/HITE 

General 

Zoufl Bullding 

1254a 

70711 

il 

874-1387 

5121475~268 

St.. sun0 1400 

.?5201 

U 

4 A, twte 202 

i-x. 77002 

88 

WY. Suite 312 

TX78401 

138 

mth. Suite B 

n: 78501 

n7 

flua. Sutte 400 

nb. TX. 78205 

I91 

The Attorney ,General of Texas 

December 10, 1981 

Honorable Ray Farabee, Chairman 

State Affairs Committee of the 

.Texas Senate 

State Archives Building, Room 411 

Austin. Texas 78711 

Opinion No. NW407 

Re: Characterization of 

“right-to-use” timesharing 

plans in resort communities 

Dear Senator Farabee: 

You advise us that a concept known as “timesharing” has been used 

in connection with resort properties. You ask us several questions in 

connection with the timesharing plan knowu as the “right-to-use” 

timeshare. In your letter, you define a “right-to-use” timeshare as 

follows: 

‘Right-to-use’ -timeshare, also known a8 

‘timeshare license,’ offers the consumer a certain 

eeaaon (high, swing, or low) during which he may 

reserve his interval week or weeks. The purchaser 

is not tied to any definite week prior to 

reservation, and will probably have a different 

unit of a particular type each year. IJo title to 

property is conveyed and no investment 

represented. The purchaser is prepaying for the 

right ‘to use an accomodation. The reservation is 

handled like a hotel reservation in that no 

particular room or unit is dedicated to the 

purchaser until he checks in. The reservation 

clerk makes Sure that a certain type of unit will 

be available for the purchaser during his reserved 

week. When the purchaser checka In. he is 

assigned to a condominium unit. The resort 

supplies maid service, heat, aft. water, linens, 

and conducts the usual check-in and check-out 

procedures. Gueeta have the right to use all of 

the available resort amenities, ouch .a8 pool, 

tennis courts. golf course, marina. stables, etc., 

at the posted prices. 

The objective of ‘timesharing’ has been to 

_ provide the consumer with the exclusive right to 

p. 1387 
Honorable Ray Farabee - Page 2 (MW-407) 

use and ~occupy a structure during a pariiCUlar 

time of year. 

You have not attached any particular timesharing contract to your 

request for our interpretation. Your request indicates that there may 

be various other types of timesharing plans; however, since these are 

not "right-to-use" plans, we will not consider them. No statement in 

the definition was made as to the duration of the "right-to-use". but 

it will be assumed that it is of limited duration and therefore can 

not constitute some form of life estate. Your statement as to the 

objective of a timesharing program as providing a consumer with the 

exclusive right to use and occupy a structure does not,apply to this 

particular type of timesharing program as you have defined it. Since 

no consumer can claim an exclusive right to use any particular piece 

of property, condominium or apartment, the consumer cannot be said to 

have eXcl"siVe right to occupy a particular structure. The COnSUmer’S 

right under such a timesharing program is a con,tractual right for a 

license to enter into the real property owned by the resort company. 

The resort makes the decision as to which unit the consumer can 

occupy. 

You ask the following questions: 

1. Is a right-tolrse timeshare an interest 

in real property? 

2. Is a right-to-use timeshare a 'SerViCa' 

as used in the Consumer Credit Code? 

Since, by definition, a "right-to-use" timesharing plan does not 

convey title to property. a consumer would not obtain an undivided 

interest in the property subject to the "right-tO-"Se" plan. The 

question remains. therefore, whether the consumer has purchased a 

license to use the property or a lease in the property. Whether or 

not two parties intend to enter into a lease agreement or some other 

agreement is determined by the contract between them. Byrd v. 

Fellding, 238 S.W.Zd 614, 616 (Tex. Civ. App. - Amarillo 1951, no 

writ). Many "right-to-use" timesharing plans have specific provisions 

in the contract stating that no interest in real property of any 

nature is being conveyed by the owner .to the contracting consumer. 

This, in and of itself, could be dispositive of the Issue as to 

whether or not a particular right-to-use timesharing contract conveys 

an interest in real property. 

