INFORME DE LA D.G. DE REGISTROS Y DEL NOTARIADO SOBRE REGÍMENES PRE-EXISTENTES A LA “L.A.T” 42/98: “UNA VISIÓN DISTINTA A LAS RECIENTES “SS.TT.SS”

RDO nos ha facilitado el informe  de la Dirección General de Registros y del Notariado de fecha 9 de febrero de de 2016, emitido a instancia del Diputado del Común (Defensor del Pueblo) de Canarias.

Creemos que este informe recoge una interpretación más adecuada al espíritu, a la propia exposición de motivos y las disposiciones imperativas de la Ley 42/1998 de 15 de Diciembre de Aprovechamiento por Turno de Bienes Inmuebles de Uso Turístico (L.A.T. 43/1998).

Hay que recordar que esa Ley se gestó en la propia Dirección General de Registros y del Notariado.- En esa Ley se incorporaban las prescripciones de la Directiva de Tiempo Compartido de 1.994, pero además se pretendía en la misma respectar los derechos preexistentes a la misma, pero exigiendo a los propietarios y/o promotores de esta clase de explotación turística, la inscripción del régimen preexistente, ya fueran transformados o no en derechos reales o arrendaticios de aprovechamiento por turno o manteniendo su propia naturaleza jurídica preexistentes, tanto los sujetos a ley española como a ley no española y con una duración máxima de 50 años o superior e incluso indefinida si así se declarase en la escritura de forma expresa.

 (Para una mejor lectura pulse en la imagen-pagina para agrandarla)Informe DGRN 1-page-001 Informe DGRN 1-page-002 Informe DGRN 2-page-001 Informe DGRN 2-page-002 Informe DGRN 3-page-001 Informe DGRN 3-page-002

Lizarza Abogados

04.03.2016

TIMESHARE FACING A “PULL FACTOR”

LLAMADAThe recent Judgements of the Spanish Supreme Court rendered during the year just ended, 2015, have caused or may cause a tsunami which could ruin the timeshare industry as a result of the “pull factor” created by the interpretation of these Judgements and the application thereof by first instance courts and provincial courts, which has already started.

The doctrine contained in Supreme Court Judgement (SCJ) no. 774/2014 concerning the requirements to be met for the adaptation of timeshare systems in existence before the enactment of the Spanish Act 42/1998, and in SCJ 830/2015, handed down on the same date, regarding the requirements to be met by the subject of a timeshare contract (which, in addition, have both been promptly ratified by Judgements given during the same year so as to fulfil –and this is my personal opinion – the reiteration requirement necessary for Case Law to be considered a source of Law), certainly seem to indicate that the intention of the Supreme Court was to take strong action for the purpose of bringing order to a Sector plagued by a bad reputation it has failed to shake off, sometimes through fault of its own but more often than not due to a factual assumption that the consumer, whatever they say or do and even if all of it is contrary to true facts, actual events or their own actions, IS ALWAYS RIGHT.

In every consumer relationship, greater and more thorough diligence is always demanded from the trader in the fulfilment of its obligations simply because it has the upper hand over the consumer, but the consumer is also demanded to exercise their rights in good face and without abusing their own rights. Just as “bad faith traders” do exist and their dominant position allows them to take greater advantage of their position, bad consumers also exist, and not occasionally or only in isolated cases, but acting together, not only through non-profit organisations for the defence of their own interests, but also through other professionals and traders who use the means provided by the information society and the electronic networks for the obvious purpose of obtaining a personal gain.

Supreme Court Judgements 747/2014 and 830/2015 have filled with bewilderment timeshare resort promoters, companies providing tourism services to those resorts and virtually all the legal operators who, after fifteen years of what appeared to be a correct interpretation of Act 42/1998 of 15 December, have been surprised –if not overruled – by the Supreme Court with a new and, until that moment, almost exclusive interpretation of the requirements to be met for the adaptation of pre-existing systems or the extent of the requirements relating to the subject of the contract.

I have not entitled this opinion article “Timeshare Facing a Pull Factor” because of the existence of some dark conspiracy against this Sector, but to stress that such a “pull factor” does certainly exist, particularly as the possible claims to the courts of justice are being “marketed”.

The pull factor as such takes place when the doctrine established by the Supreme Court in a specific case (and it could not be different in this instance) is taken out of context and isolated and subsequently translated by for-profit operators (an activity which, other considerations aside, is currently lawful) in a simplistic, albeit not totally wrong, interpretation, outside the context of the specific case to which it relates, of the following doctrine:

A.- Doctrine initially contained in SCJ 747/2014 which, in my view, denies the possibility of adapting systems in existence before the enactment of Act 42/1998 by merely giving them public status, which was the form of adaptation used with virtually all timeshare resorts. The Supreme Court has thus established that the “transformation of pre-existing timeshare rights into in-rem or leasehold rights of rotational enjoyment according to the requirements of said Act” is the correct doctrinal interpretation of how adaptations must be performed.

B.- Doctrine contained in SCJ number 830/2015: “In the legal system established by Act 42/1998 of 15 December on rights of rotational enjoyment of holiday accommodation, failure by the contract to determine the unit which constitutes the subject thereof determines the nullity of such a contract, as provided for by Article 1.7 in relation to Article 9.1.3 of the said Act”.

This doctrinal line has been vulgarly, publicly and interestedly translated by trading and legal operators seeking to make a profit in the following statements:

• “Timeshare contracts entered into up to 2012 whose duration is in excess of 50 years are absolutely and radically null and void”.
• “Even if you have used the tourist resorts for 10, 15 or 20 years, you can recover all the money you paid – absolutely the full price you paid”.

