Official: Amendments Proposed to Spanish Timeshare Law

In a move which has almost gone unnoticed, a group of Spanish parliamentarians have tabled a motion to amend the timeshare laws 42/1998 & 4/2012. We say almost unnoticed as it is buried within other amendments tabled on various laws, published in the Boletin Oficial De Las Cortes Generales Congreso De Los Diputados, (BOCG).

Until the enactment of Law 42/98, timeshare was basically unregulated, it was new and open to abuse as we saw during the 1980s with criminal elements getting involved in what was then a very lucrative and easy money-making market. There was nothing to define what was and was not timeshare, leaving its interpretation totally open.

Now this motion seeks to amend the laws placed primarily to protect consumers, it is obvious the industry is behind it, no politician is going to seek to have any laws changed especially ones such as timeshare, without being nudged by “lobbyists”. But before we look at the proposals and the “justifications” for them, let us have a brief look at the development of timeshare in Spain.

Spain started to become a popular holiday destination during the 1960s, the idea of the “package” holiday to sunnier climes was in its infancy, and Spain itself was still very much a rural society with the coast full of little fishing villages. The income that “tourism” brought would soon see these villages grow and become the holiday resorts we know today.

The real boom in “tourism” and the development of places like the Costa del Sol began with Spain becoming a democratic country in 1975, following the death of Franco. Spain was about to modernise and become the go-to destination for holidays.

Land was being released for development with families cashing in by selling their own land and moving away from their old existence. Many fortunes were made, but also many were lost.

With all the building of the hotels and resorts, there came another problem, how to fill them, after all the tourist economy only thrives with visitors. The “package” holiday took care of that, tour operators, such as the UK’s famous Thomas Cook (gone) & Thompson (now TUI) offered these at affordable prices and the Brits snapped them up.

But there was also another “new” holiday product which was now just entering what would be its very own boom years, timeshare.

Two names which were well known in the UK, mainly due to their advertising for new homes were Wimpy and Barratt, both built and run their own timeshare resorts, with Wimpy in Tenerife and Barratt on the Costa del Sol. Wimpy sold out several years ago to a management consortium and is now run by the Ona Group, Barratt become MacDonald Resorts and we know how they treat members.

Other resorts such as the small family owned and run, obviously struggled to fill them, after all, we didn’t have the internet in those days, and the big tour operators at the time were not interested in “leasing” these resorts, too small for their needs.

These were ripe for timeshare, many were approached, and the lure of letting them run the resort and have a “guaranteed” income was very tempting. The “management” companies would also “market” the resort and sell it as timeshare, all would be happy. Many of these resorts are still operating today, and although they are now starting to decline, with the long-standing owners we are sorry to say dying off. More and more weeks are being handed back, and only the die-hards remain.

These were the resorts where timeshare did do what it was supposed to do, but as we said, where there is easy cash to be made, then the crooks will find a way in. In Tenerife, this was certainly true, with the infamous John “Gold finger” Palmer becoming heavily involved in the timeshare market, with great financial loss to his “victims”.

It is believed his timeshare “empire” was built on the money made from the Brinks Matt bullion robbery, a way to launder the “dirty” cash into “legit” cash. Tenerife became a byword for timeshare scams and that is still very true today.

What was common to all things relating to timeshare was the uncertainty of what it was, and it was this which left consumers vulnerable to scams from the like of Palmer. Even today it is being sold as if it were property, real estate, something tangible and of value, a point that is not lost on those who have tried to sell based on the promises given.

This is where the timeshare laws were needed, to clarify what it was, how it could be sold and procedures to protect consumers. At first, it was ignored, and timeshare sales continued as before with total disregard for the law, after all, who knows about it, foreign consumers definitely do not.

As with any new law it needs to be tested in the courts and the first major test did not come until 11 years after the law came into force. It was then another 5 years before the first ruling on the law was made by the Spanish Supreme Court. This was then followed by a further 129 rulings on the law, clarifying various points and ruling one way or the other. This is the position we are in today, the law is very clear on what timeshare is, how it can be sold and what protection the consumer has.

Basically, the law allows for timeshare to be sold in the original form, the fixed week, fixed apartment, with the sale and ownership details registered with the land registry (or equivalent). This then only allows 51 weeks for each apartment to be sold, the points and floating weeks systems are not allowed.

You don’t own the property, just the right to use it during the specified period and with the appointed apartment, this guarantees the right of use. Points and floating weeks are not linked to specified weeks or apartments, there is no limit to the number of weeks or points equivalent which can be sold, thus not guaranteeing any rights of use.

The duration of the contract was something that was also addressed in the new laws, until that point, contracts were sold in perpetuity, or never-ending. It was this which solidified the myth that you purchased “property”. The new law was very clear, the contract was to be for a duration of no less than three years and no more than fifty years.

The amendments being proposed are to “legalise” floating weeks and to allow contracts longer than the 50 years currently allowed. Nothing major or of any real significance here, the only point is about the floating weeks, the way it is being proposed is that if the week and apartment are registered then the week can be turned into floating.

If we have read this correctly, we have to ask the question how can it be registered to more than one person, floating weeks were introduced to increase the number of members when the number of available fixed weeks ran out, no new members, no new sales, no increase in maintenance income.

Looking at the amendments, it is hard to see how these will actually proceed forward, let alone be passed into law, they are what can only be called minor changes, proposed to placate the industry lobbyists. Even if they are then eventually passed into law, the whole round of testing in court has to begin again with more time wasted by High Court appeals and Supreme Court hearings. Going by the last round, that will take another twenty years.

It is not the change proposed in the amendments which points to industry lobbying, after all, they do appear to be minor, it is justifications used for the amendments. The focus on tourism with increased employment if these amendments are passed.

So, we do have to ask where the representatives whose names are on the amendments have got their information, as the text appears to blame the demise of the timeshare industry on the laws, which in turn has reduced employment. We do have to point out here that the representatives are part of the Canary Islands Coalition, so have a vested interest for their constituents.

On the whole, timeshare is not the be-all and end-all of the tourism industry in the Canary Islands, compared to the number of hotels and resorts which are not timeshare, they are not great in number. It is also a fact the resorts themselves are reverting to non-timeshare business, especially the leased resorts, with many actively seeking to end their timeshare association and work within the open market.

Given this demise in timeshare ownership, the only employment the timeshare industry is likely to produce is more salespeople. These will not be local people, the very nature of timeshare sales is seasonal, and professional sales teams move from one location to another, depending on the nationality of their “UPs”.

Obviously, further research has to be done on the impact of timeshare and the local economy versus the open market model, at the end of the day it is down to the influx of tourists that creates jobs, not the whims, as we believe of an industry that seeks to influence representatives with what we think are false justifications.

We hope the representatives who have tabled this motion, do get their research done correctly and see that changing a law because it doesn’t suit the timeshare industry is not necessarily going to create better opportunities for the local people.

There is still a long way to go, as we said, the chances are it will never get through, but if it does it will still have to be tested and that is a long way ahead. On this point we should also warn you, the scammers will no doubt use this in future pitches to influence you into parting with your money for “legal” services, yet another tool in the arsenal of the crooks.

AIT did ask one resort which is reducing and ending its timeshare section for a comment, but nothing has yet been received, all lawyers we consulted appear baffled by the changes, seeing them as unnecessary and just a change in “semantics”.

PDF of the relevant section from the BOCG, in the original Spanish and rough translation to English.

Amendment to Spanish Timeshare Law

We hope you all had a good weekend, unfortunately, we had a rather nasty calima here so Baby Dog and myself were confined to quarters.



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