Law 42/1998

Over the last couple of months I have noticed a rise in the amount of people contacting the TCA, after receiving a cold call regarding their in perpetuity contract.

Many people have asked if we have a copy of the Judgement and as such, below you will find the full, translated transcript.

Spanish Legislation

Provision: Law 42/1998 of 15 December on periodic usage rights for holiday properties and tax regulations

Regulation: Law 42/1998 of 15 December on periodic usage rights for holiday properties and tax regulations

Publication Date: 16/12/1998

Regulation Date: 15/12/1998

Status: Ordinary Law

Official State Bulletin No.: No. 300, of 16 December 1998

Modified by: Repealed by Royal Decree-Law 8/2012 of 16 March on contracts concerning the periodic usage of holiday properties, procurement of long-term holiday products, resale and exchange.

TEXT:

This regulation has been repealed by Royal Decree-Law 8/2012 of 16 March on contracts concerning the periodic usage of holiday properties, procurement of long-term holiday products, resale and exchange.

 EXPLANATORY MEMORANDUM

1. The term “multiple ownership” has been improperly used to refer to all those formulas by which the the right to enjoy a place of accommodation during a specific period of time each year is transferred. The interest in carrying out a procurement of this nature is often justified in the holiday usage of the property: on the one hand the grantee has a stable and safe place for its yearly holidays; on the other hand it does so without having to procure and pay for the entire property, thereby considerably reducing the investment, adjusting it to its real possibilities of use.

From a legal point of view, the figure implies a temporal division of the right to enjoy the property. Despite that on 6 July 1960 there was registered in the Industrial Property Register an invention patent for several so-called “summer policies”, which attribute to its titleholders the right to enjoy holiday accommodation for “fixed or variable time periods”, this system of holiday property development was unknown in Spain until relatively recently; however, there can be found similar usage formulas in other spheres, such as, for example, the legal system for irrigations shifts (dulas) traditionally used in the Canary islands, which consists in temporally dividing water usage between titleholders, or the pro-division communities with a concurrence of Sunday rights for greenhouses, range lands, pastures and labour (every two, three or six years), specific to Extremadura, as well as, in our own history, pasture usage incertitude, temporal division of use and the use of a farm for various crops.

Be that as it may, since this concept has begun to be applied, it has had widespread development, such as to make Spain second worldwide in the number of complexes used in this manner.

Very shortly after the introduction of this concept, the idea became commonplace that the existing legislation was insufficient for providing an adequate legislative framework thereto. This idea seemed, at the very least, rushed. The problem was not so much one of legal configuration but rather that of guaranteeing the effective enjoyment of each right.

On the other hand, for the European Union, the large quantity of abuses which have occurred in this sector has, for some time, been a cause for concern: from the “motion for Resolution concerning the need to close the existing loophole in terms of multiple ownership” which was presented to the European Parliament on 17 October 1986 to Directive 94/47/EC of the European Parliament and the Council of 26 October 1994 “relating to the protection of grantees in relation to certain aspects of the procurement contracts concerning a usage right for properties under a time-sharing scheme”. Significant milestones along the way were the European Parliament Resolutions of 13 October 1988 and 11 June 1991. Also noteworthy is the Resolution of 14 September 1989, which falls within the field of cross-border real estate procurements.

In the end, the European Union itself came to be convinced that the problem was not so much with a theoretical legal insufficiency but rather with the fact of dealing with a sector where the consumer is particularly unprotected, such that it appeared best to draft a Directive which would establish regulations of an exceptional nature and limit freedom of choice within this sphere to the point where it was advisable.

The specific measures adopted by the Directive are the following:

It established, in favour of the grantee, a right to unilateral withdrawal during the ten days following the signing of the contract. The Directive, in its Spanish translation, called it “right of early termination” and added the characterisation “ad nutum” to indicate that this right can be exercised without the need to put forward any motive or reason. However, precisely because it is not necessary to put forward any reason, and not because there is none, it being a right which is conferred upon the grantee by virtue of his being such and can be freely exercised without the need for any ulterior condition to coincide, it appears more fitting to call it a right of “withdrawal”, which expression accentuates its unilateral and unconditional character.

In addition to this right of withdrawal, the Directive imposes upon the grantor a duty of disclosure, which is broken down into the following aspects: firstly, the grantor must make available, in favour of anyone who requests it, an informational document in which certain points have been taken into account; secondly, the contract must contain certain references which are, in short, aimed at informing the grantee of essential aspects concerning that which is being procured. In order to make this duty of disclosure fully effective, it has been established that, in the case of the contract not containing any of the references required, the grantee shall have the right to unilaterally rescind the contract within a period of three months from the date of signing. Within the text this right retains the name of “right of early termination” because it has a distinct character to that of withdrawal, to the extent that it necessitates a prior condition, such as non-fulfilment, by the grantor, of the duty of disclosure which concerns him.

As a supplemental provision to the rights of withdrawal and early termination, the Directive has established that, in the case of a procurement which has been financed with a loan from the grantor or a third party after an agreement has been entered into by the third party and the grantor, the exercise of the right of withdrawal or early termination shall also imply the early termination of the loan.

Lastly, the Directive concerns other aspects, such as the language in which the contract being signed by the grantee is to be drafted and subjection to specific jurisdictions.

The concept raises two legal matters: one concerning order of terminology and the other legislative policy.

The term “multiple ownership” has the great advantage of having made an impression on public opinion to the point of being, with many, the most common way of calling the institution among ourselves, independently of whether it was constituted as a form of ownership or as a form of personal right. But it is precisely this comprehensive character with which it is normally used, on the one hand, and the fact of making reference to a specific form of ownership, on the other hand, which make it an inadequate term, owing to ambiguity.

Another option was to use the concept employed in the Directive: “time-sharing”. However, this manner of naming the institution also turns out to be dissatisfactory. In principle, it appears to be a more generic term than “multiple ownership”, but it should be taken into account that “time-sharing” is no more than a translation of the English form. Even though calling the corporate form of the French right as such does not appear to present serious disadvantages, the expression “time-sharing” is not suitable for including whichever other formula, whether it be personal right (Greek multiple-tenant leasing) or real right (the Portuguese right of periodic occupancy). In addition, it has the disadvantage of appearing to imply that what is being shared between the titleholders of these rights is time, when it is precisely the opposite, given that the titleholders are entitled with respect to distinct and exclusive periods of time. Therefore, it proves preferable to use the expression “periodic usage right”, firstly, because it is less compromised in the sense of being a more generic and more descriptive expression and, secondly, because it is perfectly adjusted to the regulation which is being made therefrom.

However, there is nothing preventing that the use of this name, or any other, be maintained, in particular for promotional purposes, provided that it does not contain the word ownership or cannot be misunderstood as regards the content of the right to which reference is being made.

The key matter of legislative policy consists in determining whether several institutional formulas should be regulated or their regulation should be limited to only one, allowing the rest to remain outside the law. A middle path has been chosen, consisting in the detailed regulation of a new real periodic usage right, allowing, however, the configuration of the right as a variant of seasonal letting to which the provisions of the law as a whole turn out to be applicable to the extent that they do not contradict its legal status.