• “You can also get back all the money you have paid every year as service fees even if the services have been provided to you”.
• “Additionally, you will not have to pay anything to the lawyers and legal representatives acting on your behalf in the Courts. This will be borne by the seller when they lose the case and, otherwise, your lawyers and legal representatives will not charge you anything”.
They obviously fail to mention that if the claimant loses the case, the claimant’s lawyers may not charge them anything but the Courts will, as a general legal principle, obligate them to pay the court costs and even the fees of the counterparty’s lawyers and legal representatives.
Who would, therefore, reject so many advantages when there is no downside?

It’s like the lottery without even having to pay for the ticket!

I believe it is necessary at this point to analyse whether, on the one hand, the above Case Law –treated as an axiom without the possibility of being disproved whatever the reason argued, however petty, irrelevant or even if based on a mere statement without having to prove anything relating to its truthfulness – can be applicable always or virtually always and in every case as proclaimed by the providers of free legal services or whether, as is my view, the aforementioned Case Law needs to be considered in the context of each specific case and in accordance with the Spanish substantive laws, in some cases, or with the law to which the contract is subject in other cases, without disregarding the fact that jurisdiction may lay with non-Spanish courts in many cases.

On the other hand, the –fundamentally economic and social – consequences of the promised universal lottery also need to be analysed.

In relation to the former, judgements have already been issued by provincial courts whose interpretation is that a brief paragraph from the Supreme Court Judgements may not be applied in every case disregarding the context of the court resolutions of the provincial courts themselves. By way of an example, Judgement 477/2015 rendered by the Provincial Court of Las Palmas, Canary Islands, on 27 November 2015, states that:

As we have seen, the aforementioned SCJ does not resolve a similar situation to the case at hand (where the subject of the transfer is not timeshare rights but condominium) and is therefore not applicable. Consequently, this Court must stick to the criterion previously described in relation to the admissibility of maintaining the pre-existing system”.

I believe that this is the line along which the Instance and Appeal Courts will go when the moment comes in the proceeding to contest other issues which had somehow been taken for granted, to such an extent that they had not been argued by the parties and that, therefore, by virtue of the principle of consistency of judgements, these may not accept or reject matters not raised by the parties in assessing the general aspects of the cases.

And here could be the first flaw of the principle followed by the managers of free legal services who encourage the consumers simply to file claims, without any further consideration, through websites and advertisements saying that the court case is basically won beforehand and that the defendant trader will bear all the expenses and the court costs, as such court costs will be inevitably awarded against the consumer. They obviously omit and fail to mention, as aforesaid, that the claimant can be sentenced to pay the court costs if the court does not accept their claims.

Will the traders who are promoting free legal services be able to promise their clients that they will not lose their right, will not pay any court costs even if they lose the case and that they will not have to pay what they owe? I believe they will not, as they say nothing about these things but simply gloss over them and fail to give any undertakings.

This is the problem with assuring an outcome in the case of a judicial controversy which is to be resolved by an independent judge.

But we also mentioned that this organised pull factor can bring about other economic or social consequences, such as:

  • A huge increase in litigiousness.

  • An escalation of bankruptcy of tourism companies and resorts. Timeshare traders will be unable to reimburse the total price paid by virtue of the vast majority of the contracts entered into over the past 15 to 20 years, during which time accommodation services have been provided, employees have been hired, utilities paid, etc., if even the proportional share of the price of the right of occupation which relates to the time during which such right has been enjoyed would have to be reimbursed.

  • Loss of a very large number of jobs.

  • Loss of the right acquired by those timeshare users who are happy with their right of occupation and want to continue to use it rather than opt for the free lottery.

  • This may be taken to the limit in those cases where there is no promoter at this time and where the resort is directly managed by its members (consumers and users) through the management bodies appointed from their number, i.e. the General Meeting of Members and the Management Committee appointed by it. Will the claimants sue a promoter who ceased to exist years ago or will they sue the other members?

Therefore, earnestness and good faith is needed from the parties, including the providers of free legal services, the traders in the Sector and the consumers and users.

If the consumers must be demanded to act in good faith and to abstain from abusing their right, the traders –in relation to the past – should review their own situation and, where it was not correct, they will have to amend it, if possible through out-of-court procedures and solutions, and for the present and for the future adapt their commercial practices and their contractual documents rigorously and strictly according to the thorough legal rules, seeking to achieve the necessary training of the agents involved in the commercialisation process so that they understand that this is the time of consumers and users and that, consequently, they need to know and respect their legal rights and those which are inherent in a proper commercialisation process.

Francisco J Lizarza – Lizarza Abogados

Marbella, January the 11th, 2015

FLOATING & FLEXIBLES TIMESHARE SYSTEMS IN SPAIN

IN RELATION TO JUDGEMENT NO. 830/2015 ISSUED BY THE PLENARY SESSION OF THE CIVIL CHAMBER OF THE SUPREME COURT ON 15 JANUARY 2015

  “In the legal system established by the Spanish Rotational Enjoyment of Tourist Property Act 42/1998 of 15th December, the fact that the accommodation unit to which the contract relates is not specified therein determines the nullity of the contract according to Article 1.7 in relation to Article 9.1.3 of the Act”.

This paragraph summarises the Case Law Doctrine expressly formulated in Supreme Court Judgement 775/2015, which has doubtlessly raised the alarm and a certain degree of confusion among the entrepreneurial operators in the timeshare/rotational enjoyment sector and among those customers who are satisfied with their product (who are a great majority) and now find themselves at risk of losing their right to occupy a “floating” or “flexible” holiday unit with which they are happy. And this has happened, in my opinion, where the interpretation of such a short text has been disassociated from the background which has led to the conclusions of the aforementioned Judgement and the doctrine therein contained.

