Timeshare. Anfi Beach. Recent rulings in favor of consumers.

I recently had the opportunity to know about several judgments, namely five, ruled by the Court of First Instance number THREE, of San Bartolome de Tirajana, in which his lordship, Judge Mr. Armando Garcia Castellano, changing his approach so far, declared null and void the contracts signed at the time by my clients -I acted in these trials in substitution of my colleague Miguel Rodríguez- with Anfi Sales SL and Anfi Resorts, SL.  The nullity is based on lack of object of the famous and so called «floating system». Indeed in Ordinary Proceeding numbers 942/2011, 1010/2011, 1215/2011, 1308/2011 and 1388/2011 the decision was the same: the contracts signed are null and void and the defendants have to return the money received plus interest from the filing of the demand.

It is in its THIRD Legal Ground where his lordship analyzed in depth these contracts that sells «floating weeks» in «floating suites» as he believes that they are contrary to Article 9.1.3. of Law 42/98. He thinks so because the contract does not specify the specific week, object of the contract, indicating the days and times that starts and ends as required by that article. Such failure is not a mere lack of information, it implies a lack of determination and realization of the object of the contract, which is clearly contrary to Article 1261 of the Civil Code. He also highlights the difficulties experienced by consumers in order to know when they can enjoy their purchased weeks. They must first go to clause eight of the Terms and Conditions of the contract and subsequently to Annex E. Finally it turns out that the week and the suite are always subject to «availability», which means that the execution of the contract is at the discretion of only one the contracting parties, in this case Anfi, and therefore there is not a true object. For these two final reasons the judge has declared null and void the contracts, having the defendants the obligation to reimburse the sums paid as the purchase price of the floating weeks.

It is equally true that, so far, this same court had ruled, on multiple occasions, against customers who wanted to terminate their contracts, so this change of position, along with the recent judgments of the Audiencia Provincial (Court of Appeal) of Las Palmas, is to be welcomed.

 

New judgment of the Court of Appeal in Las Palmas against ANFI

The judgment has date of 21st february 2013 and was notified to my colleague, Miguel Rodríguez with whom I have collaborated during the last three years on Timeshare cases, on the 8th of March.

It basically says the same as in its previous judgement of 28 september 2012, where the Court of Appeal considered null and void the contracts, based on numerous breaches of the Law 42/98 such as selling weeks in perpetuity. It considered the contract totally and absolutely null, not subject to prescription. There were two contracts involved in this proceeding, one of 7 dicember 2000 and other of 28 de marzo 2001. Now Anfi will have to return the money to the clients around 18.600,00 pounds plus the solicitors fees.

Another very interesting legal issue is that this judgment, again as did in judgments of 28 Sept and 19 Oct 2012, clearly states that is ilegal to receive any anticipated money, not only during the 10 days’ cooling off period, but during the three months referred to by article 11 of Law 42/98. This money cannot, under any circumstances, be received by means of a Trustee. This was what Anfi used to do using «Continental Trustees Limited» until the new Spanish Timeshare Law came into effect last March 2012, and the ban was already undisputable.

If you wish more information please contact me

Javier Correa
javier@correaguimera.com
+34 609 572 897

 

About the Timeshare, Holiday Products, Resale and Exchange Contracts Regulations 2010 (I)

Via lindermyers.co.uk
By Stephen Boyd

On 23rd February 2011 a new law has been produced to protect consumers of timeshare and holiday clubs.

The existing Timeshare directive only applied to certain Timeshare products and had a number of loopholes. These were exploited by unscrupulous companies and individuals in the Timeshare industry; leaving consumers as the potential victims of numerous scams.

Holiday Clubs for example fell outside of the protection afforded to customers by the Timeshare Act 1992 (later amended in 2003 and 2007). This means that if someone purchased a Holiday Club, they would not have the right to a cooling-off period that would have automatically applied if purchasing a traditional timeshare.