On the other hand, the Law is not limited to the strict transposition of the Directive but instead is able to provide the institution with a complete regulation. In this way it determines the possibility of constituting a real natural right on the basis of which the right to enjoy a property during a specific period of the year is procured; it regulates how the legal system for periodic usage is constituted with regard to a property and provides for how the rights of withdrawal and early termination which the European Directive sets forth shall be exercised in Spain.

This is not the first time that a Community text is the origin of a wider internal regulation than that for which it calls, while, furthermore, dealing with Directives which establish minimum guarantees of protection.

All these matters are framed by the Civil, Private and Commercial Law of the State, and, therefore, the Law enacts the protection of that established under Article 149.1(6), (8) and (14) of the Spanish Constitution.

Logically, this is understood without prejudice to the jurisdictions which the Spanish Constitution itself recognizes as regards the preservation, modification or development of civil rights of Autonomous Communities

In addition, the Law makes express mention of the service enterprise, essential for the life of the system and for the appropriate enjoyment of the right procured. Without a service enterprise, or if it functions incorrectly, the right may not be exercised effectively, and it would be of little use to the grantee that its legal content was perfectly specific in other aspects.

1. The text is divided into two Titles (civil and commercial regulations, and tax regulations) and expounded in twenty articles, three additional provisions, three transitory provisions and one final provision. Title I is divided into three chapters (general provisions, legal system and non-fulfilment of services), while chapter II, in turn, is divided into two sections (constitution and conditions of promotion and transfer).

Chapter I is dedicated to general provisions.

In its definition of the scope of application, the Law uses the expression “accommodation” to refer to items subject to the regime. Such an expression includes only those items which are liable to be used as accommodation. This is why shops have been excluded from the constitution, meaning all items which cannot be put to such a use, and for this reason, before the constitution of the regime, it was required that the corresponding certificates of habitability be obtained, a requirement which only makes sense for items intended as accommodation.

In addition, it is set forth that the regime may only devolve upon a building, building complex or a sector of these architecturally differentiated in order to avoid in a building or group of buildings that the owner of only one or several places of accommodation, physically dispersed, establishes a regime for periodic usage rights pertaining thereto. This does not impede the partial termination of the regime provided that the pre-existing rights and physical identity are respected. However, it does allow for the mixed use of a building provided that the type of use which is to coexist with a regime for periodic usage rights is of another type than holiday use, as, in this case, the two activities, for the material purposes of coexistence, are so close that no serious damage for the clients and the titleholders of the rights may arise therefrom.

The restrictive scope of application has advised setting forth a regulation to determine the regime for periodic usage rights or those which are similar and are constituted without being adapted to the Law, as, even though it is evident that there would be cases of contravention of the law and they should, in consequence, be subjected to the resolution of Article 6.4 of the Civil Code, this does not appear by itself a sufficient regulation to avoid that, in reality, contravention of the law does not occur in practice.

However, as has been stated, there has been included, for all purposes within the scope of the Law, seasonal letting pertaining to more than three seasons in which there are anticipated the rents corresponding thereto or to all the contracted seasons.

A minimum duration (three years) and a maximum duration (fifty years) for the regime has been established. These limits accommodate all the possible options of what might be a reasonable time for exhausting the grantee’s real rights of enjoyment. In addition, this limitation on the duration of the regime is what allows the owner who has established it to continue, during his lifetime, to be linked to the property. This link is desirable as soon as it is considered that what the owner is offering is not only ownership of a property title but also a service during the existence of the right, which is what explains the necessarily complex nature of the relationship between the titleholder of the periodic usage right and the property owner. Thus, the owner should guarantee that the titleholders of the rights receive the implicit services due under ownership of the title. This minimum required guarantee exists from the time at which the owner continues to be linked to the property, which can only be such because the rights transferred by him are not full, but instead limited. And the limitation, in this case, can only concern the duration of the regime.

III. The formalisation of the regime in a public deed is set forth as constitutive, and its inscription in the Property Register is imposed as obligatory, with the aim of avoiding that transfers of periodic usage rights might be initiated before both the authorising notary and the registrar verify the legality of the regime and it is made public. In this way, before or after the procurement, the grantees may use the Register to gather the essential information on the regime to which their procurement is subject with a full guarantee of the legality of their procurement.

Upon execution of the regulatory deed, there must be agreement from the enterprise which is to provide the specific services of the essential content of the periodic usage right, except where the owner or developer expressly states that it directly undertakes this provision.

In the section dedicated to the “conditions of promotion and transfer”, the majority of the regulations from the 1994 Directive have been transposed. Apart from its restrictive nature towards the principle of freedom of choice, there are no particular problems in the transposition, except for that which refers to the case of the contract being signed directly before a notary. The involvement of the notary public would be sufficient to consider it unnecessary to concede the right of withdrawal to the grantee, as his presence impedes the other party from asserting its superiority, but, given that the Directive does not set forth any exception in favour of these notarised contracts, it was necessary to preserve this right of withdrawal, even though requiring that it be done through notarial act, as a public document equivalent to the deed in which the contract concerning a periodic usage right was formalised.

The right of early termination which, with the exception of an agreement to the contrary, is bestowed upon the transferring party under a procurement contract concerning a periodic usage right (Article 13) is justified by the singular nature of such a right, where the value thereof depends both on the services and their content in such a way that it is perfectly logical that their non-payment could imply the early termination of the right. Similarly, it is permitted to agree upon a penalty clause which compensates the owner or developer who opts for early termination of the contract when the grantee stops paying the instalments owed to the service provider.

1. The Law, within a strictly civil scope, does not impose administrative sanctions in the case of non-fulfilment of its regulations. But it is obvious that this does not impede such non-fulfilments when the activity qualifies as holiday-related by the Autonomous Communities or, through the implementation of autonomous regulations in terms of protection of consumers and users, they may be considered by the legislation over them as sanctionable administrative infractions, without prejudice to the rights which the Law bestows upon titleholders of periodic usage rights. However, the Law intends that, through the stipulation of certain very rigorous prerequisites, whose fulfilment is indispensable for the establishment of the regime and whose control is conferred upon notaries and registrars, non-fulfilments are isolated or, at least, infrequent, making the need for administrative involvement minimal.
2. Title II contains a series of tax regulations applicable to those rights taken into consideration under this Law which have as their aim to avoid discrimination in the field of taxation against the titleholders of real periodic usage rights in relation to titleholders of other possible property usage formulas on a part-time basis.

In effect, if this regulation were not introduced, the real rights cited would follow the regime provided for under the various tax laws for rights of this nature, and, as a consequence of their nature as real usage rights concerning real estate, they would give rise, in certain cases, to the application of tax rates exceeding those anticipated for the transfer and procurement of rights of a personal nature.

In accordance with the foregoing and keeping in mind the particular character of the regulations taken into consideration under this Title, which do not constitute, strictly speaking, a specific tax regime but instead contain, solely, certain fields which do not impede the application, under that expressly not provided for, of the general tax regulations and the provisions specific to the Capital Gains Tax, the Value Added Tax and the Property Transfer and Stamp Duty Tax to which reference is made under the Title cited.

Under the Capital Gains Tax whatever the nature of the right in question, the criterion for its valuation is standardised for the purposes of its being integrated into the tax base of this tax, with valuation being determined through the price of the procurement.