In addition, the Judgement contained a dissenting vote by the Judge Mr Antonio Salas Carceller which starts with a partial transcription of Article 9.1.3 of the Rotational Enjoyment Act 42/1998 (hereinafter the REA 42/1998) which demands that certain details must be included in those contracts where a professional marketer participates in the transfer of a rotational enjoyment right; the details to which the transcribed section relates refer to the mandatory inclusion of “an accurate description of the building, its location and the unit to which the right relates, with specific mention of its registration details and the occupation period to which the contract relates, stating the starting and end days and times” (sic), and Judge Mr Salas concludes in his dissenting vote that this must not determine the nullity of the contract as it simply relates to irregularities which may constitute a breach of contract (which can consequently be the subject of an action to terminate the contract within three months thereof =as per the REA 42/1998=) rather than –as the rest of the Court argues– a reason for radical nullity of the contract which, therefore, is not amendable by the passing of time.

Resultado de imagen de imagenes gratis casas flotantes

Such differing views between the position of the majority of the Court and Judge Mr Salas’ dissenting vote is doubtlessly very important but, before commenting on its implications from a legal point of view, an important practical conclusion should be drawn from this to prevent litigation in such a complex –and often misunderstood or misinterpreted– matter, i.e. that the first rule for the commercialisation of this kind of right is that utmost care and maximum precision must be observed in drawing up the contracts and other documents aimed at the client-consumer, without any verbal promises or the clichés or vicious practices of past times, in order to prevent the nullity, annullability or termination of contracts and the imposition of penalties in a Sector which has changed a lot but continues to carry the burden of a bad reputation which still exists today, albeit to a large extent undeservedly.

Let us take as an example the contract which resulted in the court proceeding and Case Law Doctrine mentioned at the beginning. A quick reading of this contract, which is complicated fundamentally because it relates to a “complex subject” whose elements are determinable (flexible) insomuch as they relate to the occupation of various units –one of them not located in Spain– and to weekly periods which are also determinable (flexible), would suffice to understand without much difficulty that it lacks the minimum degree of rigour which would be required irrespective of the omission of certain details.

But the concerns which the Supreme Court Judgement 775/2015 has raised among the entrepreneurial agents of this type of activity, which is the fundamental subject of this article, is that it may have been interpreted or concluded from its considerations that the Doctrine therein contained entails nothing short of a prohibition, by reason of nullity, of the timeshare or rotational enjoyment structures known as “floating or flexible” systems, whether in respect of the determination of the “unit”, of the “annual occupation period” or of both.

If we confine ourselves to the paragraph reproduced at the beginning of this article, which transcribes the strict legal doctrine established by the Plenary Session of the Supreme Court, an initial, rushed conclusion may seem to indicate (obviously with the support of its remaining considerations) that, as an essential and inescapable requirement, “failure to determine the unit” results in the prohibition of rotational enjoyment contracts whose subject has not been determined (that is, perfectly and initially specified) in the contract and in the legal system or structure on which the contract is based.

The above Case Law Doctrine does not expressly contemplate the need, for the same reasons, to “determine the annual occupation period”, although it is reasonable to assume, from the context of the Judgement itself, that such failure to determine the occupation period must also be regarded as the absence of an essential element of the subject of the contract which could also result in nullity of the contract.

The above Judgement, which as explained by Judge Mr Salas cites the REA 42/1998 to state that the subject of the contract has not been “determined” due to the absence of the mentions set forth in Article 7.1 thereof –which in Judge Salas’ opinion are not what constitute the “true subject” of the contract as this should be determined by the rules of the Civil Code which refer to the original absence of such an essential element (the subject of the contract) – ,  has chosen to apply a rule which is not the rule envisaged for any of such cases (sic).

As the majority of the timeshare operators at whom this Blog is aimed are not Spanish and in many cases come from territories with Anglo-Saxon-based legal systems or for any other reason use or are familiar with legal institutions of this tradition, I believe that it is necessary to make some brief –therefore not thorough– clarifications concerning the essential requirements of the contract as briefly, albeit accurately, set forth in Article 1261 of the Civil Code, which states that “No contract exists where the following requirements fail to be met:

1. Consent by the contracting parties;

2. A true subject to which the contract relates; and

3. Reason of the obligation thereby established

”.In Spanish Law, the “true” subject of a contract may be determined at the time consent is given or it may be determinable by the application of objective rules at some later time, whether consent is to be given only once or periodically.

We must once again mention the Anglo-Saxon tradition systems where the existence of subjective rules (undetermined legal concepts as denominated by Spanish Case Law) such as “from time to time”, “as may be reasonably determined” or “as determined by the then market conditions” is contrary to the public order demand of the Spanish legal system which requires that those obligations to which initial consent is given in the contract but need to be specified at a future time must be determined or specified when the moment comes by the application of objective rules which, we could exaggeratedly say, must be “an almost mathematical result of applying the premises agreed in such rules”, so that the determination or specification of the subject is not left up to the will or arbitrary decision of one of the contracting parties.

In this regard, the subject of the contract may take the form of future things (e.g. an unbuilt house whose determination or specification would be set in the “architectonic project” which would from the start constitute a part of the contract) or future services which are not contrary to Law or to proper conduct (Article 1272 of the Civil Code).

