RDO (Resort Development Organisation) Code of Ethics
The Resort Development Organisation which used to be called The Organisation for Timeshare in Europe (OTE), released a new code of ethics back in 2005 but have failed to make it available to consumers to read. Many people feel they have been mis-sold their timeshare, but because these types of sales tactics are commonplace within the industry, believe there is nothing they can do about it. We think it is important that you are aware of the practices and standards that should be met within the timeshare industry and within your timeshare resort, so we are sharing the Resort Development Organisation code of ethics here for you in full.
- INFORMATION FOR CONSUMERS.
- ADDITIONAL PROVISIONS BINDING ON MEMBERS UNDERTAKING THE FOLLOWING TIMESHARE ACTIVITIES.
1 MARKETING AND SALES
2 EXCHANGE PROGRAMMES
3 RESALE ACTIVITIES
4 POINTS-BASED PROGRAMMES
5 CASH BACK
6 NEW HOLIDAY PRODUCTS
7 MANAGEMENT OF RESORTS
8 PROTECTION MECHANISMS FOR TIMESHARE INTERESTS
VI ADMINISTRATION OF THE CODE AND SANCTIONS
1 COMPLAINTS HANDLING
The Organisation for Timeshare in Europe and its Members are committed to the highest standards of practice and ethics, and to the principles of fair commercial practices and fair trading, for the advancement of the industry, the protection of Consumers, and the goodwill of the general public, and the advancement of the interests of Members of OTE. To this end, the OTE sets forth this Code of Ethics as it may be amended from time to time in accordance with the Statutes of OTE and in consultation with regulatory and Consumer bodies, to govern the conduct of its Members. The Code establishes standards of practice, which ensure the fairness and propriety with which Members conduct their business, and applies to all holiday concepts offered by OTE Members which fall within the broad definition set out in Section III. By the acts of applying for and being admitted into membership all Members agree as a necessary and enforceable condition of membership in the OTE:
- A) to comply with the Code;
- B) to comply with all applicable laws, rules, regulations, and codes of practice imposed by statute, common law or equivalent;
- C) to fulfill any relevant registrations and/or licensing requirements in every case in all countries in which they respectively conduct business, whether in person or through agents;
- D) to conduct their respective activities subject to this Code with integrity and propriety and in a manner that will uphold the credibility, positive reputation and goodwill of the Timeshare holiday industry and the OTE;
- E) to ensure compliance with the Code by all its employees, officers, and agents (including individuals or Companies acting as independent contractors) who undertake Timeshare Activities on its behalf, irrespective of the location of such activities and to promptly terminate their relationship with any individuals or Companies in sustained breach of the Code;
- F) to respond promptly to any communication from the OTE and in particular (without limitation) to provide forthwith on written request by any duly authorised representative of OTE, any information or copies of any documents used in the business of the Member or relating or relevant to such business or to its membership of the OTE, which such representative may consider necessary for the purposes of the Code and/or of the OTE generally; and
- G) to accept as final and binding any ruling of the Membership Council as to the interpretation of any part of this Code.
- The Code shall be applicable to all Timeshare Activities in any country and under any legal system in which Members conduct their business.
- The provisions of the Code shall apply in all cases except in those jurisdictions where the relevant law prevents this.
The terms defined in this section shall have the same meaning throughout this Code.
“Average Purchaser” Any natural person acting for purposes which are outside his trade, business or profession, and who is reasonably well informed and reasonably observant and circumspect.
“Board” The ultimate governing body of the OTE.
“Cash-back Scheme” A cash-back scheme is a secondary contract by which one party contracts on certain conditions to pay or procure the payment to the other party (the Customer) of all or substantially all of monies paid by the Customer under a primary contract to which the cash-back contract is ancillary.
“Code” The Code of Ethics of the OTE
“Consumer” The purchaser, owner or potential purchaser of a Timeshare Interest.
“Directive” Directive 94/47/EC of the European Parliament and the Council of Ministers of 26 October 1994.
“Executive Committee” The OTE body which governs the OTE (subject to the direction of the Board) between meetings of the Board.
“Members” Members of the OTE.
“Membership Council” The body which regulates membership of the OTE and is responsible for the implementation of the Code, subject to the direction of the Executive Committee and of the Board.
“New Holiday Products” Timeshare Interests which are not regulated by any current statutory regulatory provisions relating to Timeshare Interests in force within the territories of the European Union Member States.
“OTE” The Organisation for Timeshare in Europe.
