Illegality of contracts

NubloMany timeshare contracts in Spain including Anfi are illegal with the possibility to declare such contracts at court null and void to get the purchase payment back.

At beginning of 2015 there were two remarkable verdicts of the Supreme Court in Madrid declaring in-perpetuity contracts and floating week contracts without reference to the inventory as illegal with great impact to the timeshare industry. This applies to all contracts signed after 5th January 1999 when the Spanish timeshare law 42/1998 came into force. The same is true for all contracts signed after 7th July 2012 when the timeshare law 08/2012 came into force.

According to this verdicts (1) the duration of contracts must be limited to maximum 50 years, (2) floating week contracts must have an assigned week and apartment number, (3) and payments are not allowed in the cooling-off periode of 10 or 14 days after signing the contract and are not allowed over third parties. Even more any payment made within 3 month after signing the contract can be requested back double according to a civil sanction clause in this laws if the law is violated. The amount of legal costs is reimbursed depending on the case and verdict.

Contracts signed before 5th January 1999 can be declared null & void as well, but not as above but for violating the Consumer Rights law in Spain. Double amounts of payments can´t be claimed back as with contracts under law 42/1998 and 08/2012.

After this landmark verdicts there was a series of further Supreme Court verdicts against Anfi Group (Resorts Anfi del Mar and Tauro) declaring contracts for the reasons given above null and void including illegal deposits over third parties. A recent verdict in March 2016 confirmed that Anfi floating week contracts are too illegal. Several statements given by Anfi Group to their members, statements of RDO (Resort Development Organisation) and many court trials and appeals did not change this. These Supreme Court judgements serve to clarify the interpretation of the Spanish timeshare law and are now reference for lower court decisions.

Nevertheless Anfi basically thinks that regarding in-perpetuity contracts the Supreme Court has misinterpreted the law and may change its interpretation.

Though the legalisation of illegal contracts is an open issue all this does not mean that “happy” members with illegal contracts cannot use their using rights. The contract is only null and void if the court declares it. In this case the member gets up to double of the purchase payment back including legal interest since the day of application.

According to the verdict 192/2016, 29th March 2016, of the Spanish Supreme Court the pay back of the purchase price is reduced by factor (50 years – enjoyed years)/50 years taking into account the enjoyed years.

Whereas the overwhelming majority of members are happy with the resort, there are many others who want to end their membership. The reasons are age, illness, divorce, death of partner, unemployment, unable to travel and so on. For this members the best solution would be a resell program by the resort to buy the weeks back for a reasonable price. But resorts are legally not obliged to do so, and if they do, only for a fraction of the purchase price. Or they take the weeks back for null Euro which is found by most members to be unacceptable, especially because the resort sells the weeks for a high price again.

For all this reasons there are since spring 2015 hundreds of lawsuits against Anfi Group and against many more other timeshare resorts in Spain.

Impact of the SGM’s held on 23th June 2017

The Spanish Act 42/1998 created timeshare rights called “rotational enjoyment rights” for a period of up to 50 years. The Supreme Court decided that this is true for all contracts after the law came into force so Anfi had to comply with this even the law can be read the other way. At the SGM’s (Special General Meetings) of Beach, Puerto and Monte more than 80 % of certificates of voters (not certificates of all members) voted not to change the timeshare regime but to establish occupancy periods of maximum 50 years duration, with an option to extend for further reoccurring occupancy periods of 50 years to be manifested in new constitutions.

The question is if with this the claim wave of illegal contracts with unlimited maturity is stopped or not, a legal question to be decided by court soon.

Some argue constitutions are part of the contract and with the updated constitutions claims are not possible any more. Other say that the contract is between two parties, Anfi and the member, and cannot be changed by a new constitution with majority voting of only 80 % of voters, not members, and that as a consequence the contract can only be changed by the two parties involved.