Focusing on the title of this Article and the concerns expressed by entrepreneurial operators in this Sector, I believe it is right to say that Judgement 775/2015 does not in any way regard the systems colloquially and commonly known as floating or flexible (determinable) as being prohibited. And such an assertion is made despite the fact that the Court deems the contract null and void by reason of lack of subject as it considers that Article 7.1 of the REA 42/1998 is applicable when its states that “where the contract whereby any other in-rem or personal right is created or transferred […] regarding the use of one or more real properties during a determinable period each year, outside the scope of this Act, shall be fully null and void”.

The conclusions which, in my judgement, can be drawn from the foregoing, are as follows:

            First.– It is expressly acknowledged that the constitution and transfer of rotational enjoyment rights, as far as the unit and the occupation period are concerned, can be determinable by the application of objective rules (flexible or floating unit and/or period).

The omission from the contract of the requirements demanded by Article 9 of the REA 42/1998 to which Judgement 775/2015 refers, whether it be regarded as a reason for nullity (as the Court argues) or a reason for termination on the grounds of breach of contract (as maintained by Judge Mr Salas in his dissenting vote), does not entail the prohibition of systems involving flexible units and/or occupation periods,  although it does confine the latter to the restricted formulation thereof as set forth by the now repealed REA 42/1998.

            Second.– The Court’s interpretation, including that of Judge Mr Salas’ dissenting vote, does restrict the constitution and transfer of such rotational enjoyment rights, whether determined or determinable by objective rules (flexible systems), to their only formulation as set forth by the REA 42/1998.

Such a restrictive interpretation was to be fully reviewed as a result of the coming into force of the new rotational enjoyment regulations of 2012, if not upon the coming into force of the Rome I Regulation in late 2009.

              Third.- Contrary to the Supreme Court doctrine established by the Judgement now under discussion and that established by its earlier Judgement of 15 January 2015 and its later Judgement of 5 July 2015, it is my view that flexible systems of personal rights constituted or transferred –including points systems – with subjection to non-Spanish law are lawful in our country and legally valid before, during and after the validity of the now repealed REA 42/1998.

Having reached the above conclusions, I believe it is now necessary to address how and in what way flexible/floating systems of rotational enjoyment of holiday accommodation have been, or can now be, constituted.

A.- SYSTEM OF RIGHTS IN REM OF ROTATIONAL ENJOYMENT.

This is the system specifically regulated by the REA 42/1998 and the current Rotational Enjoyment of Real Property for Tourist Use Act (REA 4/20129), the provisions of which are also applicable on a subsidiary basis to the other system of personal leasehold rights contemplated by the same Act (Article 1.6 REA 42/1998 and Article 23.6 REA 4/2012).

I understand that these in-rem rights, structurally by reason of their own real nature (as stated in Judgement 775/2015), must specifically refer to:

  • Predetermined units (independent registered properties where there is a horizontal division or, in default thereof, units which are described and “registered” at the Land Registry as if they were independent properties).
  • Predetermined occupation periods.
  • In predetermined holiday accommodation resorts.

That is, what has come to be known as “fixed triple” in tourism jargon: fixed building, fixed unit and fixed occupation period.

This does not prevent, in my opinion, the existence of internal fexibilisation rules by way of what we could improperly call an “internal exchange” within the same resort.

B.- SYSTEM OF PERSONAL RIGHTS OF ROTATIONAL ENJOYMENT – SEASONAL LEASEHOLD CONTRACT.

In my opinion, this is the only system of “flexible units and occupation periods” contemplated by the REA 42/1998 (Art. 1.6), albeit not expressly contemplated as such by the current REA 4/2012 (Art. 23.6).

Indeed, the above-mentioned Article of the REA 42/1998, which was in force at the time of conclusion of the contract to which Supreme Court Judgement 775/2015 relates, which is expressly mentioned therein, states that:

Such contracts shall refer to a predetermined annual season which relates to a predetermined or determinable occupation period within that season and to a predetermined accommodation unit or one which can be determined on the basis of its general conditions, provided that the resort where the right is to be enjoyed has been specified” (sic).

Therefore, they can relate to a flexible occupation period, within the same season, in a flexible accommodation unit of a “predetermined type” in the specified building or resort.

Certainly, the 2nd paragraph of the Ruling contained in the Judgement transcribed at the beginning seems to contradict that set forth in this Article 1.6 of the REA 42/1998 when it states that there is no subject of the contract where the “contract does not specify the unit to which it relates”, but I think that this must be understood as referring to the specific contract to which the Judgement relates and that the legal rule is observed in any case where the units are determined by objective rules for each specific season from among those of the same type included in the same building which, on the other hand, are all specifically and individually  described in the public Deed of constitution of the system which, in addition, must be mandatorily registered at the Land Registry.

Article 23.6 of the current REA 4/2012 also refers to the seasonal leasehold right of rotational enjoyment and, in a wider and more general sense, so to speak, it refers to seasons contracted for whose purpose is the use of one or several accommodation units for overnight stay during more than one occupation period

In any case, this being a system of a leasehold nature, it must be constituted by public Deed and registered with the Land Registry according to the applicable Spanish regulations.

C.- SYSTEMS OF PERSONAL RIGHTS SUBJECT TO NON-SPANISH LAW

1.- CURRENT SITUATION SINCE THE COMING INTO FORCE OF THE ROME I (EC) REGULATION.

All structures or systems of personal rights subject to non-Spanish law, whether of an EU country or otherwise, provided that they do not contravene any rules of the “laws of public order of the Spanish legal system” or any rules relating to matters of mandatory application in Spain (such as consumer protection rules), are valid in our country, as it is so provided by the Rome I (EC) Regulation which came into force on 17 December 2009.

