The Supreme Court has recently ruled on whether or not the rental of residential properties as vacation accommodation constitutes an economic activity and, in relation to this question, whether the statutes of communities of owners can prohibit such non-residential use.
The huge growth in the popularity of vacation rentals has generated many questions regarding the legal rules applicable. In particular, this new business model has generated a special interaction with, among others, communities of owners, due to the coexistence of stable situations such as residential use and arrangements of a fleeting and transient nature such as exploitation of the property for tourism purposes.
In this respect, there is also a considerable debate surrounding the scope of the limits on the right of ownership, although it is clear, in any event, that this is a question of legal definition rather than an absolute right.
Whitin this context, the Spanish Supreme Court has recently handed down several resolutions which, in essence, analyze whether or not communities of owners have the capacity to prohibit the use of residential properties for economic activities and, linked to this, whether vacation rentals could be considered as economic activities for these purposes.
The significance of this last point should not be underestimated: what the Supreme Court examines is whether the wording of certain prohibitions established in the statutes of communities of owners which clearly refer to commercial exploitation, but not specifically to vacation rentals, can be understood to imply a prohibition on the latter too.
One of the most recent judgments issued by the Supreme Court on this regard is judgment no. 1671/2023, of November 29, 2023. In it, the Supreme Court understands that the rental of residential properties for tourism use must be classified as an economic activity, and that its prohibition by the statutes of communities of owners which expressly forbid the use of the dwellings for activities of this type is therefore legitimate.
The Supreme Court’s understanding is therefore that “the leasing of dwellings which are offered or marketed as accommodation for tourists or vacationers, and which are temporarily ceded by the owner, operator or manager and marketed, either directly by such person themselves or indirectly, to third parties, on a repeated or routine basis and in exchange for a financial consideration, is an economic activity”.
This interpretation by the Supreme Court gives rise, in turn, to the understanding that vacation rentals are prohibited in communities of owners whose statutes do not literally prohibit vacation rentals but do place a generic prohibition on the use of the dwellings for the purposes of economic activities. Accordingly, the Supreme Court concludes that prohibitions of the following type in the statutes of communities of owners are applicable to the use of dwellings for tourism purposes: “The pursuit of any economic activity in the dwellings (office, bureau, consulting room, clinic, etc., …) is strictly forbidden”.
In line with the forgoing, the Supreme Court, in its judgment no. 105/2024 of January 30, 2024, has once again confirmed the validity of a statutory prohibition on this type of activity in a case in which the statutes of the community of owners did not specifically prohibit “vacation rentals” but did prohibit use as a “hospitality (“hospedería”)”.
In this regard, the Supreme Court affirms that rental for tourism purposes is most certainly “an activity open to the public, announced on advertising platforms, whose essential purpose is to satisfy the need for temporary accommodation inherent in the activity of tourism, (…) and that it keeps identity of reason with the established prohibition of using the flats for hospitality”. Likewise, the Supreme Court points out that according to the Spanish Royal Academy (“RAE”), “they are synonyms of hospitality, as the action or effect of hosting someone, the “accommodation, reception, lodging, shelter, hospice”.
In short, what the Supreme Court comes to enshrine is that what is relevant for these purposes to consider whether this type of activity prohibited by the statutes of a community is being carried out, is not so much whether the business developed literally fits into the wording of the prohibition, as if in reality we are facing an economic activity and this is precisely the type of activity that the community prohibits.
Dispute Resolution: Litigation and Arbitration
