Recent Legal Rulings

Legal rulings that change the face of Timeshare

The Spanish High Court in Madrid have made a number of rulings that have moved the whole nature of the relationship between timeshare owner and resort. These rulings have declared some types of agreement as illegal, said that some forms of ownership are not lawful and in addition, have declared that some forms of timeshare contracts should not only be declared unlawful but stated that those who own them should be compensated.

What the courts have ruled: No deposits can be taken during the cooling off period

Common practice is for timeshare companies to take a deposit during the initial cooling off period. Indeed nearly all timeshare owners will have paid a deposit on the day of their purchase. The Madrid High Court has declared this illegal, and any contracts resulting from this can be considered Null & Void. Owners who paid a deposit during this cooling off period are entitled to a refund and compensation. However, it goes without saying that the timeshare companies won’t be contacting those effected, the onus is on the owner to pursue this claim, and we would recommend doing this as soon as possible, while the favourable ruling is still in place.

Contracts which include ‘floating weeks’ are deemed unlawful

The central point of this ruling is that timeshare contracts must clearly state a duration and location for there to be a lawful property contract. As the timeshare weeks in this type of arrangement have neither a fixed time nor a fixed place they are deemed non-existent under Spanish contractual law.

This can mean either of two things, that the contracts are illegal and compensation is due, or that the subject of the contract, the so called ‘floating week’ doesn’t exist and therefore the unfortunate possessor of the contract in effect is the owner of something to that no longer exists. Because of the very unpleasant implications of this ruling, we suggest that owners of such weeks seek immediate advice.

Contracts written in perpetuity deemed to be unlawful

One of the most important rulings made in 2015 has profound implications for the timeshare industry. In essence, the ruling stated that any contract written after 1998 cannot contain provisions for contracts longer than 50 years. If the contracts states a term longer than 50 years is it deemed unlawful and therefore Null & Void. This ruling covers tens of thousands of timeshare contracts, and those with such a contract should discuss their contract with a specialist.

All these rulings should be acted upon – quickly

These rulings are great news for the long suffering timeshare owner, but only if the owner acts upon them. As we stated earlier, even though some contracts may be no longer enforceable, the timeshare companies will be very unlikely to share this with their owners. At last the scales have tipped in favour of the owner – but only if that owner is armed with specialist advice. Without the expertise of a specialist relinquishment or mediation company, it is very unlikely that the average owner will be able to navigate through the rulings and counter actions currently taking place in the Spanish courts.

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