# 7-day rescission and refund of deposit



## czissman (Feb 12, 2015)

Hi folks, what a great resource this is! I'm learning a good deal from your experiences, so thanks for that.

Regarding timeshare purchases in California: A friend (yes, it truly wasn't me, not that it couldn't have been!) purchased a timeshare from the developer and immediately regretting it due to some glaring misrepresentations. Within 72 hours of signing, she followed the letter of the law and the letter of the contract to rescind her agreement.

Here's the issue: My friend is worried that her deposit will not be refunded because of the following statement in the LIQUIDATED DAMAGES section of the Purchase Agreement.

We would like to get some opinions so she can know what to expect!

Thanks!

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14. LIQUIDATED DAMAGES
(because the timeshare unit is temporarily unavailable for purchase by others, and because of the cost of placing it back into inventory), should Purchaser fail to complete the purchase of the ownership by reason of any default of Purchaser hereunder, Seller may proceed against Purchaser upon any claim or remedy which Seller may have in law or equity; Provided, however, that by subscribing their initials hereafter, Purchaser and Seller agree that Seller may retain a sum equal to the lesser of either (i) the amount of the deposit and any additional deposit hereunder or (ii) ten percent of the purchase price as Seller's liquidated damages and not as a penalty, which amount substantially compensates Seller for any damages sustained by Seller.


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## sjsharkie (Feb 12, 2015)

czissman said:


> Regarding timeshare purchases in California: A friend (yes, it truly wasn't me, not that it couldn't have been!) purchased a timeshare from the developer and immediately regretting it due to some glaring misrepresentations. Within 72 hours of signing, she followed the letter of the law and the letter of the contract to rescind her agreement.
> 
> Here's the issue: My friend is worried that her deposit will not be refunded because of the following statement in the LIQUIDATED DAMAGES section of the Purchase Agreement.



Your friend should not worry.  California law prohibits the developer from charging a cancellation fee -- all monies must be returned if the buyer rescinds within the 7 day rescission period.  I don't have the reference but you can probably google it somewhere.

Make sure she has proof of mailing (certified mail or other trackable means) to show she met the requirement.

-ryan


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## sjsharkie (Feb 12, 2015)

Found it.  Here is the reference from the CA Business and Professions Code:



> 11235.  (a) A person who has entered into a contract to purchase a
> short-term product shall have the right to rescind the contract until
> midnight of the seventh calendar day, or a later time as provided in
> the contract, following the day on which the contract is first made,
> ...



You or the developer cannot waive the rescission clause (you can only choose to not exercise your right)  -- so this is enforceable regardless of what the contract says.

-ryan


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## csxjohn (Feb 12, 2015)

The clause you quoted goes into effect after the rescission period.  If the friend rescinds in time according to the instructions provided all money will be returned.

After the rescission period things change.  Rescinding is not default and that's what the clause talks about.

No worries.


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