Timeshare Estates

Timeshare Estates: Underwriting Guidelines

When a timeshare purchaser only obtains a contractual right-to-use the facility as owned by the club, commonly called a vacation license or club membership, no ownership rights are created and therefore the purchaser does not own an insurable interest in the land. Agents National Title agents are not authorized to issue its commitment or final policy insuring these types of transactions.


Under timeshare regimes that provide individual ownership interests in real property, title insurance may be issued. Typically, Schedule A of the commitment will be unchanged, except the legal description, which must describe the timeshare estate number (or other designation), condominium unit number, and timeshare declaration recording information, and must include a clause similar to the following:


“Each such timeshare estate constituting a one fifty-second (1/52) undivided interest in the respective Condominium Unit described above in the Condominium established by [TITLE OF CONDOMINIUM DECLARATION], dated ____, and recorded ____.”


In addition to the usual exceptions for condominiums (e.g. Master Declarations, Declaration of Easements, etc.), the specific timeshare declaration, and other matters of record, both the commitment and any final policies must contain exceptions for the following matters (these exceptions should be modified in accordance with the language and contents of the actual project documents):


“Nothing contained herein shall be construed as insuring that tax assessments against the interest described in Schedule A will be made in any particular manner.”


“This policy does not insure against the consequences of a merger of all the timeshare estates in one parcel/unit by operation of law.”


“This policy does not insure against loss by reason of the hold-over or unauthorized occupancy by other owners/users of any unit or by the association, the developer, its lessees or other third parties holding over pursuant to the procedures for reserving usage as set forth in the timeshare declaration, as amended.”


“This policy does not insure against loss or damage which may be caused as a result of the enforcement of any state, federal or judicial lien against any other party holding an interest in and to the subject unit.”


“A right-of-entry for purposes shown and incidental purposes, during the “maintenance periods” as provided in the declaration of condominium and/or timeshare declaration, as the case may be, referred to herein for cleaning, servicing and maintenance.” (If applicable.)


Any record matter effecting the underlying fee must be excepted to in both the commitment and final policy. 


It is important that Agents National Title agents determine the nature of the interests being insured and their insurability under state law. If you are unfamiliar with the insurance of timeshare estates, please contact Agents National Title’s underwriting department before issuing any commitment or policy. 


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