“Points” Currency (often also called by other names) in Points-based Programme’s acquired by a Consumer which can be exchanged for periods of accommodation at Timeshare holiday resorts, which periods are given a currency value.
“Points-based Programs” Any program to create and maintain Timeshare Interests in which the accommodation, the period and/or the term are to be selected later during the term by a pre-specified formula involving Points.
“Resale Agencies” A Company or individual acting in the course of a business as agent/broker on behalf of a person or persons not acting in the course of a business (“the Vendor”) in a resale transaction.
“Resale Contracts” The contract between the Resale Agency and the Vendor wishing to sell his Timeshare interest (“the Agency Contract”) and the contract between the Vendor and the purchaser (“the Purchaser”) of that Timeshare interest (“the Sales Contract”). In a Resale Transaction, the Resale Agency may only participate in the transaction and appear in the Sales Contract as an agent of the Vendor and in his place, and not as principal.
“Resale Transaction” A sale of a Timeshare interest, subsequent to the original sale by a developer, brokered by a Resale Agency.
“Resort Development industry” The industry carrying on business under the name of Timeshare, resort development, multi-ownership, periodic or rotational use, vacation or holiday clubs, holiday points systems, vacation or holiday ownership or any other name and in whatever type of accommodation it may be made available.
“Statutes” The constitution document of the OTE.
“Timeshare Activities” All types of commercial and professional activities and services connected with the Resort Development industry and with Timeshare Interests.
“Timeshare Interest” An interest which entitles the owner to use periodically only and for tourist purposes, accommodation in a specified immovable or movable or class of immovable or movables (“the Accommodation”), for a specified period or class of periods (“the Period”) during a specified term (“the Term”), and where the initial payment for the interest is significantly greater than later related periodical payments, including both Timeshare Interests where the Accommodation, Period and Term are all pre-specified and schemes where one or more of these items are to be selected in the future by a pre- specified formula.
- INFORMATION FOR CONSUMERS
In the interests of Consumers, the public, and the Members of OTE generally, Members shall ensure that any Consumer dealing with a Member in respect of a Timeshare Interest is provided with the following in writing before he or she undertakes any commitment, namely: Generally, all information which an Average Purchaser would reasonably require for the purpose of making an informed decision on the material aspects of the proposed transaction, and that such information is presented in a form and language that the Consumer reasonably can be expected to understand. In the circumstances of a particular transaction, this general obligation may extend beyond providing the information set out in the detailed lists in other sections of the Code.
A copy of the OTE Leaflet for Consumers (current version) explaining briefly the OTE standards to which the Member adheres.
- ADDITIONAL PROVISIONS BINDING ON MEMBERS UNDERTAKING THE FOLLOWING TIMESHARE ACTIVITIES
- MARKETING AND SALES
All marketing methods for any Timeshare Interest, including but not limited to direct mail, off-premises contacts, promotional vacations and telemarketing must make it clear to Consumers at the time of any contact that a Timeshare Interest is being offered, and, if applicable, is dependent on attending a sales presentation. Telemarketing or similar direct contacts must comply with accepted direct marketing good practice in the relevant jurisdictions. In each case, all limitations and costs must be made clear to the Consumer.
In addition to any statutory rights, Consumers must be given the right to cancel a purchase of any Timeshare Interest without giving any reason by giving written notice to the vendor which is received during the period of fifteen calendar days commencing on the day following that on which he or she is otherwise committed to the transaction.
Where permitted by the relevant law, the terms of the purchase and sale contract may provide for an advance payment to be taken on account of the purchase price but only if it is paid to and held by a third party such as a bank or recognised trustee as stakeholder throughout the above cooling off period. The terms of the cooling off period, and the arrangements for the protection of any advance payment with contact details for the third party must each be set out in full in the purchase contract in a reasonably prominent manner with contact details of the vendor for the purpose of giving notice.
A Timeshare Interest must not be marketed or sold as an investment. The purchaser shall be provided before any contract comes into existence with full information about the role played by the body which holds title to the accommodation in which subsists the Timeshare Interest which is to be the subject of such contract, (often a trustee), the body which manages such accommodation and its relevant legal structure (usually a management Company), the body which represents the Consumers as a group (often called a committee or consultative council) and the body which provides finance to the purchaser.
