Organic Law 1/2025 of January 2, 2025, on efficiency in the public justice system, has amended the timeshare regulations to increase legal certainty. The changes concern both the defined rights and action for invalidity by purchasers of the assets.
The recently published Organic Law 1/2025 of January 2, 2025 on efficiency measures in the public justice system has made amendments to Law 4/2012 of July 6, 2012 on timeshare, long-term holiday product, resale and exchange contracts and tax rules (known in the industry as the Timeshare Law).
The amendments bring four major changes to elements of the defined rights and to the types of action for invalidity brought by purchasers, and place limits on them by laying down a statute of limitations:
- Article 23.6 of the Timeshare Law has been amended, to redefine the subject-matter of contracts subject to this law. The definition of timeshare has been broadened to include rights classed as simply obligational. The reform further expressly stresses that it is prohibited to include terms that could mislead anyone to believe that an ownership right or a real right in the assets under these contracts is being transferred. This is designed to increase transparency in the marketing of these rights.
- Article 30.3.1 has been amended to add flexibility to the requirement for the asset covered by the right concerned to be identified in the contract, by allowing identification to be carried out through the description of the booking process or by any other means of identifying them.
- A new additional provision one has been added, confirming the validity of preexisting rules including the earlier rules set out in Law 42/1998 of December 15, 1998 on timeshare rights and tax legislation, which will be subject to the regime registered at the Property Registry. It further allows these contracts subject to preexisting rules to be for terms longer than fifty years, or even for indefinite terms.
- Lastly, a new additional provision two has been introduced, placing a limit on the term for bringing any type of action for invalidity of contracts signed on or after January 5, 1999 which transfer rights subject to rules existing before Law 42/1998, as well as rights subject to this law. Namely, a statute of limitations has been determined for bringing action:
- seeking a declaration of invalidity of contracts subject to preexisting rules, where the action is based on a contravention of mandatory provisions contained in Law 42/1998.
- seeking a declaration of invalidity of contracts subject to Law 42/1998, where the action is based on the determinable or floating nature of the acquired rights.
In these cases, restitution of the paid purchase price is also envisaged, along with payment of damages for losses sustained by the purchaser. The reform offsets against that amount the cost associated with any use and enjoyment that has taken place, by reference to market value.
All in all, the amendments to’ the Timeshare Law seek to create legal certainty in issues that have given rise to debate in the Spanish courts.