There have been similar developments in relation to products described as “fractional ownership” or in products which are in reality timeshares, but which relate to boats, cruise ships, or aeroplanes.

In 2008 a new European Timeshare directive was adopted and it was a requirement that all European Member States should bring this into law by 23rd February 2011. The purpose of the directive was to clearly give consumers greater protection.

A full copy of the directive can be viewed at EU Directive

This directive has now been brought into law in the UK with effect from 23rd February 2011.

A full copy of the law can be also be viewed at Timeshare Regulations 2010 

Key points from the timeshare new legislation

Key features are:

• Holiday clubs are covered in the cooling off period
• Shorter Timeshare contracts are allowed
• All types of holiday accommodation are covered including caravans or cruise ships
• Timeshare can be resold by the consumers
• Introduction of exchange services (i.e. some Timeshare owners pay an additional fee to join an exchange club and for paying that fee they swap their Timeshare week for other weeks at different resorts).

It will apply to all contracts entered into by consumers in the following circumstances:

• a)
  Where the contract has been concluded in any EU State, or
• b)
  Relating to any accommodation in an EU State, or
• c)
  Entered into by a trader who conducts business in an EU State.

The directive is also designed to completely shake-up the way that timeshare and timeshare like products are sold. Essentially, the key is that accurate and honest information must be provided inline with the new legislation. This includes information on cooling-off periods.

Another issue that has been addressed by the new Directive relates to the resale industry. In recent years there have been a number of complaints regarding individuals who have contracted with companies offering to assist them with the resale of their Timeshare.

Unfortunately in the past this has been another ‘scam’. This will change under the new directive to help to eradicate this issue for consumers.

Enforcement of new regulations

The new regulations will be enforced by the Office of Fair Trading and Local Authority Trading Standards Officers in the UK. Failure to comply with the directive could allow for consumers to bring a civil claim against the trader.

Ask for advice!

Consumers now have the time to take away any contracts to do with Timeshares and holiday clubs before parting with any money. We strongly advise that you take legal advice before signing anything.

About Advertising and pre-contractual information, Spanish Timeshare Law, nº 4/12 (Articles 7 to 10)

I will summarize, article by article, what the Law says about it.

Article 7 is about Advertising. It says that any advertisement or offer, as well as any commercial communication, has to clearly state where the consumers can obtain the pre-contractual information required under this Law. So information has to be upfront from the beginning.

Also says that any invitation to any promotional event or sale must clearly indicate the commercial purpose and nature of that act. The pre-contractual information provided in the Law has to be available to the consumer at any time during the promotional event. Very interesting point!

To finalize, this article leaves very clear that any timeshare right or any tourist long-term holiday product can not be marketed or sold as an investment.

The Article 8, regarding the information requirements, says that pre-contractual information has to be in paper or any other durable support and that it has to be provided to the consumer prior to the contract or its formalization.

Article 9 gives more specific information about what is the so called “pre-contractual information”. It says that has to be given “in good time” before the consumer accepts any offer or contract.

The seller must provide accurate and sufficient information in a clear and understandable way, of the following:

–         Identity, address and legal status of the trader or traders who are party to the contract.

–         Brief description of the product (eg, description of the property).

–         Nature and exact contents of the right or rights.

–         Exact period during which the right may be exercised under contract and, if necessary, its duration.

–         Date from which the consumer may exercise the contractual right.

–         If the contract relates to a specific property which is under construction, when the accommodation and services / facilities will be completed / available.

–         Price to be paid by the consumer for purchasing the right or rights

–         Overview of additional obligatory costs imposed under the contract, type of costs and an indication of the respective amounts (eg, annual contributions, other contributions recurring, special taxes, local taxes).

–         Summary of key services to be enjoyed by the consumer (eg electricity, water, maintenance, refuse collection) and the sums to be paid for such services.

–         Summary of facilities that can be enjoyed by the consumer (eg swimming pool or sauna). Are they included in the costs listed above? If not, specify what is included and what should be paid separately.