Where any of the above bodies are neither Members, nor controlled by Members, nor bodies with whom OTE has agreed standards of fair commercial practices and fair trading, then the Member shall inform the Consumer in writing of this fact and that such non-Members are not therefore bound by the provisions of the Code protecting the Consumer (or by agreed standards), before the conclusion of any contract with the Consumer.
2. EXCHANGE PROGRAMMES
A third party exchange programme should not be represented as the primary motivation for the purchase of a Timeshare. Consumers shall be provided with clear and accurate written information on any exchange programme offered in conjunction with the sale of a Timeshare Interest, including the terms, conditions, fees, and methods for making exchanges, and that exchanges have generally to be “like for like”, and for equivalent quality of accommodation, before committed to the sale and purchase.
- RESALE ACTIVITIES GENERAL Members engaged in resale activities shall:
3.1.1 In order to qualify for, and subsequently to retain membership of OTE, establish and maintain, at their own expense, and free of charge to potential vendors, a justified track record in achieving sales of Timeshare interests on behalf of private vendors.
3.1.2 Not directly or indirectly solicit or take any fee or payment or value for any resale- related service from any Consumer before a sale is completed, PROVIDED THAT:
220.127.116.11 a reasonable charge may be made for work specifically agreed in writing with a prospective vendor and in addition to that involved in establishing and maintaining the track record referred to above, and
18.104.22.168 subject to compliance with this Code, the Resale Agent may take a deposit on account of the proposed sale price from the proposed purchaser on behalf of the proposed vendor. OTE reserves the right to require evidence satisfactory to it, of compliance with these requirements, at the time of application and at other appropriate times.
3.1.3 Include in the written contract for any such additional work referred to above, a description of the additional work to be undertaken, sufficient to allow the potential vendor both to form an opinion as to the reasonableness of the cost before being committed to the contract, and subsequently to verify that the work has been properly carried out.
3.1.4 Maintain full and accurate records of all Resale Transactions, including but not limited to, the actual prices paid and fees charged, marketing, advertising, listing, selling and completions.
3.1.5 Clearly disclose in writing to the vendor and the purchaser, as appropriate, the relevant and respective obligations and rights of the parties to the resale marketing, sales, and conveyance activities, including but not limited to the Member and the vendor and purchaser of the Timeshare Interest. 3.1.6 Ensure that any completion money paid by the purchaser in respect of a Resale Transaction (as well as any advance payment under Section V. 1.3) shall be paid to and held by a third party such as a bank or recognised trustee as stakeholder until paid out under the terms of the Resale Transaction documentation.
3.2. AS TO THE CONTRACT OF AGENCY BETWEEN THE MEMBER AND THE VENDOR
Prior to the parties entering into this contract, Members shall provide the following written details to a potential vendor, either as part of the agency contract or separately:
3.2.1 Full details of the work which it undertakes to do in relation to the Resale Transaction including but not limited to advertising, marketing, listing, methods of finding purchasers and the completion procedure between the vendor and purchaser
3.2.2 Full details of all fees and commission payments to be made by the vendor to the Resale Agency in respect of the Resale Transaction at any time.
3.2.3 Full details as to whether the Resale Agent is to be permitted by the vendor to use, rent or in any other manner exploit the Timeshare interest in advance of completion of the Resale Transaction and if so, full details of all fees and commission payments relating thereto and of the arrangements for distributing or sharing any profits arising from such exploitation.
3.2.4 Full details as to the arrangements made in compliance with clause 3.1.6 above to protect the completion money and any advance payment paid by the purchaser in respect of a Resale Transaction.
3.3. AS TO THE SALES CONTRACT BETWEEN THE VENDOR AND THE PURCHASER
Prior to the parties entering into this contract, Members shall provide the following written details to a potential purchaser, either as part of the form of contract offered to both or separately:
3.3.1 Full details of the Timeshare interest being sold.
3.3.2 Full details of the method of legal transfer of the Timeshare interest, including any documents to be completed and where necessary notarised or registered or equivalent and any third party costs involved in such transfer. 3.3.3 Full details of the price to be paid by the purchaser and the method of payment and details of such payment.
3.3.4 Full details of whether the management fee has been paid up to date and where reasonably available, details in relation to the annual adjustment of such fee.
3.3.5 Full details of the resort/scheme documentation if reasonably available, including any rules or constitution and management agreement and resort/scheme main facilities and conditions of use to be provided. As a minimum, there shall be included the length of the scheme and the nature of the interest being acquired and how this has been protected for the scheme’s length.