Under the Value Added Tax the application of the rate reduced to 7% has been generalised to the provision of services consisting in the transfer of periodic usage rights for real estate as in other forms of real estate use for a specific or specifiable period of the year with a provision of one of the additional services specific to the hotel industry.

Lastly, the provisions governing Tax on Property Transfer and Documented Legal Actions establish that a rate of 4% is to be applied, which is the one applied to the transfer of personal rights.

Thus the tax system envisaged in this Law affords similar treatment to the cases envisaged in it of timeshare rights to real estate and other rights of a personal nature that differ from them, for the above mentioned purpose of not discriminating against the former.

This objective is fully in keeping with the purposes of this Law, and it is also in keeping with Directive 94/47/EC, as it provides a significant incentive to acquire the envisaged rights.

1980. Additional Provision Two is based on the Directive itself, which in its article 9 requires Member States to take the necessary measures so that in any event the acquiring party is not deprived of the protection that it affords him. That is precisely the purpose of the provision, dealing with timeshare rights to real estate located in Spain, and avoiding the possibility that the contract be subject to the jurisdiction agreed by the parties. The ultimate aim is to avoid potential so-called legal fraud or “international law evasion”, which can occur as a result of the existence within a common space of States in which the community Directorate has not yet been incorporated into local law because the need to do so has not been felt because this class of rights is not marketed in their territory. This is the direction that the European Union is endeavouring to take as regards Community directives that protect consumers, precisely to prevent the lack of incorporation of provisions into the local law of some States making it possible to evade the application of the provisions enacted by the others for incorporation into their respective legislation. This is the aim of the Community initiative relating to cessation action in matters of protection of consumers’ interests. Moreover, this provision is supported by articles 16 of the Conventions of Brussels dated 27^th September, 1968 and Lugano dated 16^th September, 1988, and articles 3 and 4 of the Convention of Rome, on legislation applicable to contractual obligations dated 19^th June, 1980.

VII. As for the provisional system, it endeavours to make the law applicable, as regards the existing systems, to the promotion and transmission of rights that include the entitlement to enjoy accommodation for a certain period of time a year, and also establishing for these systems and in any event the obligation to adapt within a term of two years from the time when the law comes into force. The adaptation required by Temporary Provision Two does not, of course, seek to change any existing systems, but rather only that publicity be given to them and their manner of operation, while fully observing rights that have already been acquired. Thus the provision directs only that the requirements established in article 5 be met, and not the fulfilment of all the obligations that the law imposes on a person seeking to constitute a timeshare system once it has come into force, and as regards the former, only to the extent that they are compatible with the nature of the existing system.

 TITLE ONE

 CIVIL AND BUSINESS PROVISIONS

CHAPTER ONE

GENERAL PROVISIONS

 Article 1. Objective scope

1. The purpose of this law is to regulate the constitution, exercise, transfer and extinguishment of a timeshare right to real estate, which affords its holder the entitlement to enjoy, on an exclusive basis and for a specific period of each year, accommodation that can be used independently due to having its own exit to the public way or a common area of the building in which it is located, and which is equipped permanently with adequate furniture for the purpose, and to enjoy the rendering of any additional services. The right to enjoyment does not include being able to make any alterations to the accommodation or its furniture. The timeshare right can be constituted as a limited right to real property in accordance with the provisions of paragraph 6 of this article.
2. The timeshare system can apply only to a building, a real estate complex or an architecturally differentiated series of buildings. All the separate accommodation units comprising it, with the necessary exception of any business premises, must be subject to the system. The complex must have at least ten accommodation units. However, it is allowed that the same real estate complex be subject at the same time to a timeshare rights system and to any other kind of tourist operation, provided that the timeshare rights relate to specific accommodation units, for specific periods.
3. The annual timeshare period may never be less than seven consecutive days. In any event, within a system, the timeshare periods must all have the same duration. A certain period of time must also be reserved for repairs, cleaning and other, common purposes, and may not be shorter than seven days for each of the accommodation units subject to the system.
4. The timeshare right may under no circumstances relate to an undivided part of the property or be known as multiple ownership, nor have any other name containing the word ownership.

For purposes of advertising, marketing and transfer of the timeshare right to real estate, any other name may be used, provided that it does not elicit confusion in the final consumers, and that the nature, features and legal and financial conditions of the enjoyment right are clear.

Each of the timeshare rights to real property shall together encumber the full ownership of the accommodation or the property, according to whether a commonhold property system for it has been established or not.

If the same person holds a timeshare right and also total or partial ownership, this shall not entail the extinguishment of the limited right to real property, which shall endure throughout the currency of the system.

Without prejudice to any restrictions arising from the system and the entitlements of the holders of timeshare rights, the owner of the property may freely transfer his ownership right in accordance with the provisions of private law.

5. The provisions of this law shall be applied to the owner, promoter or any private person or body corporate professionally involved in the transfer or marketing of timeshare rights
6. Lease contracts for seasonal holiday properties whose subject is more than three of them, up to a maximum of fifty years, and in which the rent amounts for some for all of the contracted seasons are expected, shall be subject to the provisions of this Law, without prejudice to those of the Law on Urban Leases. Such contracts shall refer necessarily to a certain annual season corresponding to a determined or determinable period of that season and to accommodation that is specific or specifiable on the basis of its generic conditions, provided that the building or real estate complex where the right is to be enjoyed is specified.
7. A contract by virtue of which any other rights to real property or personal right is constituted or transferred for a period exceeding three years, relating to the use of one or more properties for a specified or specifiable period a year, outside this Law shall be null and void as a matter of law, and any rent amounts or consideration from the acquiring party or assignee shall be returned to him, and he shall also be compensated for any damage and losses that he may have sustained.

Article 2. Limits and consequences of non-fulfilment

1. Any clauses by which the acquiring party waives the rights afforded to him by this Law in advance shall be null and void, as shall be any clauses that release the owner or promoter or any physical person or body corporate professional involved in the transfer or marketing of timeshare rights from their obligations established by it.
2. Stipulations providing for submission to arbitration shall be null and void, unless they are agreed once the disputed matter has arisen or are subject to the consumer arbitration system or to a special arbitration tribunal that might be set up, provided that there are consumer organisations who are members of it on an equal footing.

 Article 3. Duration

1. The duration of the system shall be three to fifty years from the date of registration of the legal system or the date of the registration of conclusion of the works if the system has been constituted on a property under construction.
2. Once the system has expired as a result of the term having elapsed, holders shall not be entitled to compensation of any kind.

 CHAPTER II

 LEGAL SYSTEM

 SECTION ONE

 Constitution

 Article 4. Constitution of the system

1. The timeshare system must be constituted by the registered owner of the property. For the purpose, he shall have carried out the following beforehand:
2. a) Registration of the conclusion of the works at the Property Register. In the event that the works have commenced, he should have registered the declaration of new works under construction.
3. b) Obtainment from the competent authorities of the licences necessary to carry out the tourist activity, opening licences, the authorisations required for the initial occupation of the accommodation unit, common areas and additional services that are necessary for the intended use, and the pertinent habitability certificate. In the event that the work has only been started, it shall be enough to have obtained the works licence and the tourist activity licence.

Both if the works have concluded and if they have only been started, the latter shall be required only in those Autonomous Communities in which the marketing of rights entailing the entitlement to enjoy accommodation for a certain period of time a year is classified, according to its legislation, as a tourist activity requiring a licence.