Such systems of personal rights can be configured with fixed or flexible occupation periods, which can be annual or biennial and can relate to flexible units and can also refer to various buildings in Spain or in several countries, including the so-called “points clubs”; it must be noted, however, that  such freedom of contract also has its limitations, particularly as regards consumers’ rights, not only according to the domestic law to which the system is subject, but also according to the law of the country where the rights are commercialised if any of the properties is located in territory of an EU or EEA Member or if the contract, while not directly related to a real property, relates to the activities carried out by a Member State or projected from or within a Member State.

2.- SITUATION BEFORE THE COMING INTO FORCE OF THE ROME I (EC) REGULATION.

Supreme Court Judgement 775/2015, to which this commentary relates, refers to a contract entered into before the coming into force of the new regulations on rotational enjoyment of 2012 and even before the coming force of the aforementioned Rome I Regulation, so it only takes into account the provisions of the REA 42/1998 which was in full force at that time.

That contract, at that time, was neither formulated as a right in rem nor as a personal leasehold right of rotational enjoyment in the form provided for by the REA 42/1998, but as a confusing personal right which does not only relate to buildings located in Spain but also to a building in another country, and without any express or tacit subjection to foreign law but clearly subject to Spanish Law.

For this reason, I believe that the contract is in contravention of mandatory rules of the Spanish regulations then in force generally, and it would also be in contravention thereof at the present date by virtue of the Rome I Regulation.

But this leads me once more to assert that those contracts relating to “flexible” units, occupation periods and resorts which were entered into before the coming into force of the Rome I Regulation and were tacitly or expressly subjected to non-Spanish law were (without prejudice to the application of public order laws of the Spanish legal system or of consumer protection laws) perfectly valid in Spain, as it was so allowed by the 1980 Rome Convention.

In this sense, we must refer the reader to the article entitled “The Validity of the Club-Trustee System in Spain”, published in this Blog on 21 August 2015.

Once more, as mentioned in the aforementioned Article, this is an opinion article written without prejudice to a more knowledgeable or better informed opinion.

Francisco J. Lizarza

Lizarza Abogados

JORNADAS INFORMATIVAS “EL TIEMPO COMPARTIDO, CLAVE DE FUTURO PARA EL NEGOCIO HOTELERO”

El próximo jueves 21 de mayo de 10:00 a 13:00 horas, ASHOTEL y RDO España celebrarán en el Hotel SANTA BARBARA GOLF AND OCEAN CLUB, una interesante jornada informativa dirigida a inversores, empresarios y profesionales del sector hotelero canario.

 ASHOTEL y la Patronal de Tiempo Compartido, RDO España, entienden que el Tiempo Compartido se postula con fuerza como una alternativa viable para los negocios hoteleros tradicionales, ya que les ofrece la posibilidad de fidelizar al cliente y desestacionalizar su actividad, mejorando sus ingresos y cifras de ocupación en temporada baja.

Las ponencias serán impartidas por expertos en la gestión, explotación y comercialización de complejos de Tiempo Compartido.

La participación es gratuita, previa inscripción. Fecha límite para inscribirse: lunes 18 de mayo.

Inscripción Online

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PART II : RELINQUISHMENT OF ROTATIONAL ENJOYMENT RIGHTS OF A DIFFERENT LEGAL NATURE (I.E. WITH A DIFFERENT LEGAL STRUCTURE) TO THE AFOREMENTIONED “MULTI-OWNERSHIP”.

triplesunrise_diacon

In line with the legal grounds of the DGRN Resolution with regard to the relinquishment of “multi-ownership” rights, in this case we set out to study the possibility of unilateral relinquishment of rights whose main subject is the rotational enjoyment of an accommodation unit but which, rather than being constituted as a community of multi-ownership, are based on typical or atypical contracts relating to in rem or personal rights different from those mentioned above.

 Very different legal formulas and structures other than “multi-ownership” are and have been employed. Therefore, being unable to be exhaustive, we will only refer to the main or most commonly used structures, albeit taking also into account the time when they were constituted in relation to the Spanish legal regulations on the matter and the validity over time of each of their provisions.

1.- ROTATIONAL ENJOYMENT SCHEMES AND CONTRACTS PRIOR TO THE COMING INTO FORCE OF THE ROTATIONAL ENJOYMENT OF PROPERTY FOR TOURIST USE ACT (TIMESHARE ACT 42/1998).

Before the appearance of this Act, there was not any specific legal regulation governing what was then almost exclusively known as “multi-ownership” or, otherwise, timeshare; in the case of the former name (multi-ownership), its use is practically confined nowadays to the “community of multi-ownership” as described above, while the second term (timeshare) would be used to refer to almost all the remaining legal formulas of this phenomenon at the time, albeit predominantly to the legal system called “club-trustee”, now and then the most commonly used system in Spain.

 There not being a specific Act during this period, the various schemes were constituted under the general principles of Spanish Law known as “principle of free will” and “right to freedom of contract” and, therefore, took any form that was not contrary to Law and to the remaining general principles of our legal system.

        Among the most widely used schemes-structures, in addition to the aforesaid multi-ownership, we would mention: “Club-Trustee”, “Multi-leasehold” scheme, Trading Company, Civil Partnership, Associations, etc.

As these schemes of rotational enjoyment rights established under the freedom of contract principle are not legally defined, we could say that their own Rules and Regulations, insofar as they have been accepted, constitute their “law between the parties”. There being no provisions in these Rules concerning unilateral relinquishment of Rotational Enjoyment Rights, it can be concluded that:

        –If the right is of a contractual nature, which it is most likely to be, then Article 1256 CC (Civil Code) will apply. By virtue of this article, compliance with a contract may not be left to the discretion of one of the parties; i.e. the obligations of the parties may not be determined by one of them but must be previously determined in the contract or, at least, the rules for determination of the future obligation must be contained in the contract. No provisions typical of Anglo Saxon law such as “from time to time” or “as reasonably determined” etc may be employed in this case.

