Welcome to the start of another week with Inside Timeshare, over the past few weeks the rulings of the Supreme Court have been mentioned in many of the articles. These rulings have been simply explained in several articles over the years, but it is worth going over them again and explaining the main points of the law, which is the basis for all the contracts being declared null and void. We are seeing the results of this play out in various courts around Spain.
When Spain passed the Timeshare Law 42/98 in 1998 (updated with Law 4/12) which then came into effect on 5 January 1999, it should have come as no surprise to the timeshare industry, after all, it was totally unregulated and a free-for-all. The EU issued directives on the use, sale of timeshare and the protection of consumers, with the purpose that the directives were to be placed in each member state’s own domestic laws. The idea was to unify the rules for the industry Europe wide, so no matter where a consumer purchases they are all protected equally.
As is always the case with any new law, there is always debate on the interpretation of those laws, the timeshare laws were no exception. The industry employed teams of lawyers, with the Industry Trade Body the RDO at the head, all looking at how they will be affected and more importantly how they can manipulate the interpretation of those laws to their own advantage.
In a way, they were very successful at the start, the law did allow for timeshares sold before it came into force for those contracts issued before that date to be legal under the “Deed of Adaptation”. With any law, it cannot be enforced retrospectively, so this “Deed” allowed the timeshare resorts to continue those contracts under the old regime.
However, all new contracts sold and issued after 5 January 1999 would most definitely come under the new laws, a point the timeshare resorts decided to ignore, probably on advice (we say this tongue in cheek) from their own (expensive) lawyers. They interpreted the “Deed of Adaptation” in a different light to what the lawmakers had intended.
According to their way of thinking, as the “resort” was up and running before the law came into effect, then the “Deed of Adaptation” would cover all new contracts sold. They believed that it only affected new resorts and not existing ones, Anfi is a very good case in point, this has been the main basis for all their early appeals.
It should also be said that the industry trade body, the RDO, (Resorts Development Organisation) appeared to back up this belief, even today the RDO still believe that the interpretation of the law is wrong!
At first, the timeshare companies were successful in arguing their point before the courts, after all, it was a new law, there was no real direction for the courts and judges to follow. It was basically down to them to decide on the evidence and interpretations presented to them.
Consumers who tried to bring cases lost, the lawyers who they employed were not experienced in this field of law and had rings run around them by the experienced lawyers of the timeshare companies. What was put into place to protect consumers, was not working, everything was in favour of the industry.
The length of the contract, which was limited to a minimum of three years and a maximum of 50 years, was being defeated in the courts, the timeshare companies lawyers successfully arguing that the “Deed of Adaptation” covered this point.
Deposits being taken within the “statutory cooling-off” period were illegal but still being taken, this was hidden by various means, such as an “invoice” showing payment for accommodation, not linked to the timeshare sale. This was very common when the purchaser was moved into the resort to complete their vacation after purchase, usually as a way of consolidating the deal.
The very first case to make it to the Supreme Court was the Norwegian lady Mrs Tove Grimsbo, this was against Anfi. Her case began in the Courts of First Instance, and after many appeals to the High Court, it came before the Supreme Court which eventually made a ruling. Legal History had been made, the judges ruled her contract was illegal on this and other points, the “Deed of Adaptation” did not apply. Contracts over 50 years in duration were most definitely illegal.
This particular case was one of the most difficult for the courts, there were many aspects that were unclear as to the interpretation of the law.
In the case of Mrs Wilson, she was sold “timeshare” as an investment, it was portrayed as not being timeshare but property or real estate. This would generate a rental income and a profit for her when finally sold, well, we all know the story of this particular scheme.
At first Silverpoint lawyers argued that she was not a consumer of timeshare but an investor in property, therefore the timeshare laws did not apply. Eventually, the Supreme Court ruled that what she purchased was indeed timeshare and not property. A very significant win for all consumers who purchased from Silverpoint.
Another very important ruling, in this case, involved the use of the timeshare, there was no week number or apartment number attached and the consumer had no right of use of these timeshares. Basically, there were points attached for any use within the resort system.
The Supreme Court ruled on this, citing Article 1.7 of Law 42/98, this reads as follows (Translated from Spanish):
“The contract under which constitutes or transmit any right, real or personal, for more than three years and on the use of one or more real time during a specified or ascertainable period a year on the sidelines of this law shall be null and void, owing be returned to the purchaser or transferee or paid any income considerations, as well as compensation for damages suffered.”
All we can say is no wonder there was confusion.
Basically what it states is that a timeshare must consist of a fixed week with a week number and an apartment attached which is available each and every year to the “owner”. With points or floating week, this right is removed and is a “right to use subject to availability”. Not really what you have paid for.
This was the first ruling on points and floating weeks, it established the precedent that unless the timeshare was a fixed week, with number and apartment, then it was illegal under the law.
So these two cases set the scene for the situation we have today, 130 rulings from the Supreme Court, squarely placing the law into jurisprudence. This is being followed closely by the Courts of First Instance and the High Court as we have been seeing with all the cases we highlight.
There are many other laws that a competent timeshare lawyer may use as well as the timeshare laws, these may be covered by Consumer Laws and Mercantile Laws, but these are on a case by case basis, so may not apply to all timeshare contracts. It is certainly a legal minefield.
Despite all the rulings and rejections of appeals made by the Supreme Court and the dismissal of appeals by the High Court, in accordance with the Supreme Court Doctrine, we still see timeshare companies making appeals. This is something that baffles all lawyers, consumers and forums such as Inside Timeshare, leaving us with the same old question “WHY?”
The only logical reason we can think of is “greed”, they have your money and don’t want to give it back and any method to avoid payment will be used. A very costly strategy indeed.
Did you purchase a timeshare in Spain after 5 January 1999, is the duration longer than 50 years, is it points or floating week based, this includes fractional, did you pay any deposit within the statutory cooling-off period?
If you can answer yes to any of these, then you may have a valid case. For further information on this or any other subject on Inside Timeshare, please use our contact page and Inside Timeshare will get back to you.
Links to past articles
Links to early CLA Supreme Court cases