1. c) To have entered, in accordance with the provisions of this Law, into a contract with a service company that meets, in the Autonomous Communities in which they are established, the requirements to be fulfilled by them, unless the owner, meeting the same requirements, has decided to take them on directly.

Services companies may not be domiciled in tax havens and shall have at least one branch domiciled in Spain.

7. d) Taking out the insurance referred to in article 7.
8. An owner constituting the system on a building under construction shall also take out, in favour of any future parties acquiring timeshare rights, a bank surety with an entity that is registered with the Bank of Spain, or a bond taken out with an authorised entity, guaranteeing the reimbursement of any amounts paid in advance to acquire the right, updated on the basis of the annual consumer price index, if the works have not concluded on the established date or the furniture prescribed in the regulation deed has not been incorporated when the party acquiring the right opts to terminate the contract in the terms envisaged in article 10 of this Law. The amounts thus received shall be separate from those due from the owner or promoter as compensation for damage and losses as a result of the non-fulfilment of his obligations.

The guarantees for amounts paid on account shall be governed, regarding all matters applicable to them, by Law 57/1986 dated 27^th July on the reception of advance amounts in the building and sale of residential units and by the provisions developing that Law.

Until the notarial deed stating the conclusion of the works has been signed, the surety that has been constituted may not be released in any event; nor may the insurance contract be extinguished.

3. The timeshare system in a property shall be constituted by means of its formalisation in a notarised deed, and must be registered at the Property Register. The company that has taken on the management and rendering of the services must attend the execution of the deed, unless the owner expressly states that he is taking them on directly.

The provisions of article 1.7 of this Law shall be applied to contracts under which timeshare rights are constituted or transferred before the system has been validly constituted.

4. Notaries shall not authorise a deed regulating a timeshare system and Registrars shall not register it until they are provided with evidence of fulfilment of the requirements established in paragraphs 1 and 2 of this article.

Article 5. Regulation deed.

1. The notarised deed regulating the timeshare system must contain at least the following details:
2. A description of the property on which the timeshare system is being established and of the building or buildings comprising it, as well as of the common services to which the holders of timeshare are entitled. If construction has only been started, the deadline for its conclusion shall be specified.

2. A description of each of the accommodation units comprising each building, which are to be assigned consecutive numbers in relation to the property. If the property is to be used for tourist operation at the same time when a timeshare system is established on it, it shall be specified which accommodation units are liable to be charged with timeshare rights and for what periods during the year.
3. For each accommodation unit subject to timeshare, the number shall be stated, as shall the duration, specifying an initial and final date and time, and the instalment due for each timeshare period in relation to the accommodation, and whether commonhold property has already been established, as well as the amount, and the days of the year when they are not to be used for timeshare periods, being reserved, in that accommodation, for repairs and maintenance. Each share shall also be assigned a consecutive number in respect of each accommodation.
4. Reference to the services to be rendered and which correspond to the timeshare rights, stating that they are being taken on directly by the owner or by a services company.
5. If applicable, the articles of association to which the timeshare system is subject. They may not establish for each of the right holders any obligation or restriction contrary to what is established in this Law.
6. The status regarding the Register and the Land Registry, and the planning and tourist status of the property. A plan showing the distribution of the different accommodation units on their respective floors shall also be attached.
7. Remuneration for the services and, if applicable, the Community expenses.
8. Duration of the system.

2. The contract entered into with the services company and the insurance contracts to which article 7 refer shall also be incorporated into the deed in the form of originals or copies. An authenticated copy of them shall be attached for the purpose of filing at the Register.

If the property is under construction, a document evidencing the constitution of the surety or guarantee to which article 4.2 refers is to be included.

The physical person or persons executing the deed shall be responsible for the authenticity of the incorporated contracts.

3. If the system has been constituted on a building under construction, the conclusion of the works shall be recorded at the Property Register within a term of three months from the time of their conclusion. To effect this record, it shall be necessary to provide the licences to which article 4.1-b) refers and which were not provided at the time when the new works under construction were registered.

The owner or promoter shall, once the conclusion of the works has been registered, notify this circumstance to the parties who acquired timeshare rights to the property in question while it was under construction.

Article 6. Registration of the system and its amendment.

1. Once the regulation deed has been submitted for registration at the property Register, the Registrar shall suspend the registration of any paragraphs or articles of the Articles of Association that impose any obligation or restriction contrary to the provisions of this Law on the holders of timeshare rights.

If when the System is registered at the Register by means of the regulation deed, the different timeshare accommodation units are not recorded as separate registered properties, the Registrar shall proceed to commence a page for them, even if the regulation deed does not contain a division into commonhold property. When doing so, he shall specify for each of them the share periods and the other circumstances to which point 3 of paragraph 1 of the preceding article refers.

When registering the first acquisition of a timeshare right, there may also be registered, if so agreed in the deed or the notarised contract, the subrogation in the proportional part of the mortgage loan on the whole of the property, without any need for consent from the mortgage lender if, when the mortgage is constituted, an objective system for sharing mortgage liability between all the timeshare rights resulting from the constitution of the system has been agreed.

2. Once the regulation deed has been registered, and before returning the title to the submitting party, the Registrar shall file a copy of the contracts incorporated into it, and make a record of this in the registration of the system and in any announcement made by him about both the property and the timeshare rights, and shall attach a copy of such contracts to any certificates he issues relating to the property on which the system has been constituted, where this has been expressly requested of him in the certification request.
3. If after the system has been constituted, a new contract with a services company has been submitted for filing at the Register, in the event that the owner does not wish to continue being responsible, or due to the expiry of the contract, or in the event of its termination, or if there is a record of statements in which the owner takes over the services directly or the information document to which article 82. refers is provided, the Registrar shall file a copy and record the circumstance in a note made in the margin of the entry of the system, with a reference to the record in which they have been filed. The Registrar shall suspend the file if in the Record the owner, or in the new contract the services company, does not expressly assume the conditions of the previous one, if the contract has been entered into before the constitution of the system or if the information document does not contain the mentions required by article 8.2 The Registrar shall also suspend the filing of those contracts on which the signatures have not been authenticated by a Notary.

Provided it is allowed by law, no amendment to the contracts and document above mentioned shall be validated until it is recorded at the Property Register, as established in the preceding paragraph.

4. The system may be amended only by the registered owner, with the consent of the services company and the Community of Owners, as established in article 15.4 of this Law, and such amendment shall be recorded in a notarised deed and registered at the Property Register in the terms established in article 4.3.

Article 7. Insurance

Before the constitution of the timeshare rights system, the owner shall take out and maintain the currency of an insurance policy which covers, throughout the time that the promotion lasts and up to the time of transfer of all the timeshare rights, the risk of being liable for providing compensation to third parties for any damage and losses caused by him or any of his dependants until such transfer takes place.

He shall also take out and maintain the currency of an insurance policy that covers any civil liability which the occupants of the accommodation units may incur as a result of their use, as well as insurance against fire and other, general damage to the building or its facilities and equipment. Without prejudice to the liability of the owner or promoter to the insurance company, the latter and the services company may agree that the services company be liable for payment of the pertinent insurance premiums.

