The popularity in Spain of vacation rentals has been accompanied by a rise in litigation between the owners of tourist apartments and the condominium law of the buildings where those apartments are located. This litigation, initially concentrated in courts of first instance and appeal courts, has ended up in the hands of the Supreme Court.
In a first wave of judgments, which were handed down between November 2023 and January 2024, the Civil Chamber of the Supreme Court had occasion to rule on whether or not certain provisions that were contained in the bylaws of condominium law prior to the pursuit of vacation rentals (prohibition on the pursuit of “economic activities” in dwellings, prohibition on their use as “hotels/boarding houses”, etc.) constituted an obstacle to such rentals. As we discussed in a previous post, the Supreme Court considered at that time that tourist rentals should be regarded as included in those prohibitions and, to that extent, were affected by them.
Most recently, the Supreme Court has addressed the question of the majority that is needed to prohibit tourism activity ex novo.
Regarding this question, and in resolving the existing debate between the various appeal courts, the Civil Chamber of the Supreme Court sitting in plenary session has held in two judgments issued in October 2024 that such majority is three fifths as established in article 17.12 of the Condominium Property Law and that, therefore, the unanimity envisaged in article 17.6 of the same law is not necessary.
The controversy arose because the above-mentioned article 17.12, in describing the powers available to condominium law by a majority of three fifths, mentions “limiting or conditioning” the pursuit of vacation-related activity, but does not refer specifically to the possibility of “prohibiting it”.
The First Chamber began its reasoning by recalling that “according to the Dictionary of the Royal Academy of the Spanish Language, ‘to limit’ not only means ‘to place limits on something’, but it also means ‘to establish the extent of someone’s authority or rights and powers’”. It took away from this that “the possibility of limitation legally conferred on owners’ associations may also entail their complete prohibition, which would be the ceiling of the limit”.
Jointly with the grammatical approach, the Supreme Court also resorted to the purposive legal interpretation approach, which, as it notes, “constitutes a privileged tool to reveal the raison d’être of regulations” and, in this case, “provides precisely the interpretation that limiting tourist rental activity includes its prohibition”. According to its reasoning, the introduction of article 17.12 of the Condominium Property Law stemmed from the legislature’s aim of favoring “residential leasing over tourist rentals, which it seeks to restrict in order to increase the volume of dwellings that are available for sale and leasing”. For that reason, the Court concluded, that a mere limitation on “the pursuit of such activity does not solve, at least to the same extent, the issue of the difficulties in accessing housing, which this legislative provision seeks to remedy”.
Lastly, the Civil Chamber noted that submitting the prohibition on tourist rentals to the unanimity rule “would be tantamount to rendering it impossible, since the negative vote of the owner of the apartment where the activity was to be pursued would suffice to prevent it”.
However, in these two judgments, the Supreme Court did not address the interpretation that should be given to the final indent of the above-mentioned article 17.12 (“resolutions shall not have retroactive effect”), which has also given rise to disparate judicial interpretations on which all attention is now focused.
Thus, some appeal courts consider that this non-retroactivity only affects the tourist rental contracts already signed at the time the resolution was adopted, which, therefore, will not be affected by it. Others, conversely, assert that it goes much further and extends to vacation activities in general that were already being pursued, which will consequently escape the effects of the resolution approving prohibition. There are even precedents from the appeal courts that assert non-retroactivity on vacation activities that were not yet underway, but with respect to which preparatory steps were taken (such as applying for administrative authorizations).
The last word on this issue, the impact of which is undeniable, will once again come from the Civil Chamber of the Supreme Court. So we will certainly have to revisit this topic in future blog posts.
Manel Pastor i Vicent
Dispute Resolution: Litigation and Arbitration