        –If the right is of any other nature, then the same considerations contained in the doctrine established by the Resolution, and other doctrine of the DGRN by analogy, could be applicable.

        –As regards the effects of the relinquishment, if admissible, the relinquished rights would revert back to the developer of the scheme or to the seller of the right unless otherwise provided in its rules and regulations.

        –Of especial note are the associative and corporate schemes which were constituted under Spanish law before being prohibited by Act 42/1998, particularly those formalised as civil partnerships and trading companies. Suffice it to mention the legal arguments of the Resolution transcribed in Part I of this article which, insofar as including references to the rights of one and the other and notification requirements which are analogously applicable to the relinquishment of a right in a multi-ownership community, may lead us to conclude that, also in these cases, the relinquishment is detrimental to the members themselves, so their consent needs to be obtained or, at least, they must be notified of the relinquishment in order to exercise the right of opposition and take any legal action to which they may be entitled (1705 CC).

In this sense, as with the community of multi-ownership, the effects of the relinquishment, if admitted, would accrue to the remaining members.

        2.- ROTATIONAL ENJOYMENT SCHEMES AND CONTRACTS AFTER THE COMING INTO FORCE OF ACT 42/1998.

        A.- IN REM AND LEASEHOLD RIGHTS OF ROTATIONAL ENJOYMENT.

        In this case we will refer to both in rem rights and personal leasehold rights constituted under the Rotational Enjoyment Act 42/1998, in force from 04/01/1999 until the coming into force of Royal Decree 8/2012 on 18th March which was subsequently repealed by Act 6/2012 on 8th July of the same year.

Both in rem and leasehold rights of rotational enjoyment are regulated by the three aforementioned sets of legal rules in essentially the same manner –or very similar in any event– so, for the purposes of this section, we will refer to them jointly.

 Having established, as indicated in Part I of this article, that every person is entitled to relinquish a right, and having also established the limitations to such a relinquishment of rights –that it may not be detriment to third parties or constitute an abuse of law-, we should now determine who would be prejudiced by the relinquishment in order to meet the indispensable requirements (i) of obtaining consent from the prejudiced party, or (ii) of serving notice on the prejudiced party so that the latter can formally oppose the relinquishment.

        In relation to the above, it would first be of interest to know whether the relinquished right becomes the property of the State or otherwise accrues to any of the parties involved in these schemes.

        Both in the case of in rem RERs and in the case of leasehold RERs, what is inappropriately referred to as ‘division of property’ takes place upon the constitution of the scheme:

  • In respect of the actual property on the one hand albeit without the use thereof, which by analogy in terms of in rem usufruct rights could be called “bare ownership”. Such ownership without entitlement to use the property continues to be held by the owner/developer of the property.
  • On the other hand, the “right of rotational enjoyment of the accommodation unit”, which could also be compared to ‘usufruct’ or ‘use and enjoyment’, although in this case the unit can only be occupied as tourist accommodation, whether for valuable consideration or gratuitously.

When the RER is constituted by public instrument, fee simple ownership is formally and legally broken down into the aforementioned rights and the two rights are at that moment held by the same owner and/or developer of the scheme, until the right of rotational enjoyment is transferred to a third party.

Contrary to what happens in the case of the in rem usufruct right, the law governing RERs (currently Act 4/2012, according to article 23.4, 3rd paragraph) provides that “the fact that an in rem right of enjoyment and the ownership, or a share thereof, are held by the same person, does not involve the expiry of the limited in rem right, which shall continue to exist during the whole lifetime of the scheme”. That is, even if the owner of the property should by any title re-acquire the RER, the RER will not expire.

Once the RER has been transferred to a third party, the latter becomes liable for the annual service or maintenance fees to the owner of the properties operated under the scheme, who is always accountable for the service even where the provision thereof has been contracted for with a third party. This is without prejudice to the existence of further obligations being taken on by the third-party owners of the RERs, e.g. by virtue of resolutions passed by the “community of RER holders”.

Obviously, the owner may not in any way pass on to the remaining RER holders what, as owner (not, therefore, as holder of title to the underlying property), they have the obligation to bear.

Consequently, the relinquishment of a right involves that a share becomes vacant which, in the case of an in rem right, is blended with the right from which it arises; that is, it would revert back to the developer (who would become liable for the fees) but the scheme would not expire until its termination.

DCITAMEN

The conclusion to be drawn is clear: the owner and/or developer is the prejudiced party, insofar as they recover ownership of the RER but also the obligations inherent therein. And, as prejudiced party, the developer could object to the relinquishment, so notice of the relinquishment must be served to enable the developer to express its opposition.

But, is the owner and/or developer of the scheme always the person to whom a detriment is caused by reason of ownership reverting back to it?

In relation to the quantification of the annual service fee, Article 30.1 of Act 4/2012 provides (as did the preceding regulations) that the RER Contract must express:

The price to be paid by the purchaser and the amount which, according to the regulatory deed, has to be paid after the purchase of the right on an annual basis to the services company or to the owner where the latter has taken on such a provision by virtue of the regulatory deed, in respect of which it shall be mentioned that such a price must be updated in accordance with the Retail Price Index published by the National Institute of Statistics except where any other updating system has been agreed by the parties –which may not be left to the discretion of either of them. Also, the average index over the preceding five years shall be mentioned to provide an approximate idea of its magnitude”.