SECTION TWO 

Promotion and transfer conditions

Article 8. General information

1. Without prejudice to the provisions of article 1.4 of this Law, the transfer of timeshare rights with the name “multiple ownership” or any other name containing the word “ownership” is forbidden.
2. The owner, promoter or any physical person or legal entity whose professional line of business is the transfer of timeshare rights and who intends to commence transferring such rights, shall draw up, in accordance with any provisions, if applicable, approved by the Autonomous Community that is competent in consumer matters, an information document constituting a binding offer, which he shall provide free of charge, after it has been recorded at the competent Property Register, to any person requesting information. The following shall be mentioned in this document:
3. a) The identity and address of the owner or promoter or any physical person or legal entity professionally involved in the transfer or marketing of the timeshare rights.
4. b) The property or personal rights that are to be transferred, stating the date on which, according to the contents of the note from the Property Register at the foot of the regulation deed, the system is to expire.

In any event, the requirements and conditions required for the exercise of these rights at the place where the property is located and whether they have met is to be stated, or otherwise the requirements and conditions that have yet to be met.

1. c) If the building is under construction, the deadline for its conclusion, also according to the contents of the regulation deed, and specification of the estimated date of expiry of the system, calculated on the basis of the deadline for concluding the works.
2. d) A precise description of the property on which the system has been constituted and its location, and whether the works have concluded or are ongoing.
3. e) The common services that make possible the use of the property and any others that the acquiring party may enjoy now or in the future, specifying the stage they are at and the conditions for such enjoyment.
4. f) The facilities for common use to which the holder may have access and, if applicable, the pertinent conditions for access, expressly specifying the amount or the basis for its calculation.
5. g) Specifying, if applicable, the services company that will take charge of the management, stating its name and its registration particulars at the Trade Register.
6. h) The average price of the timeshare rights and those that have the highest price; the legally compulsory charges, as well as any taxes or rates, among others; the annual expenses or an estimation of the same for occupying the property, for the use of the common facilities and services, and those arising from management, preservation and maintenance of the accommodation and the common elements, specifying the procedure for calculating the future annual amounts

It shall also be stated that the acquisition of timeshare rights will not entail any disbursement, expense or obligation other than those mentioned in the contract.

1. i) Information on the number of accommodation units that may be used as timeshare and the number of timeshare periods per accommodation unit.
2. j) Information on the unilateral right of the buyer to withdraw from and terminate the contract (including the deadline for the buyer to exercise this right under this Law), with the buyer exempt from any costs associated with the exercise of this right, and the details of the person and office to be notified if said right is exercised. If the project is in progress, details of the guarantee or insurance obtained to ensure completion of the same must be provided.
3. k) Whether or not there is an option to participate in a system of exchange; if there is, the name, registered name, or corporate name of the third party to provide the service must be provided, with reference to the document to be issued by said third party each year confirming participation of the regime in the exchange program. The document, signed by the legal representative of the exchange company, shall state that the contract between the buyer or holder of the timeshare and the exchange company is separate and different from that between the buyer and the developer or owner of the timeshare. The document will also confirm their share as a partner in the exchange program and the exchange fees applicable.

The document will also stipulate the total number of partners in the exchange program, as well as the number of timeshare properties participating in said program and an overview of the operation of the system. The document issued by the exchange company will be incorporated into, and form an integral part of, the information document provided for in this article.

1. l) If there is an option to participate in an organised system for the transfer of the right the object of the contract to third parties, and if this system is organised by the owner or developer, whether directly or through another individual or legal entity involved professionally in the transfer of timeshares, an indication of the possible costs of said transfer.
2. In accordance with consumer regulations approved by the Autonomous Region, the owner, developer, or person or legal entity involved professionally in the transfer of timeshares must also inform the buyer on how to request general information on the rights applicable to them in the bodies and to the following official professionals free of charge, with the addresses and telephone numbers of those closest to the property on which the timeshare exists:

Tourism offices.

– Instituto Nacional del Consumo (the national consumers’ association).

– Regional tourism and consumer associations.

– Municipal consumer associations.

– Property registrars.

– Notaries.

The above is without prejudice to any information provided by professional architects’ associations, real estate agents, property administrators, solicitors, notaries, and registrars.

4. In accordance with consumer regulations approved (where applicable) by the Autonomous Region, the owner, developer, or person or legal entity involved professionally in the transfer of timeshares must also be able to provide persons offered the opportunity to enter into the contract with a full inventory of all furniture, installations, and items contained in the accommodation included in the overall value of the same.
5. All advertising, including the information document referred to in section 2 of this article, promotions, and offers relating to timeshare services must indicate the registration details of the arrangement in the Property Register, setting out ownership and charges and stating that any parties that wish to find out about the legal situation of the property and the full contents of the timeshare must consult said register.

Article 9. Minimum contents of the contract.

1. As a minimum, the contract entered into by any individual or legal entity as part of their professional activities and in relation to timeshare must contain the following information:
2. The date the contract was entered into, details of the regulating deed for the arrangement (with the date of issue of the deed, details of the authorising notary, and the number of the entry in their records), and details of the entry in the Property Register.
3. Express reference to the real or personal nature of the right transferred, showing the date on which the arrangement shall cease in accordance with the provisions of this Law.
4. A detailed description of the building, its position, and the accommodation to which the right relates, with express reference to its registry information and the timeshare to which the contract relates, with the start and end dates and times of the timeshare in question.
5. An indication as to whether the project is complete or under construction. In the case of the latter, the contract must indicate:

a) The current state of progress on construction.

1. b) Deadline for completion of the property.
2. c) Reference to the building permit, and the name and address of the municipal council that issued said permit.
3. d) The current state of progress on common services required for use of the property.
4. e) The address given by the buyer where notification of the completion of the project must be sent, and the date the timeshare arrangement shall be deemed to have begun.
5. f) A list of the specifications of the accommodation the object of the contract.
6. g) A detailed list of items of furniture and household items provided with the property, as well as the value attributed to them for the purposes of the guarantee or insurance referred to in art. 4.2.
7. h) Express reference to said guarantee or insurance, with the name of the entity that has provided said guarantee or insurance and a stipulation that it can be executed or a claim made by the buyer if the project is not completed by the deadline set for this purpose, or if the stated items of furniture are not installed in the property in question.
8. The price payable by the buyer and the amount he or she must pay to the services company or to the owner who has assumed responsibility for these amounts in the regulating deed each year upon purchasing the right under the regulating deed, with the stipulation that it will be adjusted in line with movements in the consumer price index published by the Instituto Nacional de Estadística, unless the parties have agreed to another method for adjusting the price, which cannot be left to the discretion of one of the parties, and with the average CPI for the last five years provided for information purposes. The contract will also indicate the amount of taxes applicable to the acquisition of the property under the provisions of this Law, as well as a rough indication of notary and registration fees payable in the event that the contract is put on public record and recorded in the Property Register.
9. Insertion of the wording of arts. 10, 11, and 12, confirming their status as legal standards applicable to the contract.
10. Common services and facilities that the buyer is entitled to use and, where applicable, conditions governing said use.
11. Whether or not there is the option to participate in timeshare holiday exchange services. Where this option exists, any associated costs will be set out and reference made to the document confirming the exchange provided for in art. 8.2.k) of this Law.
12. The name or business name (together with the details of registration in the Mercantile Register in the case of companies) and registered address:
13. a) Of the owner or developer.
14. b) Of the transferor, with a specific explanation of their legal relationship with the owner or developer at the time of entering into the contract.
15. c) Of the buyer.
16. d) Of the services company.
17. e) Of the third party handling the exchange, where appropriate. If this third party is a legal entity, it must have a registered office operating in Spain.
18. Duration of the arrangement, with reference to the regulating deed and the date of registration of the same. If the property is under construction, the deadline for registering the record of completion for the project must be stated.
19. Reference to the right of the buyer to:

1. a) Confirm ownership of, and charges on, the property, requesting information from the competent registrar, whose registered address and fax number shall be expressly stated.
2. b) Demand the issue of a public document.
3. c) Record its acquisition in the Property Register.

