Report 71 Business Practices Committee

A timeshare pooling scheme (points club) consists of a number of timesharing weeks or stock "deposited" by timeshare owners in exchange for points in the pool. Further stock for the pool is purchased by the company selling points (the vendor company or the points club) to increase its stock. The increased stock offers the timeshare owners a wider choice of resorts and makes possible the selling of points to other members of the pooling scheme. In a timeshare pooling scheme timeshare rights are derived from agreements reached between the administrator of the pooling scheme and the owner of the timesharing interest.

The Property Timesharing Control Act, 1983 (Act No. 75 of 1983) sets out stringent requirements for all timesharing schemes regarding the scheme documentation and the administration of the scheme. In terms of the definition contained the Property Timesharing Control Act, pooling schemes are based on a timeshare scheme under pined by a trust or a club.

It was stated above that the vendor company purchases timesharing interests. These interests consist of proprietary rights (timeshare weeks) and usage rights (pool points purchased by those that did not contribute any timeshare weeks). The vendor company registers these rights in the name of the property-owning trust.

It was also stated above that the vendor company buys stock or time share weeks for the pool. As a quid pro quo the property-owning trust retains the proprietary rights of the timesharing weeks and cedes the use rights (to use the accommodation and facilities of a resort) back to the vendor company as points rights or accommodation credits. This enables the vendor company to sell the use rights to clients. The property-owning trust in which the timeshare interests are registered protects clients' investments.

The points rights or accommodation credits allocated to a specific timesharing interest depends on the grading of the resort, the size of the unit, the resort amenities and the time of the year the unit is available. Vendor companies administering points schemes compile points tables or guides wherein they grade the resorts in which they acquired weeks and allocate points in respect of the usage rights.

To ensure that control is maintained on the points rights and the accommodation held in the trust, the provisions of the Property Timesharing Control Act, Shareblock Control Act, 1980 (Act No. 59 of 1980) and Sectional Titles Act, 1971 (Act No. 66 of 1971) must be adhered to. For example, in a typical points scheme with a registered property trust, the total points annually assigned to a unit are usually ensconced in the constitution of the vendor company. This ensures that the vendor company cannot diminish or increase the value of the usage rights at will.