From the above follows that there are two different ways of determining the fee on the basis of the amount reflected in the contract (and normally also in the rules and regulations of the scheme). The first one is the annual updating of the fee by application of the Retail Price Index, and the second one is any updating system which may be agreed on by the parties.

The second updating option was included in the Act at the proposal of ANETC-OTE (currently the Spanish Chapter of RDO), as it was felt that updating the fee during a 50-year period on the basis of the Retail Price Index was not realistic and would soon become outdated.

Therefore, the rule whereby <<another updating system>> is allowed opens the door toASAMBLEA what, by experience, was already considered a realistic updating formula, which is none other than the approval and implementation of an annual budget by the “community of right holders” and by the owner and/or developer or the services company respectively. Such a budget should contemplate all the expenses required to maintain the services (including the remuneration to be received by the service provider) against the income which, fundamentally, will come from the fees paid by the affiliates. This way, the fees to be paid by the affiliates are not determined at their discretion by the owner and/or developer or by the services company as the case may be.

However, this formula may entail a transfer of the RER holder’s obligation and, therefore, it may be detrimental to third parties in the event of relinquishment of their right, as if the cost of the service in its entirety is borne by the members “as a community”, then the debtor may well be the community itself or, at least, insofar as every RER holder is liable to the creditor (owner and/or developer or services company) and the income must be in line with the expenditure, the relinquishment of a RER may entail an increase of the fee payable by each member to cover what should have been paid by the relinquisher.

Obviously, it will be necessary to follow the rules of the “community of RER holders”, which may be freely determined with the sole exception of the majorities required for the passing of resolutions in each case. For any matters not envisaged by its own rules and regulations, the “rules applicable to communities of property owners under the Horizontal Property Act” are applicable on a subsidiary basis.

Also, the community may have other activities not included in what may be called the “provision of ordinary services”, such as the introduction of new facilities not legally mandatory (internet or any other which may be introduced in future, etc), the cost of which would be borne by the RER holders on a pro rata basis.

Consequently, I consider that the legal grounds of the DGRN Resolution may be applicable to: (i) the community of holders of in rem rights of rotational enjoyment, more clearly, and (ii) the community of leasehold RER rights, in terms of the detriment caused in both cases to the community and/or to its members by reason of the relinquishment, which would determine that consent from the community, or the service of notice thereof on the community to enable it to express its opposition, would be necessary for the relinquishment to be valid.

 B.- ROTATIONAL ENJOYMENT RIGHTS OF A PERSONAL NATURE CONSTITUTED UNDER “NON-SPANISH” LAW.- THE ‘CLUB-TRUSTEE’ SYSTEM.

THE CLUBAlthough numerous RER schemes of a personal-associative nature in pursuance of predominantly Anglo-Saxon law –the so-called “Club-Trustee” system– were constituted before Act 42/1998, the actual change introduced by the new regulations of 2012 was that, while the preceding Act prohibited the constitution of any scheme other than those involving in rem or leasehold rights (although it did not go as far as to mention explicitly that the 1980 Rome Convention was not applicable in that case), the new Act recognised that, in addition to the two aforementioned formulas of in rem and leasehold rights, other formulas of an associative nature, with a merely contractual or binding content and subject to foreign law (of an EU State or otherwise), may be employed under (EC) Regulation no. 593/2008 on contractual obligations. This is doubtlessly an extremely important fact, as one of those schemes, i.e. the Club-Trustee system, which is normally subject to Anglo-Saxon laws, is still –and is expected to continue to be– one of the favourite systems for the future given its flexibility and the fact that it provides consumers and users with practical protection in several relevant aspects.

Schemes have been constituted on that basis to operate in Spain under the Club-Trustee formula to such an extent that this is currently the system adopted by a majority of operators.

For this reason, we need to consider whether the unilateral relinquishment of club affiliation rights or, in other words, the rights inherent therein to occupy tourist accommodation in Spain on a rotational basis, and the associated obligation for the member to bear the communal expenses, has to be compliant with the Spanish laws or must be subjected to those of the legislation under which they were constituted.

The provisions of the current (Spanish) RER Act 4/2012 are certainly applicable to rotational enjoyment schemes configured as a “Club-Trustee System” where these relate to property located in Spain or marketed from Spain, but only insofar as relating to the rules transposing Directive 2008/122/EC, which fundamentally refer to consumer data protection rules such as information to the consumer, withdrawal and termination right, prohibition of advanced payments and other rules concerning the marketing of the product.

But the aforementioned Directive does not address the issue of what the legal nature of the rights is or must be, as this falls under the exclusive jurisdiction of the States.

The exclusive jurisdiction for substantive regulation of in rem and leasehold rights does certainly lie with the State where the property is located (hence in rem rights and the alternative leasehold rights of rotational enjoyment are exhaustively regulated by Act 4/2012). However, insofar as the right is configured as a merely personal, contractual and binding right, the above-mentioned Regulation (EC) no. 593/2008, which is an internal rule of Spanish Law as it is of the remaining States which have adopted it, allows the constitution of such personal or binding rights –even where they relate to property located in another State–, which are solely governed by the rules of the State to whose jurisdiction they are subject.

In the case of ‘Club-Trustee’ schemes, if the constitution is subject to British Law (for example’s sake), then the scheme –i.e. the Club– shall be substantively regulated by British rules, among them the rules governing the acquisition of club membership (namely the acquisition of this kind of rotational enjoyment right) and the forfeiture of such membership.

We therefore consider that the unilateral relinquishment of Club affiliation rights, whether to the detriment of the remaining club members or consented by the latter or otherwise, shall be valid or null as determined by British Law.