–         Is it possible to join a system of exchange? If yes, indicate the name of the exchange system.

–         An indication of the costs of membership or the exchange.

–         Is the merchant bonded to one or more codes of conduct and, if so, where can or can be located?

–         This information may also contain explanation on the right to cancel the contract without justification, which is of fourteen calendar days from the date of the contract.

–         During the withdrawal period, it is absolutely prohibit any advance payment by the consumer. The ban covers all compensation, including payment, provision of guarantees, cash reserve accounts, explicit acknowledgment of debt, etc.. It includes not only payments to the merchant, but also to third parties.

–         The consumer shall bear no costs or obligations other than those specified in the contract.

All this information will be included in the “Standard Information Form” that has to be signed by the consumer before signing any contract, and will be provided free of charges by the trader on paper or another durable support. This Standard Information will be part of the contract.

This information should be written in the language or one of the languages of the Member State of residence of the consumer.

The trader may publish the entire pre-contractual information on the website of the company, or on the website of a professional association or business of their choice, and are responsible for continuously updating the same.

Finally, Article 10 refers to the right of withdrawal and the prohibition of payments in advance, stating the before the contract is concluded  the trader shall inform the consumer, explicitly, of the existence of the right of withdrawal and the length of time for its exercise, and the ban on advance payments during that period, referred to in Article 13.

The very new issue is that the information has to be provided, in full, from the very beginning, the trader has the duty to inform the consumer on all this matter and it has to be written and signed being part of the contract (Article 11.2).

About the new Spanish Timeshare Act, number 4/2012, of 6th July.

This Law regulates the use in turns of turistic real estate (timeshare), the acquisition of long-term holiday products, their resale and exchange as well as tax regulations relating thereto.

This law substitutes the previous Timeshare Act, number 42/1998, that came into force the 5^th January 1999. Its enactment has been following the European Union Directive 2008/122/CE. Its scope is wider as it not only deals with the timeshare, as did the previous one, but also regulates matters relating to holiday packages, resale and exchange, issues that were outside the previous law.

The Act is divided into three parts or titles. The first, or Title I (articles 1 to 22), deals with general rules applicable to all types of contracts, either timeshare or vacation packages. The second part, or Title II (articles 23 to 34), is about timeshare properly. Here is basically included all the content of the old law 42/98. Finally the last part, or Title III (articles 35 to 37), is on tax regulations. Consequently what is really new is Title I that  deals with the Directive transposition along seven chapters. 

Which are then the main features of this Title I?

The most striking features are:

-The voluntary withdrawal period (cooling off) goes from 10 to 14 days (Article 12).

-It is absolutely forbidden any payment in advance, constitution of guarantees, reservation of money on accounts or any other explicit acknowledgment of debt in favour of the trader or third party, before the end of the withdrawal period (Article 13).

The clauses relating to these two points will have to be signed separately by the consumer (Article 11.4).

-The law is very strict on precontratual advertising and information that has to be provided to the consumer. Articles 7 to 10 deal with this issue. It is imperative to hand over, «well in advance», a standard information form which has to be signed by the consumer and will be added to the contract when this is signed. There is a standard form included at the end of the Law.

-Finally the contract must be in writing, on paper or on another durable support. It has to be in the consumer’s language, wherever resident in the European Union and in Spanish if the trader carries out its business in Spain. 

In future posts I will examine more in detail specific aspects of the Law, such as the cooling off period and its requirements, the payments in advance or the specific characteristics of the Duty of Information. 

 

 

Timeshare in Spain. A bit of history: Law 42/98

The “Tiempo Compartido” (Timeshare), misnamed as “Multiproperty”, involves the acquisition of a property between several buyers, who occupy this property, in shifts, during the course of the year.

A proportional amount  to the duration of the occupation and the time of year you choose has to be disbursed . Furthermore, by paying a fee, you can enter an exchange system that allows you to redeem the stay in the apartment for another in a different country.

