeshare salespeople from offering gifts, free vacation certificates or other promotions without informing the consumer of the specific purpose of the offer, but many salespeople ignore the law.

2. Do not purchase a timeshare based on a brochure. A salesperson may show you a brochure and try to get you to purchase a timeshare without showing you the timeshare property. It is important that you visit the resort and the developer’s office before considering the purchase of a timeshare.

3. Do not sign a contract when you first meet with a timeshare salesperson. If a contract is presented to you, tell the salesperson you need time to read it after the meeting to be sure you understand it. We also recommend you have the contract and any related documents reviewed by an attorney.

4. Do your homework. In addition to visiting the resort, search the Internet to find out more about the resort and the company you are dealing with. Timeshare owners who have previously been scammed often post their experiences and warnings about scammers online. You can also check for complaints on the United States Federal Trade Commission website and the website for PROFECO, which is the Mexican Consumer Protection Agency.

5. Right of cancellation. Mexican law gives you the right to cancel a timeshare contract within five (5) business days after you have signed it. This right to cancel cannot be waived. If you wish to cancel, do not let the timeshare salespeople tell you that you waived this right when you signed the contract . To cancel the contract, you must follow the instructions provided in the contract and notify the resort in writing within the five day period.

Timeshare Resale

Once you own a timeshare, you need to be aware of another fraudulent scheme. There are many scammers posing as resale brokers who contact timeshare owners stating they have a buyer willing to pay the owner much more than the owner paid for the timeshare. The scammers typically identify themselves as being part of a company based in the United States (frequently with an office in California, Florida or Illinois). If the timeshare owner appears interested, the scammer will email a generic sales contract, often indicating that the seller will not be responsible for any fees beyond a defined percentage sale commission. After the contract is signed, however, the scammer will ask the owner to wire several thousand dollars to an escrow account in Mexico to pay for fees or taxes required by the Mexican Government. The scammer will assure the timeshare owner that he or she will be reimbursed by the buyer for these expenses at closing, and will often identify a bogus escrow agent who will supposedly hold the escrow funds. Once the funds are wired to the account, the owner will never see them again. There is no buying party, the seller still owns the timeshare, and he or she is out thousands of dollars.

Any attempt to sell your timeshare should be initiated by you. You should contact the timeshare property to discuss the appropriate way to sell the timeshare, and if necessary, hire a broker who you can confirm is licensed to sell timeshares in Mexico.

Timeshare Fraud Reimbursement

Adding insult to injury, there is a follow-up scam that takes advantage of timeshare owners who have already been victimized by the resale scam. In this scheme, someone will contact you saying that a branch of the Mexican government has set up a fund to reimburse victims of timeshare fraud in Mexico, and that you will be entitled to reimbursement of your lost funds if you wire a participation fee to a Mexican account. However, there is no such reimbursement fund in Mexico. No matter how legitimate it sounds or the related documentation looks, this is a scam, pure and simple.

In summary, the purchase and sale of timeshares in Mexico, as well as in other countries, is fraught with pitfalls. Be cautious, be thorough, reject unsolicited offers, and never wire funds to unknown parties.

For more information about timeshares, contact Dick Wolff.