Making the best buy of a timeshare unit

JAKARTA (JP): Tips on how to purchase and select the right timeshare unit:

* Make sure that the parties you will be tied up with in any timeshare purchase agreement are legally registered as a local company or PT and located in Indonesia. Be careful with any agreement using foreign laws as you would have difficulty in claiming your rights at a later stage.

* Has the construction of the resort you would buy been completed and has the resort yet started to operate? Where is it located? Check land status, building permit and operational license. Is there any leasing agreement or joint-venture agreement between the owner of the land and buildings and the timeshare management company?

* Make sure what rights of occupancy and privilege you will get from the resort club (unit type, season, maximum occupancy, type of week purchased, and length of right of occupancy), quality of facilities that the resort has and the units it has at the time of purchase.

* Is there a cooling-off period applied during which you may cancel the purchase agreement unconditionally? And will the down- payment you have made be refunded after deduction from the cost of administration? How much are administration costs? A minimum of seven working days cooling-off period applies in the developed countries.

* What level of interest charge applies for late payment of the installments or the annual maintenance fee? And what are the consequences for you if you can no longer afford to pay the rest of the installments? Will the resort club be willing to buy back your unit?

* When will you be able to start using your right of occupancy? When will you be registered as a member of the exchange company and able to use its exchange facilities?

* If you have paid in full all the purchase fees, including your 10 percent value added tax, will you also be charged accommodation tax as well as electricity, water and gas fees when you take a vacation at the exchanged resort?

* When you have fully paid the purchase price and want to sell to another party, what are the procedures and would the resort club buy it back if there is no term of "second-hand unit" existing in this matter?

* If the vacation exchange system is new to you, you would be better off confirming its details directly with the specified vacation exchange firm running that system before you make any commitment with the seller. This is to prevent you from being misled by information from the seller.

* Be careful with exchange companies or resort clubs who do not provide membership services in Indonesia, or those who move from place to place. Be extra careful especially if you must talk and ask about anything only on the phone, because matters would not be handled quickly, correctly and clearly.

* The last and most important thing is that there should be a third party appointed as a guarantor for your right of occupancy, if the resort construction is not completed yet, or not as written in the agreement; if there is a management dispute at the resort; or if the quality of facilities and services given by the resort and the unit are not as good as at the time of purchase.

As in the case of the guaranteed cover of any financial loss from an insurance company or a letter of credit issued by a bank, a guarantee from a Trustee Company or an Escrow Agent is needed by a timeshare buyer.

If there is a guarantee, when the resort club breaches the agreement, you can easily claim your rights to get your money back without waiting for a court order. But if the Trustee Company is not yet a local entity such as a PT and not located in Indonesia, then you will also be in trouble since there will be foreign laws involved.

For your information, the only legal instrument for timesharing is that issued in June 1996 is the ministerial decree of the Ministry of Tourism, Post and Telecommunication, KM.57/PW.102/ MPPT/1996.

And up to the present, the technical guidance that should follow that ministerial decree has not been issued. This unfortunate state of affairs is used by those involved in timeshare businesses to make profits in their own way, which could lead to deceitful business practices. Being a member of the Indonesian Timeshare Association is not a guarantee that the timeshare company you deal with can be trusted more or provide better services and protection to consumers. (Olivia Sitompul)