If there is no specific provision in the timesharing contract 

regarding whether an interest in property is conveyed by the contract, 

the courts would look to the facts of each case to determine whether 

or not-the consumer had entered into a contract to purchase a license 

or a lease. The first and perhaps most important test to determine 
- 

. . . * 

Ronorable Ray Farabee - Page 3 (Mw-408)’ 

whether or not the contract is for a lease of real property is the 

extent to which the consumer obtains exclusive possession of the 

property. Brown v. Johnson, 12 S.W.2d 543. 545 (Tex. 1929). The 

second test to determine the existence of a lease or a tenancy is that 

there must “be a definite, certain place demised or rented.” Tips v. 

United States, 70 F.2d 525, 527 (5th Cir. 1934). The facts presented 

in your request show that the consumer does not have the exclusive 

possession of the premises for which he contracted. The owner remains 

in possession and control of the property, provides all the cleaning 

services for the property. and has the right to determine which room 

or unit is to be used by the consumer. The consumer cannot expect any 

definite, certain space to be allotted to him. Under a similar set of 

facts in the Byrd v. Feilding case, the court held that the owner 

retained sufficient control over the premises so that a license was 

created in the contract between the owner and the purchaser and not a 

landlord-tenant relationship. We note that the comptroller has 

considered such resort property as a hotel subject to hotel occupancy 

tax under article 23.02, Taxation-General. Cur con+sion is that the 

“right-to-use” timesharing plan does not create an interest in real 

property. 

You have also asked whether or not a right to use timeshare is a 

“service” as used in the Texas Consumer Credit Code. See V.T.C.S. 

arts. 5069-6.01, et. seq. The Consumer Credit Code providzthat: 

(b) ‘Services’ means work, labor, or 

services of any kind when purchased primarily for 

personal, family or household use and not for 

commercial business use.... 

V.T.C.S. art. 5069-6.01(b). 

As described in your request, a consumer purchases extensive work 

and labor in addition to the license to use the owner’s property. The 

owner provides work and labor to clean and maintain the condominium 

and to maintain and operate the various recreational facilities that 

are made available to the consumer under the program. In addition, 

the consumer purchases the managerial work necessary to organize the 

timesharing schedules. Under the plan, therefore, the cons-r 

purchases both the license to enter the property and the labor 

required to maintain and manage its facilities. Regarding the 

license, in Riverside National Bank v. Lewis, 603 S.W.2d 169. 175 

(Text 1980). the Texas Supreme Court ruled that seeking to require the 

use of money, and, implicitly, the offering of money for use, was not 

a “service” under the Texas Deceptive Trade Practices Act. The court 

emphasized that ,services includes an activity on behalf of one party 

by another. Although the ,definition of “services” under the Deceptive 

Trade Practices Act is broader than under the Consumer Credit Code, 

the central focus of the court’s definition would still apply to the 

p. 1389 
Eonorable Ray Farabee - Page 4 04w-4Q) 

Consumer Credit Code: a "service" requires some form of activity On 

the part of the party providing the services. Therefore, the eale of 

a mere "license" to use land would not be a "service" under the 

Consumer Credit Code. 

Nonetheless, the right purchased under a "right-to-use" 

timesharing plan is a combinationof a service and a non-service. The 

purchase of the mere:~license would be worth very little if the 

services were not aleo included in the purchase. In fact, the 

services are an integral part of the consuttter's purchase. 

Consequently, it is almost impossible to distinguish, in practical 

terms, the service from the non-service. A court would in all 

probability find that the entire "right-to-use" timesharing plan 

should be characterized as a "service" under the Consumer Credit Code. 

SUMMARY 

A "right-to-use" timeshare is not an interest 

in real property, but it is a service~within the 

Texas Consumer Credit Code. 

Very truly yours. 

MARK WdITE 

Attorney General of Texas 

JORN W. FAINTER, JR. 

First Assistant Attorney General 

RICRARD E. GRAY III 

Executive Assistant Attorney General 

Prepared by Richard Symonds 

Assistant Attorney General 

APPROVED: 

OPINION COEQIITTEE 

Susan L. Garrison, Chairman 

Jon Bible 

Rick Gilpin 

Jim Hoellinger 

Richard Symonds 

0. 1390