The laws on timeshare are complex and can be extremely confusing. New legal precedents are regularly being set as more and more people come forward to challenge timeshare companies in the Courts, meaning that things are changing all the time. That’s why legal advice from specialists in timeshare legal matters are the only ones who can really help you to navigate the convoluted and contorted landscape of timeshare law.
At the same time, however, we are committed to the task of empowering people like yourself who have been affected by problems with timeshare to overcome the hurdles timeshare companies put in your way. As such, this article is designed to give you as much information as possible to inform and educate you, giving you the confidence to bring your case forward and be heard.
Why Did Timeshare Law Come Into Force?
The 1980s were the Wild West years of timeshare, with malpractice and deceit at its height. By the early 1990s, it was clear that the industry needed regulation, and specific laws to curb the cowboy salespeople of the timeshare world.
The 1992 UK Timeshare Act was the first step towards regulation, but it covered very little. It wasn’t until 26th October 1994 that the first substantive timeshare law Directive was enacted. Prior to this, there was little to no protection for consumers of timeshare. When the European Communities passed this law (the European Directive 94/47/E) that things began to change for the better.
Despite the Directive being issued in 1994, it did not come into force until 1997. There was then a lull of over a decade before the Timeshare Holiday Products, Resale and Exchange Contracts Regulations 2010 was issued, which came into force in February 2011. A second Directive to replace the first 1994 one also came into force in 2011, clearing up discrepancies in wording that the 1994 document was subject to. Eliminating these discrepancies meant that laws on timeshare in all countries in the EEA are the same, avoiding confusion for consumers and ensuring a level playing field across the EEA.
Another related law that had applications within timeshare was passed in 1999, the Unfair Terms In Consumer Contracts Regulations. This overlaps with the Unfair Contract Terms Act of 1977, and empowers enforcement authorities to put an end to unfair contracts that adversely affect consumers. The 1999 law was replaced with the Consumer Rights Act 2015 to cover all unfair consumer contract terms under British law.
The Spanish Supreme Court and Spanish Timeshare Law
Most of our enquiries concern Spanish timeshares, unsurprising as Spain (including the Canaries) is the number one timeshare destination in Europe. It’s therefore important to devote a significant section to Spanish timeshare law.
It wasn’t until after 2010 that Spanish timeshare law was amended to comprise European rules and regulations on the industry. Spanish law is constitutional, which means that new laws need to come before the Courts to be tried and tested before being put into effect. Previously, lawyers would have to put their cases to local and provincial Courts before they could be seen in the Spanish Supreme Court. Only the Supreme Court can set a legal precedent for any similar cases that arise thereafter, with all decisions in the Supreme Court being final once ruled.
Most cases can be settled without appealing to the Spanish Supreme Court, as there is usually a legal precedent in place that ensures a similar case will be awarded in the claimant’s favour. However, if your case covers new ground, it will go to the Supreme Court. If a case goes to Court, you will need to attend in person, but we do everything to avoid it going to court.
You may be wondering whether, if your timeshare is in Spain, you should not just use a Spanish lawyer for your case. Whilst any Spanish lawyer may be qualified to assist you in your case, it is preferable to have a legal expert who specialises in timeshare law on your side. If you do not speak Spanish yourself, you may also prefer to work with an English-speaking lawyer for your own peace of mind.
Unfortunately, there have also been a number of cases of fraudulent Spanish ‘legal firms’ promising to help fight timeshare cases only to disappear with money without doing the work. Often, consumers are led to believe they have been extricated from their contract only to find this not to be the case when the next maintenance bill arrives.
Illegal Timeshare Contracts
There are many types of timeshare out there, so it can be hard to keep track of where any illegalities may lie. These points, however, should clear up some of those queries.
Floating Weeks are sometimes known as ‘Flex-Time’ timeshares, and – as the name suggests – are touted as a more flexible way of having a timeshare than the traditional, ‘Fixed Week’ model. These type of contracts can be declared ‘null and void’ by Spanish courts on the basis of them not having a fixed date or specific unit for the holder to use. Many consumers have found Floating Weeks timeshares incredibly stressful, as there is rarely any availability even when attempting to book up to two years ahead. It is necessary to pursue a legal route to having your Floating Weeks timeshare nullified, and may be eligible for compensation.
