Timeshares are vacation residences in which the owner gets the right to use a specified type of residence within a specified timeframe. Some cities, such as Newport Beach, have placed restrictions on timeshares through local ordinances.
Specifically, these local laws regulate where timeshares can be built and what types of properties can be operated as timeshares.
Newport Beach’s local ordinance defines a timeshare accommodation as “any dwelling unit, apartment, condominium or cooperative unit, hotel or motel room, or other structure constructed for residential use and occupancy, including, but not limited to, a single-unit dwelling, two-unit dwelling, or multi-unit dwelling.” (Newport Beach Municipal Code 20.70.020).
The city restricts what residential zones a timeshare may operate in. Under Newport Beach Municipal Code Section 20.48.220, timeshares may only be operated in zones specifically authorized for such a purpose.
Properties outside of these zones – such as a condominium unit in a residential-zoned area – cannot be subsequently converted into timeshare properties, so as to prevent the incursion of timeshares into residential communities.
In zones where timeshares are permitted, there is a requirement for a permit that must be reviewed and approved by the city, so as to ensure the development conforms with the stated requirements, including the minimum number of units and required amenities.
Timeshares must also still conform with property development standards in the zoning district they are in.
Additionally, timeshare developers must submit four plans to the city as part of their application – a sales plan, an operating plan, a management plan, and a contingency plan (which explains what will happen if the timeshare development is an economic failure or fails to sell at least 50% of its units within 2 years).
In May of 2023, Newport Beach has defined a timeshare to include a fractional ownership.
This change came after residents complained that “fractional ownership” – whereby multiple owners take title to real property – was being used by a San Francisco-based company to turn single-family residential homes into vacation homes.
Residents expressed concern that these fractional ownerships were fundamentally turning residential properties into short-term rentals or even illegal hotels to avoid paying occupational transient taxes.