3.3.6 Full details of any restrictions or encumbrances affecting the Timeshare interest or the resort/scheme of which the Timeshare interest forms part, including but not limited to any outstanding loan, which affects or may affect the Resale Transaction.
3.3.7 Full details of any fees payable to third parties on completion of the Resale Transaction, including but not limited to, trustee registration/transfer fees and/or resort/scheme developer’s/management Company’s registration/transfer fees.
3.3.8 Full details of the purchaser’s first possible occupancy date of the resort/scheme.
3.3.9 Full details of any exchange Company’s requirements for enrollment and any restrictions or limitations placed on the resort/scheme by the Exchange Company.
3.3.10 Full details of whether a deposit is to be taken if permitted by the applicable law, and if permitted, the conditions relating to the holding of the deposit and full details as to the provisions for its release in the event that the Resale Transaction is completed or repayment in the event that it is not completed.
3.3.11 Full details of the cooling off period applicable under Section V 1.2 and as to the arrangements made in compliance with clause 3.1.6 above to protect the completion money and any advance payment paid by the purchaser in respect of a Resale Transaction.
3.3.12 Full details as to the entity responsible for receiving notification regarding any change in ownership of the Timeshare interest as a result of a Resale Transaction, including where appropriate the resort/scheme developer or management Company, trustee or exchange Company.
- POINTS-BASED PROGRAMMES Members who establish or maintain Points-based Programme’s must comply with the following requirements:
4.1 DEMAND BALANCING
4.1.1 There must be a mechanism in place to ensure that the number of Points sold does not exceed the ability of the programme to meet demands and that the programme has committed accommodation available for that purpose.
4.1.2 There must be at all times a prudent positive balance between the accommodation available to the Points-based programme and the overall demand likely to be made upon that accommodation, which also ensures that all purchasers have a reasonable opportunity throughout the life of their interests to enjoy their rights of use as provided by their purchase contracts.
4.2 VARIATION OF ACCOMMODATION AND POINTS VALUES
Purchase contracts must specify the methods for determining and disclosing the value of new inventory and for modifying the value of existing inventory from time to time and must not permit the removal of accommodation unless it is replaced with accommodation of a similar type (taking into account factors such as standard of accommodation, amenities, seasonality, and demand) or unless the removal is otherwise in the best interests of the members of the Points-based programme as a whole.
4.3 ACCOMMODATION REPRESENTATIONS
4.3.1 Points-based Programme’s must own or control an appropriate and adequate spread of accommodation to cater for the nature and size of the Programme, and representations made when marketing to Consumers. OTE expects Points-based Programme’s to own or control a minimum of 50 weeks per resort at a minimum of 5 resorts and that the weeks comprise a portfolio which is appropriate to cater for the nature and size of the Points- based Programme’s as aforesaid and are balanced in terms of unit size, unit type, spread of weeks and seasonality.
4.3.2 The promoter/operator of the Points-based Programme must have written permission from the relevant developer or manager for the inclusion of a resort in promotional or advertising materials.
Prior to the execution of the purchase agreement, and before the purchaser undertakes any commitment, the purchaser must be provided with documentation which discloses, either by including a copy of the operative document, or by extracts from this with an adequate reference to the operative document, or by another adequate description, the:
4.4.1 Nature, legal structure and description of the Points-based programme;
4.4.2 Identity of the developer, promoter, operator, management Company and/or trustee (if applicable);
4.4.3 Nature and duration of the rights acquired, and the relationship of the individual purchaser’s interest to the collective interests of all purchasers and to the total interests (inventory) then under the control of the Points-based programme;
4.4.4 Description, details (including but not limited to details in matrix or summary form of number of days (by days or by weeks or by their current points equivalent) available by resort, season, and unit type) and extent of accommodation and the amenities available, differentiating between accommodation that is available for the lifetime of the Points- based programme and accommodation that is available for lesser periods;
4.4.5 Rights of the Points-based programme to such accommodation and the amenities and applicable arrangements;
4.4.6 The number of Points required to utilise all types of accommodation during the year;
4.4.7 Any restriction on the rights of the Points-based programme or its members to use such accommodation;
4.4.8 Mechanisms for adjustments to accommodation and Points values;
4.4.9 Details of any ongoing fees (including maintenance/management fees and reservation fees) payable;
4.4.10 Any repossession rights that the Points-based programme may have in the event of non- payment;
4.4.11 Details of any external exchange facility available;
4.4.12 Arrangements for inventory protection and security differentiating and describing the difference between inventory secured for life of the scheme and inventory not so secured, if applicable;
4.4.13 Basis upon which accommodation may be added to or deleted from the Points-based programme or substituted for other accommodation, which must be fair to the interests of existing members;
4.4.14 Basis upon which the Points values of accommodation available to the Points-based programme can be adjusted, which must be fair to the interests of existing members; and
4.4.15 Complete and accurate description of the terms and conditions related to the reservation or allocation of accommodation each year.
