Attorney General Bill McCollum News Release

Attorney General: Beware Foreign Timeshare Investments

~ Advisory follows increase in number of complaints
reported to the Florida Attorney General's Office ~

TALLAHASSEE, FL – Attorney General Bill McCollum today issued a consumer advisory, encouraging Floridians to be cautious when booking timeshare reservations or vacation memberships in foreign countries, particularly Mexico. The Attorney General noted that his office has received an influx of complaints from citizens who have been scammed by less than reputable travel companies offering ideal vacations to these locations but often falling far short of operating under fair business practices.

'During the summer months, many of our residents and guests are looking forward to spending time on vacation, often with families or loved ones,” said Attorney General McCollum. “My office is committed to providing as much information as possible to Floridians in an effort to educate them about ways to protect themselves from various types of vacation-related fraud.'

Complaints about foreign timeshares received by the Attorney General’s Citizen Services Division include problems associated with extremely aggressive sales tactics, exaggerated claims of return on investment and questionable business practices, resulting in substantial financial losses for investors. The U.S. Department of State has also issued a warning about these practices, reminding U.S. consumers that timeshare companies cannot be sued in U.S. courts unless they have an office or other business presence in the United States.

According to the U.S. Department of State, Mexican law allows time-share purchasers five days to cancel the contract for unconditional and full reimbursement. Attorney General McCollum encouraged consumers to be aware of this information and to avoid signing a contract that includes clauses penalizing the buyer who cancels within five days. Consumers with complaints about fraudulent or deceptive practices should contact a Mexican attorney, the Mexican consumer protection agency PROFECO, or other consumer information agency for information on companies that operate outside of the U.S. for assistance when dealing with a Mexican-based timeshare company.

Floridians considering investing in a timeshare are also encouraged to contact the Attorney General’s Office to inquire whether or not specific companies have complaints lodged against them. While the absence of complaints does not necessarily guarantee a company’s business practices, checking a company’s reputation is a step towards preventing potential fraud.

Consumers can contact the Attorney General’s Citizen Services Division by calling the Attorney General’s fraud hotline at 1-866-9-NO-SCAM (1-866-966-7226) or by visiting the Attorney General’s website at http://www.myfloridalegal.com .

Additional information from the U.S. Department of State’s advisory is available online. It is quoted here:

REAL ESTATE AND TIME-SHARES: U.S. citizens should be aware of the risks inherent in purchasing real estate in Mexico, and should exercise extreme caution before entering into any form of commitment to invest in property there. Investors should hire competent Mexican legal counsel when contemplating any real estate investment. Mexican laws and practices regarding real estate differ substantially from those in the United States. Foreigners who purchase property in Mexico may find that property disputes with Mexican citizens may not be treated evenhandedly by Mexican criminal justice authorities and in the courts. Time-share companies cannot be sued in U.S. courts unless they have an office or other business presence in the U.S. Consumers should contact a Mexican attorney, the Mexican consumer protection agency PROFECO at http://www.profeco.gob.mx/ or other consumer information agency for information on companies that operate outside of the U.S.

Ownership Restrictions: The Mexican Constitution prohibits direct ownership by foreigners of real estate within 100 kilometers (about 62 miles) of any border, and within 50 kilometers (about 31 miles) of any coastline. In order to permit foreign investment in these areas, the Mexican government has created a trust mechanism in which a bank has title to the property but a trust beneficiary enjoys the benefits of ownership. However, U.S. citizens are vulnerable to title challenges that may result in years of litigation and possible eviction. Although title insurance is available in the Baja Peninsula and in other parts of Mexico, it is virtually unknown and remains untested in most of the country. In addition, Mexican law recognizes squatters' rights, and homeowners can spend thousands of dollars in legal fees and years of frustration in trying to remove squatters who occupy their property.

Labor Laws: U.S. citizen property owners should consult legal counsel or local authorities before hiring employees to serve in their homes or on their vessels moored in Mexico. Several U.S. citizen property owners have faced lengthy lawsuits for failure to comply with Mexican labor laws regarding severance pay and Mexican social security benefits.

Time-share Investments: U.S. citizens should exercise caution when considering time-share investments and be aware of the aggressive tactics used by some time-share sales representatives. Buyers should be fully informed and take sufficient time to consider their decisions before signing time-share contracts, ideally after consulting an independent attorney. Mexican law allows time-share purchasers five days to cancel the contract for unconditional and full reimbursement. U.S. citizens should never sign a contract that includes clauses penalizing the buyer who cancels within five days. The Department of State and the U.S. Mission in Mexico frequently receive complaints from U.S. citizens about extremely aggressive sales tactics, exaggerated claims of return on investment, lack of customer service and questionable business practices by time-share companies, resulting in substantial financial losses for time-share investors.

This is from the State Department's web site at: http://travel.state.gov/travel/cis_pa_tw/cis/cis_970.html#real_estate .