Vacation is a precious time that many people look forward to relaxing, discovering, and enjoying life. Currently, there are many forms of tourism and resort formed to serve the needs of everyone. One of them appears in the form of customers entering into the “Vacation Ownership Contracts” with companies or resorts – A form of resort that is quite new to Vietnamese people. However, in addition to the benefits that the Vacation Ownership Contract may bring, the Customer may face many risks from this Contract. In this article, we will give an overview of the Vacation Ownership Contract and analyze the risks that Customers may face.
1. Overview of Vacation Ownership Contract
In the provisions of Vietnamese law, there are currently no specific provisions for “Vacation Ownership Contract”. However, one can be understand that a “Vacation Ownership Contract” is a type of contract where the buyer buys the right to use a specific resort location for a fixed period of time, usually annually. This is a form of vacation investment and is often used to secure ownership of vacations in popular resort locations at domestically and internationally.
Vacation Ownership Contracts usually come with specific terms and conditions, including periods of use, maintenance fees, and the rights and responsibilities of the buyer. Under the Contract Contract, the buyer may transfer or resell their ownership in this Vacation Ownership Contract to someone else.
2. Risks to the Customers
The Trade Remedies Authority of Vietnam (Ministry of Industry and Trade) said that over the past time, disputes, reflections and complaints related to the Vacation Ownership Contract have continued to be reported by the media as well as consumers to the consumer rights protection agency.
A Vacation Ownership Contract is essentially a service registration contract, based on Case Law No. 42/2021/AL which makes it very clear that this is a form of accommodation service contract. Therefore, owning a vacation is not the same as owning real estate, or property there, but what the buyer owns is the time and service enjoyed in the future, not in the present. So it has a lot of potential risks for buyers. As follows:
• First, in fact, the term of Vacation Ownership Contracts is often quite long, which means that the buyer has to pay large amounts of money to own, it is possible that at the time of entering into the Contract, the project of the resort under the Contract has not been completed. Therefore, it is necessary to carefully evaluate the risks and profit margins before entering into the Contract.
• Second, in addition to the risk of external factors, such as the salesperson pressuring to sign the contract, the seller also uses untrue forms of advertising. The risk that future performance of the Contract may be “delayed” or even “broken” if the vacation seller fails to complete the Project on time or, worse, the Project “dies”.
• Third, in addition to the one-time payment at the time of signing the contract, the Customer must also pay annual expenses (from several million to several tens of millions of VND) depending on the specific rights and utilities that the Customer wants to enjoy when using the service at the resort. However, in the Contract there may not be specific and clear provisions about these expenses and related issues.
• Fourth, many people consider Vacation Ownership Contracts as a profitable investment channel. However, during the Contract, there are many buyers who want to resell or terminate the Vacation Ownership Contract for many reasons such as the vacation seller does not comply with the Contract, promises, the resort project is not completed on schedule to participate in the service, detecting signs of deceiving customers, mobilizing capital to build resorts by entering into vacation ownership contracts, … Many Customers after paying a lot of money to the vacation seller and receive the Contract after payment. At this point, the Customer can carefully read the Contract and realize that there are many unfavorable terms for vacation buyers. Therefore, if the Customer considers this as a profitable investment channel and wants to sell/re-transfer the Vacation Ownership Contract, the Customer will face difficulties because the terms of sale or transfer are very unfavorable, even in cases stipulating that the Customer must have the approval of the vacation seller to proceed with the transfer. Customers who have purchased vacations often have difficulty exiting this agreement.
• Fifth, the current Vietnamese law also does not have specific legal provisions to regulate the subject of “Vacation Ownership Contract” and the fact that investors through the sale of vacations to raise capital from entering into contracts with customers, has created a large legal gap. Businesses use a strong legal team, using a pre-written contract (Sample Contract) that stipulates terms that are favorable to them and disadvantageous to customers, especially for those who are not knowledgeable about the law.
3. Minimizing risks when entering into Contracts
• Before entering into the Vacation Ownership Contract in particular and the types of Contracts in general, the Customer should carefully study information about the subject of the Contract which products or services are introduced in the event, as well as about the supplier. In this way, it is possible to identify important issues of benefits and risks that may be encountered, thereby having the opportunity to decide and ask for further answers before signing the contract.
• For the Vacation Ownership Contract, the Customer should carefully read and understand all the terms and conditions in the Contract, pay special attention to the fees and durations, rights and obligations of the Customer, the value of the Contract and related costs, as well as the terms of termination/assignment of the Contract and handling of breach of the Contract. Clients can use legal aid services from a legal service provider to advise on entering into this type of Contract.
• In addition, Customers can report and denounce to the police agencies organizations, businesses and individuals that take advantage of the activity of “Owning vacations” to commit illegal acts.
Above is the article “Risks to Customers when entering into “Vacation Ownership Contract” that TNTP sent to readers. In case there is a problem to discuss, please contact TNTP for answers.
Best regards,
