Timeshares: The Law And Practice

Published on 29/08/2011 in Holidays in Spain

Timeshares sound like a good idea and, in principle, they are. You have the opportunity to spend a week of every year in an apartment in a hot, sunny country. You have access to two swimming pools, a restaurant, a fitness centre, a sauna and a jacuzzi. Your apartment is cleaned on six of the seven days, you are given fresh towels daily for both showering and swimming, and your bed linen is changed for you. All this for an initial purchase price, and an annual maintenance fee, which goes towards the upkeep of the buildings and facilities, and the provision of the excellent services.

The first problem usually only arises when you want to cancel your timeshare contract. Perhaps your circumstances have changed. Perhaps you’ve lost your job, and an annual holiday is no longer something you can afford. Perhaps, due to ill health, you are no longer able to travel. Perhaps you are getting divorced, or have become a widow. Perhaps you have become bored of going to the same place, every year. Of course, you can rent out your week to somebody else, or simply not go, but ultimately, you will still be liable for the maintenance fees. So you decide to contact the office, and terminate your contract. Obviously, you will not be able to go to the resort anymore, but similarly, you will not be liable for any more annual fees, right?

Wrong. Many people sign up to timeshare agreements whilst overlooking one key factor – most agreements are agreements in perpetuity. In layman’s terms, this means that the contract you are signing will have no end. You will be liable for the annual maintenance fees, which inevitably rise each year, for the rest of your life. When you die, your children will carry the burden of the timeshare, and so on, and so on, forever. What is more, this isn’t, in itself, illegal.

The law governing a timeshare contract depends, mainly, on which country the agreement was signed in. The European Union law, Timeshare Directive (2008/122/EC) will eventually bring the law in all EU countries in line, however at the moment that is not the case. The Timeshare, Holiday Products, Resale and Exchange Contracts Regulations 2010 incorporated the Directive into UK law, as of the 23 February 2011. The Directive is also applicable in most other EU countries at this time. It is worth noting, however, that Spain has not yet implemented the Directive, and seems unlikely to do so before the end of 2012.
 
Timeshare in SpainThe new law, applying to timeshare agreements signed in the UK on or after 23 February 2011, sets out a list of rules that must be applied. As standard, the consumer has 14 days from the day the contract is signed to cancel the agreement, without giving a reason. If any of the required disclosures, as shown below, are not contained in the contract, the consumer has an addition three months – one year, depending on which disclosure is omitted, to cancel the contract without penalty. The section of the law relating to timeshares reads as follows:

“a. Definition:- “A consumer right, lasting for more than 1 year, to use accommodation for more than one period of occupation”

b. Disclosure. Consumers must be given a written contract containing, as a minimum, the following :-

i. Name, place of residence and legal status of the trader who is party to the contract
ii. Date and place of contract
iii. Short description of the product and the exact nature of the rights including period of use
iv. Price
v. Accurate description of services and costs resulting from the purchase of timeshare rights. (Management fees, special levies etc.) together with information of how these are calculated in the future.
vi. Summary of benefits (leisure facilities etc.) and costs (where relevant)
vii. Information on restrictions on availability of accommodation
viii. Possibility and costs of joining and using an exchange system.
ix. Whether or not the trader has signed a code of conduct and where it can be found
x. That the consumer has 14 calendar days in which to cancel the contract without giving any reason.
xi. That the consumer must not pay anything during the cancellation period
xii. The law under which the contract is governed.

c. Points x. and xi. above must be separately signed by the consumer to confirm that they have read them

d. Consumers must be given a full copy of the agreement immediately upon signing

e. If the trader fails to provide any of the required information the cancellation period extends to three months and 14 days
 
f. Purchasers must also be given a separate pro-forma cancellation notice stating:-

i. Their right to cancel within a 14 calendar day period (the exact date for this period to be entered on the cancellation notice)

ii. An absolute ban exists on the payment of any money by the consumer during the cancellation period.

g. If the trader fails to provide the pro-forma cancellation notice the cancellation period extends to one year and 14 days”

Timeshare contracts signed in Spain, post 7 January 1999 are subject to a largely similar, but slightly different set of rules. The cancellation period for Spanish contracts is usually only 10 days, as opposed to 14. These rules are as follows:

  • The law covers all Spanish land - including the Balearics and Canaries
  • The law only includes fixed property and does not include boats and caravans  etc.
  • The purchase of "points" from a points club do not appear to be included in the law
  • The purchase of a "second hand" timeshare through a reseller is included.
  • The law applies to rights of use for 3 years or more  (up to a maximum of 50 years)
  • Purchasers must be allowed, and told about, a 10 day "cooling-off" period.    "Day 1" is the day after both parties have signed the purchase contract.
  • 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" 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 (currently at 7%) 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 can opt to forego their right to recompense if they later fail to pay their Management Fees.
  • 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 (we use "turn" or "use in turn" as the nearest translation to the Spanish word for timeshare):-

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. Costa Luz Lawyers are an English and Spanish speaking firm in Algeciras, Spain with vast experience in all property related matters, including timeshares, as well as bank guarantees, off-plan purchases and conveyancing. Also, Coventry Legal Advice Service is a free service supervised and run by staff and students of the Law School at Coventry University. Both organisations are keen to hear your legal problem and advise, as appropriate.

COSTA LUZ LAWYERS

C/ Ancha 30
3º - 11201
Algeciras

Phone: 0034 956.092.687
Fax: 0034 956.092.697
Email: web@costaluzlawyers.es
COVENTRY LEGAL ADVICE SERVICE

Hope Centre
Sparkbrook Street
Hillfields
Coventry
CV1 5LB

Email: coventrylaw@live.co.uk

Written by: Leon Pascal

About the author:

Leon is a law student at Coventry University currently doing an internship at Costaluz Lawyers.




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Comments:

Harriet Mendler said:
26 April 2013 @ 22:00

I just want to warn about El Cid in Mexico, is a scammer resort, beware of timeshare presentations if one you go there: http://www.timesharescam.com/timeshare-complaints-resorts-black-list/5-el-cid-resort-timeshare-complaints/


Louise said:
30 August 2011 @ 22:33

We used to have a timeshare with a well known timeshare company on the Costa del Sol and we had many years of happy holidays and it was only because the maintenance got ridiculous and as Patricia says you can rent so cheaply now, that we decided to get shot! We couldn't sell it as there are thousands for sale, even tho some sharks tried to convince us they could get £32k for it!! We handed back our deeds with a covering letter to say we no longer wanted the use of the timeshare and we were relinquishing our rights to it (we were paid up) and they sent a letter back to confirm that all was cancelled and that we no longer had use of any of their resorts. We may have lost some initial buying costs but we got some worth of it by another way (long story!) so we were happy we no longer had to worry about the annual maintenance!


Dave said:
30 August 2011 @ 19:36

Check out the DRI protest at:

http://drip.enjin.com/home

lots of unhappy timeshare "owners"



Patricia said:
30 August 2011 @ 15:42

I simply cannot understand how anyone would want to buy a timeshare. (I'm not too gone either on the idea of buying a property off-plan).
The "management fees" are and can be extortionate, and simply defeat the whole idea. If I could prevent it I would not let anyone I know buy a timeshare.
After all one can rent an apartment (or stay at a hotel) for two weeks for a reasonable amount.

Patricia



Norm de Plume said:
30 August 2011 @ 12:04

It is the estate which carries the burden of a perpetual timeshare, not the children per se.
It is arguable (although it has never been argued) that perpetual timeshares are now illegal under Ley 42 of1998.


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