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Spanish Supreme Court’s decision declaring Timeshare Contracts in Perpetuity NULL & VOID 03.04.2015

The importance of this Supreme Court decision is HUGE. In Spain access to the Supreme Court is very very limited. Only claims for more than 600.000 euros may have access. In other cases for the claimant to have access, he/she needs to show that there is real legal interest, for instance, that there is a real need of a unified interpretation about a controversial legal point that perhaps has been decided in different ways before. In this case the Supreme Court judgements have the effect to interpret the law and how has to be applied by the other Courts (First Instance courts and Courts of Appeal, etc.). The Supreme Court has pointed the way that has to be followed by lower courts.

 

The paradox is that this time was Anfi who appealed the Supreme Court seeking for confirmation that what they were doing was correct. There had been two different decisions from the Court of Appeal in Las Palmas so Anfi considered that the Supreme Court should decide what interpretation was correct. Unfortunately for them (and for any other Club that has sold timeshare contracts for more the 50 years after 1999) the Supreme Court has ruled against them.

 

In Gran Canaria this will affect timeshare  clubs such as Palm Oasis or Puerto Calma, among the most poplars. In Tenerife Beverly Hills Club and Heights, Hollywood Mirage and Palm Beach Club could also be affected. Generally speaking this may affect to any Club based in Spain or at least to those resorts located in Spain. The impact can be enormous.

 

The key issue has been that Law 42/98 included a Transitional Provision, the Second, which deals with Pre-existing regimes. This provision gave the Clubs which were operating before the entrance into force of this Law the possibility to continue to exist forever, BUT the weeks not yet sold would have to be adjusted to it. This means that the schemes can continue to exist in perpetuity contracts, but the weeks sold within the scheme will have to have a maximum duration that cannot exceed 50 years.

 

Anfi and many other clubs believed that both the Regimen and the Weeks could be sold in perpetuity contracts. This was the big mistake that now has been clarified by the Supreme Court resolution.

April 3, 2015

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