Every single timeshare contract is legally obliged to come with a 14-day cooling-off period. This means that, for the first 14 days after signing the contract, the consumer has the right to change their mind and cancel the entire transaction. During this period, no money is to be paid whatsoever, the consumer must be made fully aware of their right to cancel, and it should be easy and straightforward to do so.
If you did pay any upfront sums within this period (including deposits, refundable and otherwise), the company made it difficult for you to cancel during the cooling-off period, or you weren’t made aware of it, then you should be awarded back double anything you paid in the period, any subsequent sums paid returned to you, and the contract terminated immediately.
Any contract signed after 1999 that exceeds 50 years in duration is to be ruled null and void by the Courts without question. All sums paid should be returned to you.
If you signed before this date, see the section below.
1999 Supreme Court Ruling: What are my rights if I purchased before?
After the 2015 Supreme Court ruling in Spain, any timeshare contract signed after January 1999 cannot last more than 50 years otherwise it is deemed illegal. But what are your rights if you purchased your timeshare before that significant date?
One of the principles of the Supreme Court Ruling in 2015 was that any pre-existing timeshare contracts from before January 1999 must be amended to comply with the new enforced Ruling. If your timeshare company has not altered your contract since the Ruling came into force, you are entitled to demand that the contract is changed, and to seek court action if needed, as they are in breach of the law.
The 2015 Supreme Court Ruling created legislation that was set as a result of the first successful “test case”. This first case set a legal precedent, meaning that any following cases that met the criteria identified in the test case, would also reach a similar ruling.
Unfortunately, in most cases, customers with pre-existing timeshare contracts cannot claim compensation on the ruling criteria because the legislation was not in place to dictate before the ruling. Historical contracts with perpetuity clauses cannot usually be voided in the same way that as ones signed before 1999, though there is potential for compensation in cases where money was exchanged during the cooling-off period. However, this depends on the claimants meeting certain criteria.
Often when it comes to timeshare law, it isn’t a case of a simple yes or no. The 1999 Supreme Court Ruling can often still be stated to negotiate your case even if it was signed before. If your contract is in perpetuity, or you have a query about your contract that was signed before January 1999, please get in touch with us. We recently were able to fight a client’s ownership in Mexico citing various clauses of the legislation. As a result, the client received over £21,000 in compensation.
Obscuring Access To The Contract
In some cases, timeshare companies have been found to actually be hiding the full contract from the signee! Consumers found that what they had signed was merely an abridged version of the contract, which did not fully set out the clauses and terms contained in the unabridged version. If you were not permitted access to the full contract, you may have agreed to fees and conditions that you may not otherwise have agreed to. If you suspect this to be the case, it is important you seek legal representation urgently.
‘Ownership’, ‘Property’ and ‘Investment’
These terms are misleading. In the vast majority of cases, timeshare holders do not own the timeshare unit. Ownership belongs to the resort developer or Trustee. As such, you do not have a real stake in the property, just the right to use it.
Furthermore, all too many timeshares are sold as an ‘investment’, implying that they will accrue value over time. This could not be further from the case, as timeshares are known to absolutely plummet in value after purchase, if they even had any real value to begin with.
Misselling and Misrepresentation
It is difficult to prove, but if you are able to produce evidence that the salesperson misled you as to what you were buying, the contract can be annulled and timeshare compensation may be due. In cases like this, proof can be hard to establish and so it is important to get a timeshare legal expert to help you.
Timeshare Trading Standards: What You Need To Know
Trading Standards and Consumer Services are controlled by the local authorities where a timeshare trader operates, with the mission to safeguard the consumer and business interests, by promoting a fair and healthy trading environment. They have the well-being of local communities and businesses at the forefront of their ethos and they carry out many enforcements, and advisory services such as investigating complaints, in support of the consumers.
Trading Standards have a list of statutory duties under many Acts of Parliament and associated Statutory Instruments which it enforces. In order to meet the objectives of timeshare Trading Standards, the aims are –
- To monitor the pricing of the timeshare goods and services and to ensure the price indications are not misleading.
- To examine timeshare goods and services to make sure they conform to their description and offering.
- To ensure that timeshare consumers are not misled when buying timeshare goods and services and that the sellers are not using fraudulent trade practices.
- To supervise and control Consumer Credit Licensing and monitor all those involved in credit lending.
- To promote an effective Trading Standards and Consumer Advice Service, which can be accessed by all consumers of the timeshare community.
