If I paid for a full year to a membership for a gym in advance but now it is closing, can I get my money back for the unused months?

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If I paid for a full year to a membership for a gym in advance but now it is closing, can I get my money back for the unused months?

There is 4 months left on my contract.

Asked on August 9, 2013 under General Practice, Illinois

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

Health clubs/gyms many times go out of business after collecting pre-paid memberships dues. To avoid any loss to consumers many states have enacted statutes to afford protection. Most now require health clubs/gyms to meet certain conditions to operate legally. They provide for consumer recourse, which can include penalties for businesses that do not comply with the law. Typically they are required to post a security bond (at least for a limited time). By requiring this, a State can provide some financial protection to members of health club/gyms that close unexpectedly (the funds can then be used to compensate members who purchase long-term contracts).

Before contacting the state (typically the Attorney General’s office or Department of Consumer Affairs), first consider that the owner may be attempting to find a buyer for the club/gym who will honor the contracts of club members. Try to contact the owner in order to determine their plans. If the new owner offers comparable equipment and services, it may be in your best interest to accept a proposed substitution, although you ordinarily will not be obligated to do so. The owner of your health club may also own another facility nearby, so may invite you to transfer your membership to there. If the location of the alternative facility is convenient, and it offers comparable equipment/services, it may be in your best interest to accept the alternative. Sometimes the owner of a closed health club/gym arranges with a competitor to allow the patrons of the closed club to transfer their memberships to the competitor's club (although, you will be under no legal obligation to do so).

If none of the above apply, this constitutes a breach of your contract. This means that you typically have a right to terminate your contract, to stop making payments and to claim money damages for the services for which you paid did not receive (that having been said, if the club closed because it is insolvent and has no assets you may not be able to actually recover any damages).

Note: If your club is sold to a new owner and they refuse to honor your contract, you have a claim against the original owner for breach of contract and can sue them in small claims court.


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