In Spain, at last, a national legislation was enacted to be applicable to timeshare, it was Law 42/98 of 15 December, on the Rights of Timeshare Real Estate and Tourist Use and Tax Regulations, which came into force on 7 January 1999. The standard is the result of the transposition of the EU Directive 94/47/EC of 26 October 1994, which until now was the only rule that could be invoked in case of conflict originated in Spanish territory.

This law was an important step in strengthening consumer protection in this area of the tourism situation so conflicted.

Among the most remarkable features of the “Spanish Timeshare Act 42/98” are:

–          It applies to contracts signed from 7 January 1999 until 16 de march 2012, both inclusive.

–          The legal cancellation period for Spanish contracts is 10 days.

–          It applies in all Spanish land – including the Balearics and Canaries.

–           The purchase of «points» from a points club is not included in the law.

–          The law applies to rights of use for 3 years or more (up to a maximum of 50 years).

–          Cancellation must be in writing and sent by the buyer not later than «Day 10» – a fax is an acceptable method of cancelling. The address for cancellation should be on the purchase contract.  

–          Any advance payment from the buyer during the cooling-off period is prohibited..

–          The buyer is not required to pay any costs if he cancels within the cooling-off period.

–          Any related finance agreement will be automatically cancelled (at no cost to the purchaser) if the buyer cancels within the cooling-off period.

–          No mention of the words «ownership», nor “property”  may be made in the contract.

–          The purchase contract must be in the language of the buyer provide that language is a recognised European Union language.

–          The buyer will have to pay VAT in addition to the purchase price.

–          All owners must be registered – the cost of the notary (lawyer) and registration may be added to the purchase price.

–          Buyers must be given a comprehensive list of information – failure to do this extends the cooling-off period by three months. See the list below for the required information.

Information that must be included in a timeshare purchase contract:

 1. Date of contract and, data included in the deed regulating the use regime (date when the deed was executed, name of the notary, date registered in the Land Registry).
 

2. Nature of the rights that will be sold, and expiry date of the use in turn regime.

3. Description of the building, its location; description of the lodging (including registered data, and exact duration of the turn negotiated in the contract).

4. Where appropriate, it must be mentioned that either the construction of the real estate is already finished or that the real estate is still under construction. In the latter case, the current stage of construction, the completion deadline, building license, a quality statement of the materials used for construction, either the banker’s reference or the insurance as a guarantee of the end of the building site, and the buyer’s residence in order to communicate him or her the end of works, must be mentioned.

5. Complete price to be paid by the buyer, indicating the updating procedure (for the management fees) which, in general, will be made according to the retail price index. However the parties of the contract can arrange another updating method. Also, it must be mentioned the amount of taxes to be paid by the buyer along with an indication of the notary and registry expenses, where appropriate.

6. Information of rights of cancellation and unilateral solving

7. A statement that any payment in advance made by the buyer is forbidden during the cooling-off period or the right of unilateral solving.

8. The Community services and installations and conditions of use.

9. Possibility of participating in exchange services of periods of use.

10. Identity and place of residence, as well as registration in the Business Register of the owner or promoter; of the seller (indicating here the relationship between the owner and the seller at the moment the contract was signed) and of the buyer and of the third party in charge of the exchange service.

11. Duration of the use in turn regime, with a reference to the deed that regulates it.

12. Information on buyer’s rights in order to check the ownership and the charges of the real estate (the residence and the fax number of the relevant land registrar), in order to demand a deed and to register the buying of the right in the Land Registry.

13. Place and signature of the contract.

The buyer must receive a copy of the contract containing all the above information. 

Obviously, as is clear from the above, the law on timeshares is complex, and can often be different depending on where and when the contract was signed.For this reason, it is always best to seek legal advice before signing a timeshare contract. Similarly, if you are trying to escape a timeshare contract, legal advice is also recommended.