12. Place and signing of the contract.

13. If there is an opportunity to participate in an organised system for the transfer of the right the object of the contract to third parties, any costs associated with said system for the buyer will be set out, at least in approximate terms.

2. The inventory and, where applicable, general conditions not included in the contract, as well as the provisions recorded, shall appear as an inseparable attachment signed by the parties.
3. The contract and information documents provided for in this Law will be prepared in the language (or, if there is more than one language, that chosen by the buyer) of the Member State of the European Union where they are resident or of which they are a citizen, provided that it is an official language of the Union. In addition, said contract and documents will be prepared in Spanish or in any of the official languages of Spain in the place where the contract is signed. In addition, the transferor must provide the buyer with the translation of the contract into the official language or one of the official languages of the Member State of the European Union where the property is located, provided that it is an official language of the Union.

Foreign buyers who are notcitizens of or resident in a Member State of the European Union may demand to receive the contract and other documents, translated into a language of a Member State of the European Union of their choice.

Owners, developers, or any other individual or legal entity involved professionally in the transfer of timeshares must ensure that translations of documents to be provided to any buyer and of articles deemed to be general conditions are at the disposal of consumer associations provided for in the first additional provision of this Law and, where appropriate, of tourism authorities.

Notwithstanding the responsibilities applicable, in the event of a difference between the various versions, that most favourable to the buyer shall apply.

4. All content of the information document provided for in section 2 of the previous article shall be included in, and form and integral part of, the contract.

The buyer must be notified of any amendments to said information document which, in the absence of an express agreement, can only be the product of circumstances beyond the control of the transferor, before the contract is signed.

In the event of a failure to comply with these obligations, the duty of information established in the following article shall apply.

Article 10.Withdrawal and termination of the contract.

1. The buyer of timeshare rights has ten days from the date the contract is signed to withdraw from the contract at their own discretion. If the last day of this period is not a business day, it will be excluded from the calculation of this period, which shall end on the following business day. Once they have exercised their right of withdrawal, the buyer shall pay no compensation or costs whatsoever.
2. If the contract does not contain reference to any of the references or documents referred to in art. 9 or, in the event that the buyer has not been sufficiently informed due to a contravention of the prohibition referred to in art. 8.1, or one or more of the obligations referred to in the other sections of the same article has not been met, or if the information document provided was not the same as that filed with the Register, the buyermay terminate the contract within three months of it being entered into. Under these circumstances, the buyer will not be liable for any penalties or costs whatsoever.

Notwithstanding the criminal liability incurred by the transferor and notwithstanding the provisions of the previous paragraph, the buyer may initiate action to annul the contract in the event of a lack of veracity in the information provided to the buyer, in accordance with the provisions of arts. 1300 et seq of the Civil Code.

If all information is provided before the deadline referred to above, the buyer may withdraw within ten days after all of this information is provided in accordance with the provisions of section 1 of this article.

If there is still information outstanding after three months and the buyer has not exercised their right to terminate the contract, the buyer may also withdraw from the contract within ten days after this deadline, in accordance with the provisions of section 1 of this article.

3. The owner or developer must be notified of the withdrawal or termination of the contract at the address specified for this purpose in the contract. Said notification may be issued via any means that provide proof of dispatch and receipt, as well as of the date of dispatch. In the case of withdrawal, dispatch before the deadline shall suffice.

If the contract is entered into in the presence of a notary, and notwithstanding the provisions of the previous paragraph, the withdrawal from the contract may be recorded in a notarial document, which shall be sufficient for reinstatement of the timeshare in favour of the transferor.

Article 11. Prohibition on advance payments

1. Advance payments by the buyer to the transferor before the deadline for exercising the option to withdraw, or whilst the buyer retains the power to terminate the contract as cited in the previous article, are prohibited. However, the parties may establish agreements and conditions that they consider appropriate in order to ensure payment of the deferred price, provided that they are not in violation of said prohibition and do not result in the transferor receiving compensation in the event of the exercise of said power to withdraw, either directly or indirectly.
2. If the buyer has made advance payments to the transferor, they may demand repayment of double the amount of said payments at any time or choose between terminating the contract within three months of entering into the same and demanding fulfillment of all of its conditions.

Article 12. Purchase loans

Loans extended to the buyer by the transferor or by a third party acting in accord with the transferor will be terminated upon the withdrawal of the buyer or cancellation of the contract by the buyer under any of the circumstances provided for in art. 10.

Loans may not include clauses that involve the imposition of sanctions or penalties on the buyer in the event of withdrawal or termination.

If the buyer is subrogated in a loan extended to the transferor or the right of withdrawal or termination exercised, the transferor shall remain liable for repayment of the loan.

Article 13. Termination due to non-payment of instalments

1. Unless agreed otherwise, the owner may terminate the contract if the buyer of the timeshare does not make payments for service rendered for at least one year, despite requests to do so.

The owner may terminate the contract at the request of the services company, subject to an irrefutable request for payment sent to the debtor at their registered address or, in the absence thereof, at the address provided for this purpose in the contract, under penalty of the termination of the same if the amounts claimed are not paid in full within thirty days.

2. In order to terminate the contract, the owner must consign the proportion of the price corresponds to the time remaining until the termination of the contract to the owner of the timeshare.

However, an agreement may be reached on the loss of all or some of the amounts to which the holder of the terminated right is entitled under the terms of the previous paragraph in a penal clause. This is without prejudice to the powers of the courts to act as moderators stipulated in art. 1154 of the Civil Code.

3. The owner who exercises the power to terminate the contract regulated in this article must settle debts still owing by the owner of the timeshare to the services company, unless some other arrangement has been reached with said company.

Article 14. Notarial formalisation and recording of the contract in the Register

1. The acquisition and transfer of timeshares can be recorded in the Property Register, provided that the contract has been entered into or formalised by way of a public deed and the Registrar has opened a folio for the party whose timeshare is being transferred, with due regard for the provisions of the Mortgage Act at all times.

Upon recording the first transfer of a timeshare, the Registrar shall confirm, in a marginal note, that said transfer is subject to a real encumbrance to cover payment of the last two instalments, from the time the claim is submitted via judicial or notarial channels, for the duration of the timeshare. To enforce the guarantee, the service provider may resort to any of the enforcement procedures open to the community of proprietors to claim payment for common expenses and foreclosure proceedings under the Commonhold Property Act.

2. If the contract is signed before a Notary, he must inform [the parties] of the purchaser’s right of withdrawal provided in Art. 10, which may be exercised by notarial deed, and the other rights conferred by this Law.
3. The Notary shall not legalise the deed, nor shall the Registrar register the right, unless the contract contains the wording required by Art. 9.

