Timeshare Consumers Association

Spanish Timeshare Law

On 7th January 1999 Spain introduced a new Law covering Timeshare - this summary should be treated as provisional until a number of points have been fully clarified.
The law is referred to as "Spanish Law 42/1998 dated 15th December 1998"
Persons ordinarily resident in the UK, purchasing accomodation in Spain (or any EU country) can also rely upon the UK Timeshare Act 1992 which provides greater protection than the Spanish law.
Our advice if you think the law has been broken

Introduction
The Spanish Law on Timeshare is the most far reaching law on timeshare of any European country and makes fundamental changes to the concept of timesharing.
There are four major elements to the law:-
1. The full implementation of the EU Directive on Timeshare which provides safeguards for timeshare buyers.
2. Clarification (of existing laws) on the taxes payable by timeshare buyers and owners
3. Establishment of a number of points in the legal relationships between owners, developers and management companies
4. Requirement to register all interested parties, ie owner, promoter or any individual or corporation who is professionally engaged in selling timeshare
The first two items become effective on 7th January 1999 and items 3 and 4 either when a new development is started or within two years (for existing developments)
Perhaps the most important single aspect of the law is the removal of the words "timeshare" and "property" from the law so, what is commonly regarded throughout Europe as 'timeshare'   becomes   "Right of rotational enjoyment of immovable property for touristic use" in Spain.
Key points affecting buyers of timeshare:
This part of the law is effective from 7th January 1999

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

Buyers must be given a comprehensive list of information (see Note 1 below) - failure to do this extends the cooling-off period by three months.

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.

Taxes payable
This part of the law is effective from 7th January 1999
1. By purchasers:-

VAT on purchase ( currently 7% of purchase price)

If buying privately, legal document tax amd patrimony tax (currently at 4% of the purchase price)

2. By owners:-

Wealth tax

Income tax

Property tax (equivalent to local Rates in the UK). Owners are already paying this tax, usually within their Management Fees.

1.      By sellers:-

capital gains tax

The owner is responsible for the payment of taxes, although he would normally arrange this payment through the management company. However, if the taxes are not paid, the owner can be pursued (through the courts, if necessary) by the Spanish Tax Authorities.
Key points affecting Owners.
This part of the law applies immediately to all new developments and not later than 6th January 2001 for all developments existing at 7th January 1999

There must be an "Owners Community" (Club):-

where each owner will have one vote for every week owned.

a two thirds majority is required for chnages to any arrangements

a simple majority (50%) is required for all other decisions

Taxes are payable (see above)

Existing Resorts must, generally, comply with the new law within two years but may continue with their existing structure provided that it is registered..

Note 1 - 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 licence, 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.

What you should do if you think that the law has been broken.
1. Immediately ask the most senior person employed by the company to put the matter right - there and then.     If a mistake or misunderstanding has occurred it can be easily and quickly rectified.
2. It that fails, find out the address (from the Company, if possible) of the nearest Consumer Office (generally in the Town Hall) and report the possible breach. You will probably be asked to complete a "Complaint Form" and you should ask for help in completing if this form is in Spanish - although it should generally be also available in all other EU country languages.
This Complaint Form will be used by the Consumer Officer to start an enquiry in a similar way to a complaint in the UK to a local Trading Standards Officer.
3. When you return home, please contact us with your story - we might be able to help others avoid a similar problem

August 2004