In Europe of the 1960s, rising property values made it difficult for most people to afford a full-time vacation home. Developers found a solution — create properties with a shared ownership, where each person who owns the property has access to it at a specific time each year — usually for one week. The time-share industry was born, and it didn't take long for it to spread worldwide.

The cost of each time-share is split among the people who own it, making units affordable to a wider segment of the population. Costs to maintain the units and the common areas of the property are shared by all owners. Time-shares have been sold for cruises, recreational vehicles, campgrounds, and other types of properties, but the most popular sales are for condominium units at time-share resorts.

Time-Share Ownership Variations

There are two basic types of time-share ownership:

• Deeded ownership. You receive a deed to the property that describes your specific rights.

• Right-to-use agreement. A lease agreement that expires at a specified date, after which you no longer have any rights to the property.

From there, rights branch off to become more specific:

• A fixed-unit deed give you rights to use a specific unit.

• Fixed time deeds give you rights to use the property during a specific week or season each year.

• Floating time deeds offer usage dates that are more flexible, with reservations on a first-come basis.

• Vacation clubs or points-based programs allow owners to choose from the developer's entire inventory of destinations.

Vacation clubs are popular with time-share buyers. That type of plan gives owners the option of choosing their destination from among multiple resorts in the same chain without paying a fee to an outside exchange facilitator. The downside is that many clubs have failed. Research the stability of the developer to help determine if their inventory of resorts will likely remain intact for future use.

Are Time-Shares a Good Investment?

Buy a time-share because you want to use it, not because you are looking for a real-estate investment. Time-share units generally have poor resale value. There are always thousands and thousands of people who are trying to sell their time-shares. Many of them have discovered that they never use their time, and others become tired of paying the required annual maintenance fees. However, there's one exception to this rule. Time-share resales are a good investment if you manage to find bargain properties.