Article 15. Rights of owners of timeshare rights

1. The owner of a timeshare right may freely dispose of his right with no limitations other than those laid down by statute law, and any such assignment shall not affect the obligations arising from the scheme.
2. An owner of timeshare rights who is professionally involved in the assignment or sale of rights of real property therein shall be subject to the provisions of Arts. 2 and 8 to 12 of this Law. Purchasers of those rights shall be subrogated in so far as appropriate to those of the owner of the timeshare rights in accordance with this Law and, in particular, his rights vis-à-vis the owner of the property.
3. In the case described in the preceding sub-paragraph, if the timeshare right is not registered in favour of the transferor of the right of real property or the assignor of the personal right, the purchaser or assignee may apply for registration of the timeshare right in the name of the transferor or assignor, by the procedure laid down in Art. 312 of the Mortgage Regulations.
4. The deed governing the timeshare scheme must provide for the formation of an owners’ association. The owners’ association shall be governed by the rules laid down in the regulatory deed or such rules as may be freely adopted by the owners of the rights, and their decisions shall be subject to the following rules:
5. Decisions to vary the existing scheme must be taken on a two-thirds majority of the owners.
6. All other decisions shall only require a simple majority of owners of timeshare rights.
7. Each person shall have as many votes as the number of rights he owns.
8. If there is no majority, or the majority decision is seriously prejudicial to the interested parties, the Court shall make an appropriate order on an ex parte application.
9. The rules laid down in the Horizontal Property Law governing the functions of owners’ associations shall apply in addition and as secondary hereto.

CHAPTER III.

NON-PROVISION OF SERVICES AND APPLICATIONS FOR INJUNCTIONS

Article 16. Non-provision of services.

The owner or developer shall be liable to owners of timeshare rights for the actual provision of services. In the event of non-performance by the service company, the owner or developer must rescind the contract and demand compensation for loss and damage. The right to bring an action for rescission shall lie with the owner or developer. In any event, any owner of a timeshare right may sue the owner for actual provision of services and for the appropriate compensation should such services not be provided. Once the contract with the original company has been rescinded, the owner or developer must directly take over the provision of the service or contract for the same with another service company. No change in the contract shall in any event be to the detriment of owners of timeshare rights.

Article 16 bis. Actions for injunctions.

1. Actions for injunctions may be brought for unlawful conduct that damages the collective or individual interests of consumers and users.
2. Actions for injunctions must aim to obtain a judgment that orders the defendant to cease and desist from conduct contrary to this Law and to prohibit any future repetition thereof. Similarly, an action may be brought to prohibit a specific type conduct after the time limit for the action has expired, where there is sufficient circumstantial evidence to cause fears that it will be repeated immediately.
3. The following shall be legally empowered to bring actions for injunctions:

A The National Consumer Institute and the corresponding bodies or authorities of the Autonomous Communities and Local Corporations with responsibility for consumer protection.

1. b) Consumers’ and users’ associations that meet the requirements laid down in Law 26/1984, of 19 July, the General Law for the Protection of Consumers and Users, or, where appropriate, the consumer protection legislation of the Autonomous Communities.
2. c) The Public Prosecutor’s Office.
3. d) Authorities of other Member States of the European Community, created to protect the collective and individual interests of consumers, that are authorised by inclusion in the list published for that purpose in the “Official Journal of the European Communities”.

Judges and Courts shall accept the said list as proof of the authorised entity’s right to be a party to such actions, without prejudice to the right to examine whether the purpose thereof and the interests affected justify the exercise of the right of action.

All the entities referred to in this Article shall be entitled to appear in proceedings brought by any other such entity, if they consider it appropriate in order to defend the interests they represent.

TITLE II.

TAX REGULATIONS

Article 17. Scope of application.

The tax regulations specified in this Title shall apply to the rights governed by this Law, without prejudice to the provisions of any International Treaties and Conventions that may have been incorporated into domestic law.

In the absence of any specific provisions in this Title, the general tax laws shall apply.

Article 18. Property Tax

The rights referred to in this Law, whatever the nature thereof, shall be valued at their purchase price, in accordance with the provisions of Art. 10.3.b) of Law 19/1991, of 6 June, the Property Tax Law.

Article 19. Value Added Tax and Canary Islands General Indirect Tax.

1. The reduced Value Added Tax rate of 7 per cent shall apply to the following transactions:
2. The supply of services consisting of the assignment of timeshare rights in properties mentioned in Article 1 of this Law.
3. Any other type of use of property for a determined or determinable period of the year with supply of any additional hotel and catering services.
4. The services referred to in Article 91. 1. 2. ii of Law 37/1992, of 28 December, the Value Added Tax Law, supplied by the natural persons or corporate entities referred to in Article 4.3 of this Law.
5. The transactions referred to in the preceding sub-paragraph, if effected in the Autonomous Community of the Canary Islands, shall be subject to the general rate provided for Canary Islands General Indirect Tax according to the legislation thereof.

Article 20. Property Transfer and Legal Deeds Tax.

Transfers between natural persons not subject to Value Added Tax or Canary Islands General Indirect Tax of the rights referred to in this Law, whatever the nature thereof, shall be subject to Property Transfer and Legal Deeds Tax at the rate of 4 per cent.

ADDITIONAL PROVISIONS

First Additional Provision. Consumers’ and users’ organisations.

Legally formed consumers’ and users’ organisations shall be entitled to receive copies of any documentation prepared by the owner or developer pursuant to the provisions of this Law, at the owner or developer’s cost, in order to satisfy themselves that the same have been duly observed.

Second Additional Provision. Imperative nature of the Law.

Any contracts relating to the use of one or more properties situated in Spain for a determined or determinable period of the year shall be subject to this Law, whatever the place and date of signature thereof.

Any contracts signed in Spain that relate to property situated outside Spain shall be subject to Arts. 1.3, 2 and 8 to 12 of this Law. In such cases the purchaser may further demand that the contract be delivered to him in one of the official languages of the State in which the property is situated, if that State is a member of the European Union.

Third Additional Provision. Special tax regimes – Basque Country and Navarre.

The tax regulations referred to in this Law shall be regarded as without prejudice to the special tax regimes, established by economic agreement and convention, in force in the Historic Territories of the Basque Country and the Special Community of Navarre, respectively.

TRANSITIONAL PROVISIONS

First Transitional Provision. Promotion and transfer.

1. On the entry into force of this Law, the creation of any right relating to the use of one or more properties, constructed or in course of construction, for a determined or determinable period of the year, shall be subject to the provisions hereof.
2. The transfer of such rights shall be governed by such regulations as govern the property up to the entry into force of the Law. On the expiry of the adaptation period, if adaptation shall not have taken place, it shall be subject to this Law. If adaptation shall have taken place, with effect from the date thereof the transfer shall be effected in accordance with the rules published at the Registry.
3. Arts. 2 and 8 to 12 of this Law shall in any event be applicable.

Second Transitional Provision. Pre-existing systems of rights

1. Pre-existing systems of rights relating to the use of one or more properties, constructed or in course of construction, for a determined or determinable period of the year, the constitution of which is in some form permitted by law, must be adapted to the provisions of this Law within two years.

