Timeshare Rights in Real Estate Used for Tourism and Tax Regulations

This one again law firm has obtained a favorable ruling for some Dutch clients who, in 2004, each entered into a contract for right to use real estate for tourism purposes on a timeshare basis at a well-known real estate complex in Marbella, owned by a U.S. multinational hotel chain.

This refers to the judgment rendered by Marbella Court of First Instance No. 5, dated February 27, 2024, in Ordinary Trial Case No. 19/2022.

As we will explain below, a request was filed with the court to declare these contracts null and void on the grounds that they violated the provisions then in force under Law 42/1998 of December 15, regarding Timeshare Rights in Real Estate Used for Tourism and Tax Regulations.

We should begin by noting that the disputes that have arisen on this matter stemmed from the aforementioned regulation, which was replaced by Law 4/2012 of July 6, thereby resolving the conflicts caused by that regulation.

The new regulations expressly included companies’ obligations, addressing the gaps and loopholes in the previous regulations, which allowed companies to comply in their own interest and subsequently led to the correction of such conduct by the courts.

The new law would apply to new contracts entered into after the publication of this Act, while existing contracts would continue to be governed by the previous law unless they expressly opt in under the new Act.

Since these are long-term contracts, these older contracts have remained in effect for many years under the new law; however, this has not prevented the previous regulations from applying when they are terminated at the buyer’s request.

WHO IS ELIGIBLE FOR THE RIGHTS RECOGNIZED BY THE COURTS?

The answer to this question is straightforward, because only those who have entered into timeshare contracts since Law 42/1998 took effect, December 15, and up until the effective date of Law 4/2012 of July 6, provided that they have not requested to be covered by that law during contract renewals and, of course, have ceased using this type of housing arrangement.

It goes without saying that the benefits granted by the courts apply to every contract that has been signed; therefore, if multiple contracts have been signed for various apartments or homes, all of them will be eligible for these benefits.

Here's what happened to our customers who had I signed two leases for two different apartments and the following are applied to them: benefits under both contracts.

As we will see later, even though the contracts date from 1988 onward and a considerable amount of time has elapsed, obtaining a declaration of nullity—which is what is being requested—means that these claims arising from contracts you signed so many years ago are not subject to a statute of limitations.

Another thing to keep in mind is that if the contract has been repeatedly extended for many years under the terms of the aforementioned provision, when the contract ends—provided that the 50-year term has not yet expired—you may also file a claim, because, as you will see, you will be entitled to a refund of a significant portion of what you have paid.

The contracts whose nullity was sought—and which the court upheld—were entered into on August 2, 2004, and November 4, 2004, and were therefore subject to the provisions of the cited Law 42/1998 (in effect since January 5, 1999), which was applicable in this case.

WHAT VIOLATIONS HAVE BEEN COMMITTED THAT GIVE RISE TO THE CLAIMANTS' RIGHTS?

These contracts are void because the date of termination of the Plan was not contractually specified in the contract, and although it is always argued that this date was set forth in the General Terms and Conditions, it is nonetheless true that the customer’s denial of having received them is sufficient to render such objection ineffective.

The fact is, the law is clear when it states that “The general terms and conditions shall become part of the contract once the contracting party agrees to their inclusion in the contract and the contract is signed by all parties.’’

”Every contract must refer to the general terms and conditions incorporated therein. The incorporation of the general terms and conditions into the contract shall not be deemed to have been accepted if the drafting party has not expressly informed the other party of their existence and has not provided the other party with a copy thereof.".

Any contract entered into by a natural or legal person in the course of their professional activities and relating to timeshare rights must be in writing and must specify, at a minimum, various details, including the date on which the contract will terminate; in addition to the date of execution of the contract, the details of the deed governing the arrangement, including the date of execution, the name of the notary who authorized it, and the notary’s protocol number, as well as the details of its registration in the Property Registry.

In the ruling under discussion, such circumstances were not included in the contract examined in the ruling obtained by this firm and discussed here, nor were they included in any of the many cases studied by this firm; hence, the consequence is clear: the contract is null and void, as provided in the aforementioned Article 1.7.

According to the ruling, not only are the details of the deed establishing the property regime—including the date of execution, the notary who authorized it, and the notary’s protocol number—omitted, but also the date on which the property regime will terminate

Consequently, the aforementioned omission must result in the contract being declared null and void as a matter of law, in accordance with the provisions.

WHAT ARE THE LEGAL CONSEQUENCES OF THESE VIOLATIONS?

Now that the issue has been raised, and in order to establish the legal principle we consider appropriate, we must begin with the text of Article 11 of Law 42/1998, of December 15, which is applicable to this case.

This is, therefore, a legal prohibition, and Article 6.3 of the Civil Code provides that acts contrary to mandatory and prohibitive provisions are null and void as a matter of law, unless such provisions establish a different effect in the event of a violation.

WHAT CAN I CLAIM IN A COMPENSATION CLAIM?

Regarding the consequences of such nullity, the Supreme Court ruling of July 21, 2016, concludes that all amounts paid shall be refunded to the purchaser, provided that the refund of amounts paid need not be in full but rather proportional to the remaining term of the contract, taking into account the maximum legal term of fifty years.

The plaintiff also requests the application of the aforementioned Article 11 of Law 42/1998, which prohibits “the payment of any advance by the purchaser to the seller before the expiration of the period for exercising the right of withdrawal or while the purchaser retains the right of rescission referred to in the preceding article.’.

If the purchaser has advanced any amount to the transferor, the purchaser shall be entitled at any time to demand the return of that amount, doubled, and may choose either to terminate the contract within three months of its execution or to demand its full performance.

In the case of the judgment discussed in this article, payment was made within three months of the contract’s execution; therefore, a breach of the provisions of Article 9 of Law 42/1998 has been established, and double the amount is due.

WHAT IS THE TIME LIMIT FOR FILING A CLAIM IF I'M IN THIS SITUATION?

It is also necessary to analyze the statute of limitations defense raised by the defendant. The defendant argues that the action to recover the debt is barred by the statute of limitations after five years, since that action is subject to the statute of limitations, regardless of whether the action for the absolute nullity of the contract is not.

This Court does not agree with the arguments presented, since, pursuant to Article 1969 of the Civil Code, the statute of limitations begins to run on the day the right could have been exercised, and it is obvious that a claim for restitution based on nullity cannot be brought without first having requested and obtained a declaration of nullity of the legal transaction. I therefore find that the statute of limitations begins with the final judgment of nullity, and I accordingly dismiss the exception raised.

WHERE CAN I FILE A CLAIM?

The appropriate legal claim must be filed in the judicial district corresponding to the town where the complex is located.

As for whom to sue, the lawsuit should name all parties involved in the contract without the need to specify the role of each one, and this is relevant because it is usually a group of companies that signs the contract, and since their respective responsibilities regarding contract performance are not specified, it must be understood that all of them are liable.

This is set forth in Judgment 61/2024 regarding our most recent legal claim filed with Marbella Court of First Instance No. 5, where, in response to an argument by one of the co-defendants that another co-defendant should not have been named as a defendant, and in response, the judge held that, since this involved a group of companies—as was the case here—and since it did not appear that she performed any function or activity related to the case, she had to be named as a defendant as well.

Carlos Baño Law Firm

Another success, from the Carlos Baño Leon Law Firm: Specialists in Real Estate Law, which is in addition to the many that have been obtained in courts throughout Spain.