In this regard, Philip Broomhead (legal director of FNTC) states that:

Whether an owner, who owns timeshare in a club trust resort, can relinquish his ownership without penalty earlier than the stipulated termination date will normally depend on the provisions of the club’s constitution or rules or the agreed established practice at the club. 

The general rule is that an owner cannot relinquish his timeshare before the expiry of the club unless there is a specific provision allowing this within the constitution or rules. 

However some clubs, whether by historical practice or by agreement with the Club Committee or developer/management company, allow owners to relinquish their weeks provided all management fees are up to date.  Some clubs require that between one and three years’ future management fees are paid in advance before early relinquishment is allowed. 

In other circumstances, owners may be permitted to leave early where they have reached a certain age, or the owner or a partner is infirm or medically unable to travel or the owner or partner has been made redundant or bankrupt. In these latter scenarios, appropriate evidence will be required.  In all these situations, the management fees will at least have to be paid up to date.

 There are cement fees after a given period by treating the default as a substantial breach of the constitution or rules.  However this is not normally publicised and it happens only as a last resort where the club has pursued the owner with a number of reminders.  Where a club has a small number of owners, this is unlikely to be permitted because the burden of financing the defaulters is taken on by the small number of remaining owners who have to pay an ever increasing annual management fee to cover the defaulters.  In well-funded resorts where there is still a developer present, then cancellation is more likely to be tolerated as the developer can then take back the defaulted week and resell it or cover the management fees on the repossessed week by using them for marketing or rental purposes.  If there is no established practice or the rules or constitution doesn’t permit early termination, then the club may issue court proceedings against the owner for breach of contract for the non-payment of management fees and then, on obtaining a court judgment, the club may pursue recovery of the debt through various legal means open to it.lubs which simply cancel members who have not paid their current year’s manag

 In all these circumstances it is important for the owner to consider the rules or constitution carefully to see what is permitted or to look at any agreed adopted practice of the club regarding relinquishment before actually doing so.    

 SOL BRILLANTE

FINAL CONCLUSION:

As previously indicated, given the great variety of systems which have been or may be constituted in future, we have analysed those which have been most commonly used to date. In respect of all of them, and of all those which have not been analysed, the conclusions to be drawn, in my view, are as follows:

  1. Covenants and contracts must be honoured by the parties who freely consented to them.

This is the reason why the consumer protection rules of Directive 2008/122/EC, implemented in all the EU States, focus primarily on protecting the consumers at the moment of giving their consent, which consent must be free (without aggressive sales practices), informed (pre-contractual information document) and pondered (14-day free withdrawal period during which no advanced payments may be made).

  1. Also to be protected are the rights of all the other parties, such as the developer of the scheme and the services company, hence the person who has already become a user of rotational enjoyment rights may only “relinquish their right unilaterally and abdicatively” where no detriment is thereby caused to third parties or, if it is, where the prejudiced third party’s consent is obtained or the latter does not formally oppose the relinquishment where applicable.

 Francisco J. Lizarza_MG_7643

 Lizarza Abogados                                                                                   

Marbella, January 2015

RDO:THE EUROPEAN TIMESHARE INDUSTRY 2013 – Market Characteristics Report

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DELIVERED BY RESORT DEVELOPMENT ORGANISATION (RDO)

THE MARKET RESEARCH GROUP -FERN BARROW – TALBOT CAMPUSPOOLE – DORSET BH12 5BB  – U.K.T- +44 (0)1202 961377 – e. mrg@bournemouth.ac.uk

 

 

EXCEPCIONAL AÑO DE ENTRADA DE TURISTAS EN ESPAÑA

SOL BRILLANTE

boton bamder esp. pequeñoSegún datos provisionales el año 2013 ha terminado con la llegada record a España de 60.661.073 turistas, lo que supone un incremento del 5,6 respecto de muy buen año anterior.

Casi todos los principales mercados registraron crecimientos, excepto Italia. Destacaron los incrementos en número absoluto de turistas del mercado nórdico, británico y francés. En tasas interanuales sobresalieron Rusia y China, con fuertes subidas del 31,6% y 35,1% respectivamente.

En el mes de diciembre España recibió 3,1  millones de turistas internacionales, con un aumento del 16,3% en relación al mismo mes del año anterior

MERCADOS EMISORES

 Reino Unido emitió el 20,3% de turistas en diciembre y creció un 20,2%. Canarias acaparó el 46% de sus llegadas con un aumento de un 9,2%.

 Los turistas alemanes aumentaron un 18,4% y supusieron el 15,4% de las llegadas este mes.

 El mercado francés acaparó el 17,2% de las llegadas totales.

 Los países nórdicos registraron un incremento interanual del 12,1%.

 Italia abandona la senda negativa este mes con un espectacular crecimiento del 17,2%.

Del resto de mercados destacaron Rusia, Países Bajos y EEUU, con aumentos de un 41,5%, 28,5% y 20,9% respectivamente

VÍAS DE ACCESO:

En relación a las vías de acceso, la carretera (16,1%) y el aeropuerto (17,1%) protagonizaron sendos aumentos.

ALOJAMIENTO:

El 64,7% de turistas se decantaron por establecimientos hoteleros, colectivo que ha mostrado un incremento interanual del 22,7%.

Por su parte, el alojamiento no hotelero aumentó un 6,2% en diciembre.

 FORMA DE ORGANIZACIÓN

El 71% de los turistas internacionales acudieron a España sin paquete turístico, aumentando un 20,4% en relación al mismo mes del año anterior.

Los turistas con paquete aumentaron un 7,5%. 

Fuente: Encuesta Frontur-Turespaña