Brief report on Law 4/2012 of 6th July 2012, on contracts of rotational use of tourist assets, purchase of long term holiday products, resale and exchange contracts and taxation rules
The timeshare Directive 2008/122/EC was officially transposed into the Spanish national legal system on 16/03/2012 by means of a Royal Decree which was ratified by the law 4/2012 of 06/07/2012. This law substitutes the previous law 42/1998.
As it happened with law 42/1998, the new law does not only implement the new Directive but also establishes new rules on taxation, timeshare systems and rights applicable in Spain.
In respect of timeshare systems and rights, while the previous law 42/1998 established the rules to create a timeshare legal system under Spanish law based on real rights of rotational use, and intended that this should have been the only applicable legal system in Spain, the new law recognises systems based on personal rights created under non-Spanish laws (i.e. Club Trustee systems) according to the EU Regulation Rome I.
This is an important development considering the complexity of the systems under Spanish law and the requirements of the industry.
According to the new law, non Spanish legal systems rules can be registered at the relevant Land Registries which might be advantageous not only for the security of the consumers but also for the traders who would be protected against possible claims based on the lack of information or publicity of the non Spanish system. The “adaptation” of pre-existing systems which was required by the previous law 42/1998 is not necessary according to the new law however pre-existing non Spanish systems can be given publicity at the relevant Land Registries.
According to the new law all pre-existing systems will have a maximum duration of 50 years (from 04/01/1998) unless they had a shorter duration, or in the adaptation deed to the Law 42/1998 it was declared that their duration was indefinite.
In respect of taxation rules, a reduced VAT rate is established for the rights of rotational use and a reduced transmission tax is applicable to the transfers between private individuals.
The new law has imperative nature and consumers will not be able to waive the rights conferred on them. In case of multi-destination timeshare clubs the law protection is applicable if any of the resorts is within the EU; in the case of a contract that is not directly related to an immovable property, the law protection is applicable if the entrepreneur carries out activities in an EU member State.
As demanded by the Directive the law establishes:
– A 14 day cooling off period – it was 10 days according to Law 42/1998.
– An absolute ban on deposits during the cooling off period.
– The law is applicable to timeshare contracts with duration of more than one year – it was three years according to Law 42/1998.
– The law is applicable and regulates the sale and marketing of:
- Timeshare contracts
- Long-term holiday product contracts
- Resale contracts
- Exchange contracts
– In addition to the traditional formulas (i.e. timeshare weeks), moveable property such as cruises and caravans, trial membership packages of over one year, fractional, etc. are to be considered timeshare and are subject to the law – Law 42/1998 was only applicable to immovable property.
– Timeshare or long-term holiday products cannot be sold as an investment
– Pre-contractual information will have to be available and provided to the consumer before the contract is signed in the language of the purchaser (as long as it is an EU language); according to the new law this can be published on the company website or on the website of its trade body. Advertising, promotional events, etc. always have to specify where this information can be obtained.
– Standard forms (i.e. withdrawal form) and the pre-contractual information have to be included in the contract; the obligatory clauses regarding the right of withdrawal and ban on advance payments will have to be signed separately by the consumer.
– Right of withdrawal term (without giving any reason): 14 days from:
- The day of conclusion of the contract or preliminary contract;
- The day the consumer receives the contract / preliminary contract if later.
If the withdrawal form is not provided the withdrawal period will be 1 year and 14 days. If the pre-contractual information is not provided the withdrawal period will be 3 months and 14 days.
The consumer can use the withdrawal form or another durable medium (i.e. email) to exercise his right of withdrawal; the deadline is met if the notification is sent before the withdrawal period has expired. The consumer will not be liable to pay any costs including the value of services received before the withdrawal.
– Advance payments:
- Any payments are banned during the withdrawal period, including payments to third parties, guarantees, etc.
- Resale contracts: payments are banned before the sale takes place.
- Long-term holiday products: payment according to a staggered payment schedule; membership fee will be divided into yearly instalments of equal value. A written request to be sent by the trader every year (14 days in advance); from the second instalment the consumer can terminate the contract without incurring any penalties by giving notice to the trader within 14 days of receiving the payment request.
– Ancillary contracts, exchange, resale and credit contracts: they terminate automatically when the consumer exercises his right to withdraw from the timeshare or long-term holiday product at no cost to the consumer.
De Cotta Law is a Firm of English and Spanish Lawyers specialised in timeshare law. The implementation of the new Spanish timeshare law requires the adaptation of timeshare contracts to the new law and it might be advisable to take other measures according to the new regulation.
De Cotta Law provides a broad range of legal services including:
– Incorporation of timeshare structures
– Drafting and adaptation of timeshare contracts
– Registration of timeshare systems according to Spanish law
– Advice on applicable laws – Spanish national law, Andalusia and Canary Islands local laws, English law
– Mediation of disputes and Court claims
– Licence procedures, etc.
De Cotta Law
Avenida de Los Pueblos,
Esq. Avenida Colón,
Parque Residencial Villaflor,
Local B-20, San Eugenio,
38660 Costa Adeje, (Tenerife)
Tel: +34 922 719 520
Fax: +34 922 724 511
De Cotta Law
Centro Commercial Valdepinos 1 y 3A
Urb. Calypso, 29649 Mijas-Costa, (Málaga)
Tel: +34 952931781
Fax: +34 952933547