- CASH BACK
Members shall ensure that no purchaser of a Timeshare Interest is offered (directly or indirectly) any form of Cash-back Scheme.
- NEW HOLIDAY PRODUCTS
New Holiday Products must be created, developed marketed, sold and operated with commercial good sense and in a manner which cannot reasonably give rise to legitimate criticism as being an attempt to evade any requirements of any and all the relevant legal jurisdictions or of this Code. The price of the product must be economically balanced in relation to long-term Timeshare Interests. The products are not sold in a manner to be confused with mainstream Timeshare Interests.
- MANAGEMENT OF RESORTS
Members engaged in the management of resorts must comply with the following principles: The developer of a Timeshare project must establish a mechanism ensuring its proper long-term maintenance and management. Increases in annual fees should be set at levels which reflect the costs of current and future requirements at the resort in accordance with procedures set out in the documentation governing the scheme. An adequate reserve or sinking fund or other mechanism should be established to protect against foreseeable future costs. The management should have the right to propose special levies or charges to cover one- off projects and unforeseeable circumstances at the resort. OTE encourages the inclusion of external assessments and audits of the maintenance and management operations.
- PROTECTION MECHANISMS FOR TIMESHARE INTERESTS
Every Timeshare Interest must have a protection mechanism (for example a trust structure) to ensure that accommodation offered has been obtained and secured in such a way that it will continue to be available for use for the time period represented to purchasers or potential purchasers. In the case of floating time or floating apartments or Points-based Programme’s there must also be:
8.2.1 An efficient and effective reservation system capable of managing the accommodation within any such system and servicing its members.
8.2.2 Adequate safeguards to ensure the continued availability of the reservation system for the duration of the Timeshare Interest and to provide or procure an adequate alternative in the event of a replacement being required.
- ADMINISTRATION OF THE CODE AND SANCTIONS
- COMPLAINTS HANDLING
If a dispute arises between a Member and a Consumer in relation to the Member’s Timeshare activities, the Secretariat of OTE shall upon being informed act promptly to resolve the dispute in a manner acceptable to both parties. If it is unable to achieve such a result within a reasonable time, the Consumer may by notice in writing given to the Secretariat elect that the dispute be resolved in accordance with the procedure of the alternative dispute resolution scheme chosen by OTE. Any failure by a Member to comply with the above procedures upon request, or with any final determination made within them, will be considered to be a breach of paragraph I C of the Code.
- SANCTIONS SUSPENSION AND EXPULSION FROM MEMBERSHIP
2.1.1 The Executive Committee may at any time and in its sole discretion after consultation with the Membership Council reprimand, suspend or expel from membership any Member which in its judgement has violated the Statutes, codes or rules of the Association or who has engaged in conduct detrimental to the best interests of the Association or who has refused or willfully neglected to comply with any order or decision of the Board or recommendation of the Membership Council.
2.1.2 Any Member so disciplined may appeal such sanction in writing to the Board within 10 days of notification by the Executive Committee and the Board shall decide such appeal at its next regularly scheduled meeting. The membership of such Member may be suspended by the Executive Committee in its sole discretion during the period pending such appeal. The decision of the Board on appeal shall be final. Any termination shall cancel all rights, interests and privileges in the assets, services and resources of the Association.
2.2.1 In the event that the Executive Committee determines that the failure to comply with the Code does not merit expulsion or suspension, it may reprimand the Member concerned and such reprimand shall lay on the record for a period of three years and shall be taken into account by the Executive Committee in deciding upon the imposition of any further sanction, in the event of any other failure to comply by the Member during that period.
2.2.2 Concurrent with the imposition of any sanction, the Executive Committee may also publish details of the sanction, including an explanation of the business conduct involved and the name of the Member or individuals concerned.
If reading the Resort Development Organisation code of ethics has raised any questions surrounding your own circumstances, or if you have a general question about timeshare, then please do get in touch with us. We are happy to talk you through any of your concerns or worries and we can help wherever we can, to make sure you have peace of mind.