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On the 26th October 1994, the European Communities adopted the following Law : "The European Directive 94/47/EC of the European Parliament and Council on the protection of purchasers in respect of certain aspects of contracts relating to the purchase of the right to use immovable properties on a timeshare basis".
All EU countries were required to adapt their national law by the final date for implementation of April 29th 1997. The aim of the Directive to establish common rules to protect consumers in all EU Member States. The Directive covers transactions between commercial vendors and private buyers but excludes business-to-business transactions, agreements between private buyers and sellers, agreements with resale companies and agreements on canal/narrow boat timeshares.
It is important to note that the Directive applies to "any contract or group of contracts concluded for at least three years under which, directly or indirectly, on payment of a certain global price, a real property right or any other right relating to the use of one or more immovable properties for a specified or specifiable period of the year, which may not be less than one week, is established or is the subject of a transfer or an undertaking to transfer." Such a definition could mean that companies selling "timeshare" of less than three years (such as holiday packages), for example, are not covered by the legislation and therefore are not required to offer a cooling-off period.
The four main points to the EU Directive are: Buyers must have a statutory minimum "cooling off" period of ten days from signing the contract The taking of deposits before the end of the cooling off period is prohibited Contracts must be in the language of the Member State in which the buyer lives Purchasers must receive all descriptive information concerning the property and their rights. The Directive does not attempt to set up legal structures for timeshare. It is a consumer protection measure and concentrates on the position up to and including the time of the purchase contract.
OTE supports the provisions of the Directive recognising the imperative behind its inception, and continues to work with governments at both European and national level to create legislation and regulation that safeguards the interests of the consumer and encourages the positive development of the industry. It is important to note that all OTE members, regardless of whether they are resale companies, companies selling weeks in canal boats or selling weeks with contracts of less than three years, are all obliged to adhere to OTE's Code of Ethics.
To add further protection to packs of less than three years, OTE has implemented a Holiday Pack Resolution which came into force in August of 1999 in order to protect consumers buying from OTE members.
History and Development of the EU Directive In 1991 the European Commission announced its intention to present a Directive to protect consumers in relation to timeshare contracts. The proposal had three main sources: The European programme for consumer protection and information adopted in April 1975 Resolutions of the European Parliament in 1988 and 1991 Pressure from the UK Government for European-side legislation, following pressures on the UK Government by the UK timeshare industry to legislate. The original draft Directive presented by the Commission covered most of the necessary ground - provision of information, cooling-off period, representation of purchasers in respect of ongoing resort management. The main area it did not cover was establishing minimum standards for the legal structure.
The national European timeshare industry associations grouped together within the European Timeshare Federation and spearheaded by the UK Timeshare Council, lobbied actively for the concept of a Directive which held a fair balance between the supply side on the one hand and the consumer on the other. They proposed detailed changes to the draft to achieve this throughout the period up to the final signing of the Directive in October 1994.
Unfortunately, the general attitude of many Member States was that they would only support a minimalist Directive and the Commission was forced to substantially reduce the provisions of the original draft to obtain agreement. Many of the provisions for which the industry had lobbied to achieve a fair balance were omitted, although a substantial number had met with approval by Commission officials and representatives of Member States.
Summary of EU Directive In its final form the Directive deals only with the provision of information and arrangements for the purchaser to withdraw from the contract (cooling-off period). The main provisions can be summarised as follows:
Article 3Sellers have to provide information on the matters listed in the annex to the Directive, and the information becomes part of the contract.
Article 4The contract has to be in the language of the purchaser or the Member State in which the purchaser resides and be accompanied by a translation of the contract in the language of the Member State where the resort is situated.
Article 5The purchaser has to have a minimum cooling-off period of 10 days from the signing of the contract or of 3 months plus 10 days if the contract does not contain the obligatory information. The right to withdraw is to be exercised by notice to the person appointed for that purpose in the contract. The notice has to be given but need not be received before the expiry of the period. If the right to withdraw arises because of lack of information, there is no obligation on the purchaser to pay any of the seller's expenses. If it is exercised within the 10 day period there can be an obligation to pay the necessary legal expenses of the vendor which have to be expressly mentioned in the contract.
Article 6Advance payment by the purchaser, e.g. by way of deposit before the end of the cooling-off period, is forbidden.
Article 7Related contracts for financing the purchase are automatically subject to the same rights of withdrawal if these are exercised in respect of the purchase contract.
Article 8Contracting out of the provisions which benefit the consumer is not permitted.
Article 9No clauses adopting a system of law which would deprive the purchaser of the Directive's protection are permitted if the resort is in an EU Member State.
Article 11Member States can add provisions more favourable to purchasers, but not cut down the protection provided for in the Directive.
Article 12Member States were required to incorporate the provision of the Directive into national legislation by 29 April 1997.