Since 1994, an EU Directive has helped to harmonise timeshare rules across the EU, but litigation between operators and holidaymakers is still frequent, and many products have been designed, similar to Timeshare, which fall outwith the scope of the existing legislation. As the 1994 Directive was a minimum harmonisation directive, this has led to a fragmented regulatory framework across the EU that has caused significant compliance cost when entering into cross border transactions.
The new Timeshare Directive on the protection of consumers in respect of certain aspects of timeshare, long-term holiday products, resale and exchange contracts, was adopted on 14 January 2009 and published on 3 February 2009. The new Directive supplements the general rules introduced by the recent Directive on unfair commercial practices, and will cover both timeshare packages, including re-sales and exchanges, and new products that so far have escaped any legislation. The new Directive provides for full harmonisation, though only for certain aspects (sale and resale of timeshares and long-term holiday products, as well as the exchange of rights deriving from timeshare contracts).
The purpose of the Directive is to contribute to the proper functioning of the internal market and to achieve a high level of consumer protection, by approximating the laws, regulations and administrative provisions of the Member States in respect of certain aspects of the marketing, sale and resale of timeshares and long-term holiday products as well as exchange contracts.
The Directive lays down new rules on the right of withdrawal, choice of contract language, pre-contractual information which must be provided in a standard information sheet which must include all fees and charges and a ban on taking deposits during the cooling-off period. The standard information sheet must be available at all times at any sort of promotional event.
The Directive's scope is also broader than the old legislation. "Long-term holiday products" (holiday clubs), which were less common at the time the original directive was adopted, will fall within its ambit, as will re-sales and exchanges of timeshares. It will cover not just traditional property timeshares but also boats, caravans and cruise ships marketed under timeshare or holiday club contracts.
The legislation applies to contracts for "more than one period of occupation" of the accommodation (i.e. repeated visits) concluded for a period of more than one year (previously three years).
There will be 14-day cooling-off period (increased from the current 10 days) granted to buyers after signing a timeshare contract. In the event that the standard information sheet was not provided by the seller to the purchaser the right of withdrawal will be extended to three months.
Lastly, Member States will have to encourage the creation of effective out-of-court complaints and redress procedures for settling consumer disputes and must encourage traders to inform consumers of such procedures.
The full text of the Directive can be found at:
Member States have until 23 February 2011 to adopt Regulations to implement the new Directive. BERR have advised that they will be consulting in 2009 on regulations to implement the Directive in the UK.
We shall update this briefing note as matters develop.