- To investigate all civil and criminal complaints made by consumers regarding timeshare goods and services.
- To carry out test purchasing using secret shoppers, to ensure that timeshare sellers comply with all legislation.
- To consult with other traders and users of the service on enforcement and satisfaction levels.
- Planned Service Review.
If your timeshare resort or company is the subject of a trading standards Inspection, this is not something to be concerned about. Reputable companies often invite Trading Standards to their resorts and assist them in carrying out their objectives. Regular meetings with Trading Standards is a good thing and Trading Standards can call to see an organisation for a variety of reasons.
The Consumer Protection Regulations 2014: How They Relate To Timeshare
Malpractice within the timeshare industry has, unfortunately, become commonplace. However, governments and regulatory bodies are now noticing the issues within the industry and have provided legislation so consumers can now raise their issues within the UK courts.
There are three main considerations within the Consumer Protection from Unfair Trading Regulations 2008 (CPUTR).
- A general ban on unfair/ unreasonable commercial practices
- Misleading/evasive/ deceptive/disingenuous and aggressive sales practices which are assessed in light of the effects they have on consumers.
- A Black List which contains the list of those practices which are unfair and thus banned
Misleading and Deceptive Tactics
Traders are not allowed to use deceptive or misleading sales tactics, in order to get consumers to pay money. Often within the timeshare industry, this is seen when salespeople promote the timeshare as an ‘investment’ or that the buyer will somehow become enriched by buying the timeshare. Other tactics include advertising a product that does not exist, offering a limited amount of items at a particular price with no intention to meet a large demand at that price.
Traders are also banned from being deceitful about the products they are selling. This can often be seen with the timeshare points system, where consumers are misled into believing that it is better than a fixed week system when in reality it is of benefit to the trader, and at the expense of the consumer.
Equally as deceptive as lying to the consumer, is purposely omitting information which prevents the consumer from making a fully informed decision.
If a timeshare resort has signed up to a code of practice or regulatory body, then consumers should be aware of the code of practice as if any of these tactics have been used, the resort may be in breach of Consumer Protection from Under Trading Regulations 2008.
Timeshare salespeople are infamous for their aggressive tactics and they can greatly manipulate and pressure a consumer into making a decision. From not taking no for an answer, to refusing to go away until a contract has been signed.
A sales tactic is considered aggressive if the average consumer’s freedom of choice is significantly impaired by the actions of the seller.
Acting on the regulations
If a consumer accuses a timeshare trader of using any of these tactics, they need to show that their actions influenced their decision making, even if they have not entered the contract.
Unfair or misleading trading practices, aggressive selling, and misleading omissions are all covered by the Consumer Protection from Unfair Trading Regulations and gives consumers a new right to protection.
Can My Timeshare Resort Take Legal Action Against Me?
If you are a timeshare holder, in signing the contract you have consented to pay annual maintenance fees, additional fees and if applicable, your loan repayments. If you feel like you were mis-sold your timeshare or can no longer afford the payments to the timeshare resort, it is often tempting to just stop paying the fees. However, the timeshare resort can take legal action against you for doing so.
Failure to Pay
If there is a failure of payment, the timeshare resort will begin by calling and sending demands for the late payment. If this correspondence still does not lead to repayment, a warning about possible legal action will often be issued by the timeshare resort. This can be a legal written correspondence that arrives by mail. During this period of time, as the property fees are in arrears, the timeshare resort may also suspend your use of the property until the dispute is resolved.
When a timeshare resort is unable to convince an owner to resume fee payment, the matter is then often referred to a third party debt collection agency. Attempts are then made to collect the debt through the aggressive use of the telephone and mail contact and the debt is reported to the credit bureau. Regardless of the reason for the dispute, the impact on your credit report is the same as any other type of default payment and your personal financial credit history will be damaged.
Without resolution, the timeshare resort may pursue civil action by taking you to court. If a judgment is issued against you, the timeshare resort may garnish your wages or levy your bank account to get the money you owe. For timeshare owners who already cannot afford the payments, this results in legal expenses and an additional financial strain.
Going through court proceedings in respect of a missed payment is not only stressful but could leave you massively out of pocket with a judgement on your credit score which will hinder your future finance. Before you consider the option of non-payment, we strongly urge you to contact us for advice regarding the best approach to get rid of your timeshare contract.