19/01/2010

A new European Directive for the timesharing industry

Consumers are better protected

Directive 2008/112 ‘on the protection of consumers in respect of certain aspects of timeshare, long-term holiday product, resale and exchange contracts’ was approved on 14 January 2009. Each Member State has until 23 February 2011 to transpose this directive into its national legislation.

All agreements having something in common with timesharing are being targeted

Until now, EU legislation only applied to timesharing agreements that met a very strict legal definition. However, it was very easy to evade this definition, so creative minds thought up numerous new formulas for long-term holiday products that were not covered by the legislation. For example: membership of holiday clubs, access to holiday catalogues that give discounts and holiday exchanges. None of these agreements was covered by specific legislation. This has now changed.

The new European legislation applies to contracts on the sale and resale of timesharing, but also long-term holiday product and exchange contracts. The new legislation only applies to timesharing contracts and long-term holiday products if the term is at least 1 year.

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Full pre-contractual information

The European Commission has drawn up various standard forms which companies can use as a model to provide the legally required information to consumers.
This concerns 4 forms (1 per product) regarding:

Timesharing contracts;
Long-term holiday product contracts;
Exchange contracts;
Resale contracts.

These forms can be found as an annex to the Directive.

The trader must provide this information, which forms part of the contract, to the consumer on paper or on another durable medium which is easily accessible to the consumer.

The information must be set out in the consumer’s language, insofar as this is one of the official languages of the European Union.

If the consumer does not receive this information at the latest on conclusion of the contract, then he can cancel the contract during 3 months and 14 calendar days.

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Right of withdrawal during 14 days

From now on the withdrawal period is 14 calendar days.

The European Commission has drawn up a standard withdrawal form. Traders are obliged to include this document in the contract so that consumers can make use of it if they wish to cancel the contract.

The withdrawal period starts on the day that the contract is concluded or on the day on which the consumer receives the contract, whichever is later.

If the trader did not hand the withdrawal form to the consumer on the day that the contract was concluded, then he has another year to do so. The consumer then has 14 calendar days counting from the date of receiving this form, to withdraw from the contract.

If the consumer cancels the contract, all ancillary contracts (e.g. credit and exchange contracts) are also dissolved automatically without charge to the consumer.

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Advance payments are prohibited

The trader is not allowed to ask the consumer for any advance payment, provision of guarantees, reservation of money on accounts, explicit acknowledgement of debt or any other consideration to the trader or to any third party before the end of the withdrawal period.

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Long-term holiday product contracts must include a payment schedule with instalments

A long-term holiday product contract must state the price the consumer has to pay in order to be entitled to obtain access to the accommodation. Payment of this price must be made in instalments. The trader must present a payment schedule to the consumer. The payment schedule shall state the annual instalments which must be equal and the dates on which they are due to be paid.

From the second instalment payment onwards, the consumer may terminate the contract without costs. For this the consumer must send a cancellation letter to the trader within 14 calendar days after receiving the annual payment request.

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Monitoring compliance with the Directive in practice and if necessary penalties

The European Consumer Centre is delighted to hear that such legislation has been approved. Yet we have doubts about applying this Directive in practice. The industry for timesharing and related products is characterised by the unmistakable presence of swindlers and businesses that use unfair and aggressive business practices. Many so-called businesses selling timeshare or related products have dishonest intentions and are clearly intent on swindling consumers. It is therefore necessary to monitor compliance with the Directive. Failure to comply must be punished. These two aspects have in fact been covered in the Directive.

In anticipation of the transposition of this Directive into the legislation of the various Member States and improved monitoring of the market in timesharing and related products, we advise consumers to be careful.

More information about reselling a timeshare can be found in our brochure which you can download (at the moment only available in French or Dutch) or order by mail or telephone (02 542 33 46).

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