If the pre-existing system is registered, an application may be made to the Registrar for the non-binding report referred to in Art. 355 of the Mortgage Regulations, on the manner in which it is to be adapted.

On the expiry of the two-year period, any owner of a right, in rem or in personam, relating to the use of one or more properties, constructed or in course of construction, for a determined or determinable period of the year, may apply to the Court for the adaptation referred to in this provision.

2. In all cases the regulatory deed containing such of the requirements set out in art. 5 as are compatible with the nature of the scheme must for the purposes of such adaptation be executed and registered in the Property Register, solely for purposes of publication and with full respect for the rights acquired. Of the contracts referred to in the said Article, only those existing at the moment of adaptation need be incorporated. The deed must be executed by the owner of the property alone.

If the pre-existing scheme was designed in such a way that the owners of the rights own undivided shares in the building, coupled with the enjoyment thereof by turns for a determined period, the deed of adaptation must be executed by the chairman of the owners’ association, subject to the agreement of the community itself, to be adopted on a simple majority of those present at a Meeting to be called for that purpose.

In the deed of adaptation, the sole owner of the building must describe the pre-existing scheme and declare that the rights to be assigned in future shall be of such a nature as results from that scheme, identical to those already assigned. If he wishes to sell any periods not yet assigned as timeshare rights, he must also create a scheme for the available periods with the requirements laid down in this Law; the scheme need not be created to cover the whole building, but only the periods not yet assigned. If he wishes to change the whole scheme and convert it into a timeshare scheme, as regulated by the Law, he may do so if he complies with all the requirements laid down therein, but maintaining the term of the pre-existing scheme, even if the same was indefinite.

3. Without prejudice to the provisions of the preceding paragraph, all pre-existing schemes shall have a maximum duration of fifty years from the date of effect of this Law, unless the same shall be for a lesser term, or unless the deed of adaptation shall contain an express declaration of continuity for an indefinite time or a fixed period.

VALIDITY:

Amendments to this legislation:

This legislation has been repealed by Royal Decree-Law 8/2012, of 16 March, the law of timeshare contracts for tourist use, purchase of long-term holiday homes, resale and exchange.

*Art. 8.2.b), paragraph two: added by Art. 73.1 of Law 14/2000, of 29 December, on tax, administrative and social policy measures.

*Art. 8.2.e): reworded in accordance with Art. 73.2, of Law 14/2000, of 29 December, on tax, administrative and social policy measures. The previous wording provided as follows: “e) Common services for the benefit of the purchaser and conditions of enjoyment thereof”.

* Art. 8.2.h): reworded in accordance with Art. 73.3, of Law 14/2000, of 29 December, on tax, administrative and social policy measures. The previous wording provided as follows: “h) Average and highest prices of timeshare rights. Similarly, the amount of the first annual share to be paid for the use of the common facilities and services, or estimate thereof, and procedure for calculating future annual payments.”

* Art. 8.2, l): added by Art. 95.1 of Law 24/2001, of 27 December, on tax, administrative and social policy measures.

* Art. 9.1.13: added by Art. 95. 2 of Law 24/2001, of 27 December, on tax, administrative and social policy measures..

* Art. 9.3, paragraph one: reworded in accordance with Art. 73.4, of Law 14/2000, of 29 December, on tax, administrative and social policy measures. The previous wording provided as follows: “The contract and informative documents specified in this Law shall be drafted in the language, or one of the languages, to be chosen by the purchaser, of the Member State of the European Union of which he is a resident. They shall also be drafted in Castilian Spanish or any of the other official Spanish languages in the place of signature, at the purchaser’s choice.”

* Art. 9.4: reworded in accordance with Art. 73.5 of Law 14/2000, of 29 December, on tax, administrative and social policy measures. The previous wording provided as follows: “4. All the information contained in the informative document referred to in sub-paragraph 2 of the preceding Article must be incorporated in and form an integral part of the contract. Failure to comply with this obligation shall create the duty of information for the purposes of the next Article.”

* Art. 10.3, paragraph two: reworded in accordance with Art. 73.6, of Law 14/2000, of 29 December,, on tax, administrative and social policy measures. The previous wording provided as follows:

“3. Notice of withdrawal from or rescission of the contract must be given to the owner or developer at the address that must necessarily be stated for that purpose in the contract. Notice may be given by any means that guarantees that records are kept of the dispatch and receipt thereof, and also of the date on which it is sent. In the case of withdrawal, it is sufficient that notice is sent before the expiry of the time limit.

If the contract is signed before a Notary in the case of Article 14.2, withdrawal must be recorded in a notarial deed. This document shall validly authorise the re-registration of the timeshare right in favour of the assignor.”

* Art. 14, heading: : reworded in accordance with Art. 73.7 of Law 14/2000, of 29 December,, on tax, administrative and social policy measures. The previous heading was: “Publication at the Registry.”

* Art. 14.1 and 2: : reworded in accordance with Art. 73.8 and 9 of Law 14/2000, of 29 December, on tax, administrative and social policy measures. The previous wording provided as follows:

“1. The acquisition and assignment of timeshare rights may be registered in the Property Register. For this purpose the contract must be notarised as a public deed and the Registrar must open a folio for the period for which the timeshare rights are assigned, save always as provided in the Mortgage Law.

On registering a timeshare right for the first time, the Registrar must note in the margin that it is subject to a property charge to cover the two most recent shares of common outgoings, from the date of the legal or notarial application, for the whole term of the scheme. To enforce the guarantee, the service supplier may use any of the means of enforcement the Law of Horizontal Property permits owners’ associations to use to recover shares of common outgoings and the extra-judicial mortgage enforcement procedure.”

“2. If the contract is signed before a Notary,he must inform [the parties] of the purchaser’s right of withdrawal provided in Art. 10, which may only be exercised by notarial deed, and the other rights conferred by this Law.”

* Chapter III of Title I: the heading is amended by Art. Six of Law 39/2002, of 28 October, on the transposition into Spanish law of various Community directives on the protection of the interests of consumers and users. The heading previously read: “Failure to provide services”

* Article 16 bis: this is added by Art. Six of Law 39/2002, of 28 October, on the transposition into Spanish law of various Community directives on the protection of the interests of consumers and users..

* Art. 19: reworded in accordance with Additional Provision Four of Law 14/2000, of 29 December, on tax, administrative and social policy measures. The previous wording provided as follows:

“Art. 19. Value Added Tax. The reduced rate of 7 per cent shall apply to the following transactions:

1. The supply of services consisting of the assignment of timeshare rights in properties mentioned in Article 1 of this Law.
2. Any other type of use of property for a determined or determinable period of the year with supply of any additional hotel and catering services.
3. The services referred to in Article 91. 1. 2. ii of Law 37/1992, of 28 December, the Value Added Tax Law, supplied by the natural persons or corporate entities referred to in Article 4.3 of this Law.
4. The transactions referred to in the preceding sub-paragraph, if effected in the Autonomous Community of the Canary Islands, shall be subject to the reduced rate provided for Canary Islands General Indirect Tax according to the legislation thereof.

*Additional Provision Two, final paragraph: reworded in accordance with Art. 73.10 Of Law 14/2000, of 29 December, on tax, administrative and social policy measures.

For more information regarding this article or assistance in any other timeshare related issues please contact the TCA on 01908 881058 or email: info@TimeshareConsumerAssociation.org.uk