German Supreme Court: No exclusive "forum rei sitae" in dispute over membership in timesharing association

Plaintiff, an Austrian timesharing association, sued a German member for annual maintenance fees which were due according to the bylaws. Courts of first and second instance (AG Oranienburg/Brandenburgisches OLG) dismissed the claim because of lacking international jurisdiction of German courts.

Upon further appeal of plaintiff, BGH held that membership in a timesharing association was not closely enough connected to the use of real estate property to constitute exclusive jurisdiction of the courts of the Member State in which the property is situated as provided by Art. 22 of the Brussels I Regulation (44/2001/EC): the member's rights and obligations would go beyond the mere right to use of some real estate property. Membership in teh association therefore could not be compared with a tenancy contract. Supreme Court assigned the court of second instance with further proceedings and decision.

Source: BGH press release re case VII ZR 119/08, available in German here>>.

Florida: Injunction Sought Against Timeshare Resale Companies

Attorney General Bill McCollum on Nov. 2nd announced that his office has filed a lawsuit and has requested an emergency injunction against two related South Florida timeshare resale marketing companies. Universal Marketing Solutions, Creative Vacation Solutions, and owner/manager Jennifer Kirk allegedly collected over $4 million in marketing fees on a monthly basis, but rarely if ever marketed, advertised, or facilitated sales for the timeshare owners who had contracts with the companies. The injunction requests the companies’ cease doing any timeshare business while the lawsuit is pending.

In a statement released Nov. 3rd, the American Resort Development Association (ARDA) welcomed the move to seek an emergency injunction: Although there were many reputable companies that provided resale services, the largely unregulated secondary market also included some that used unscrupulous tactics to take advantage of owners who may wish to sell their timeshares.

Sources: Attorney General Bill McCollum News Release, ARDA press release.

Austria: misrepresentation by agent attributable to timesharing contractor

Plaintiff had entered into a timesharing contract through an agent whom he (also) had assigned himself. The agent had falsely stated plaintiff's usage rights would be safeguarded by registration in the land register. Trusting the agent, plaintiff didn't read the contract carefully. As there was no registration of his rights he contested the validity of the contract based on deception. Austrian Supreme Court in decision 6 Ob 109/09m of July 2, 2009 confirmed judgements of the lower instances attributing the misrepresentation by the agent to the timeshare contractor.

Supreme Court decision available for download in German here>>.

Austrian Supreme Court addresses excessive term of timesharing contract

In July 2003 plaintiffs had acquired timesharing rights (right to use an appartement one week per year) in defandants' hotel at CHF 10.000 and a yearly contribution of CHF 490. The contract term was scheduled until 20.01.2050 (!). In their law suit filed in 2008, plaintiffs sought for termination of their contract by 20.01.2015 and refund of EUR 5.297. They claimed that due to settled case-law the term of a timesharing contract must not exceed 10 to 15 years. As thus their contract therefore was partly void they were entitled to the refund claimed for.

The claim was dismissed by all levels of jurisdiction: Supreme Court (OGH) confirmed the view of the lower instances that it was not the excessive term of contract itself that had to be regarded void but the lack of a right to terminate the contract after expiration of a reasonable term. Even if notice of termination can be given long time in advance, the legal consequences of termination will only become effective at the time of termination. Thus there was no claim to the declare the contract void "pro futuro" and no due claim for refund.

OGH judgement 8 Ob 147/08p of April 4, 2009 available in German here>>.

"Better protection for holiday-makers: Commissioner Kuneva welcomes Parliament's vote on Timeshare"

As stated by the EU Press Room, "Consumers across the EU will benefit from greater holiday protection - when they buy and resell timeshare holidays, or timeshare-like holidays on cruise boats, canal boats, caravans and 'discount holiday clubs' - under new rules endorsed by the European Parliament today. The aim of the new Directive is to further boost consumer confidence in the Timeshare industry (worth over €10.5 billion and responsible for more than 40,000 jobs across the EU) and to eliminate the rogue traders who cause problems for consumers and bring legitimate operators into disrepute. Up to now, EU rules on Timeshare have given consumers basic rights with regard to clear information, the right to withdraw and change their mind, and a ban on deposits. The new Directive which the European Parliament voted in favour of today, aims to tackle loopholes in the current rules. Most importantly, it will extend the scope of the 1994 EU Timeshare Directive to cover new products which have emerged on the market – like discount holiday clubs, and 'timeshare-like' holidays on cruise boats, canal boats and caravans. It will also extend protection to important areas like timeshare resale and exchange clubs. The new rules should ensure that consumers are equally well protected across the EU and will create a level playing field in the market for timeshare and certain other holiday-related products.
Consumer Commissioner Meglena Kuneva said: 'I warmly welcome Parliament's support for this Directive, which will allow consumers real peace of mind when they sign up for their dream holiday deal. The new rules will ensure that the best possible protection is in place for consumers in the modern holiday market, and that rogue traders will no longer be able to exploit loopholes in the law'."

This release is available in full text.

EU: Revision of the Timeshare Directive

On 7 June 2007 the Commission adopted a proposal for a new Directive which will enhance consumer protection by extending the scope of the current rules to also include the new products which have emerged in the market, such as holiday clubs. Resale and exchange will also be covered. The new rules should ensure that consumers are equally well protected across the EU and will create a level playing field in the market for timeshare and other holiday-related products.
Recognising the problems that timeshare consumers are facing, the proposal adopted by the Commission aims at closing these regulatory gaps, by replacing the Timeshare Directive with a set of clear, modern and simplified rules.
An updated version of the proposal for a Directive on the protection of consumers in respect of certain aspects of timeshare, long-term holiday products, resale and exchange (last update 20-06-2007) is available here.

Source: European Comission, DG Health and Consumer Affairs.

"EU steps up protection for holiday makers for Timeshare holidays and holiday discount club"

As stated by the EU Press Room, "Consumers across the EU will benefit from tougher holiday protection - when they buy and resell timeshare holidays, timeshare-like holidays on cruise boats, canal boats or caravans and popular 'discount holiday clubs' - under new rules proposed by the European Commission today. The aim is to further boost consumer confidence in the Timeshare industry (worth over €10.5 billion and responsible for more than 40,000 jobs across the EU) and to eliminate the rogue traders which can bring legitimate operators into disrepute and cause consumers problems. The 1994 EU Timeshare Directive gives consumers basic rights to clear information, a ban on deposits and right to withdraw and change their mind. The new proposals published today aim to tackle loopholes in the current rules. Most importantly they will extend the scope of the 1994 EU Timeshare Directive to cover new products which have emerged on the market – like discount holiday clubs, and 'timeshare-like' holidays on cruise boats, canal boats and caravans - and extend protection to important areas like timeshare resale and exchange clubs. The new rules should ensure that consumers are equally well protected across the EU and will create a level playing field in the market for timeshare and certain other holiday-related products."

This Press Release is available in full text as well as Questions and Answers page on this issue.

Review of the European Timeshare Directive

The Timeshare Directive was adopted in 1994 and gives timeshare buyers rights throughout the European Union. It applies to any timeshare contract made under the law of an EU country or where the property is in the European Economic Area (EEA). All Member States have implemented the directive into their national law.
A public consultation on the review of the Directive was launched on June 1st 2006. In addition to the question of the extension of the scope of the Directive, other issues are raised; e.g. the length of the cooling-off period, updating the list of information requirements, financial and professional requirements, the ban on advance payments and criminal sanctions for infringements. Submissions to DG SANCO's Consultation Document on the Review of the Timeshare Directive can be found here.

DG SANCO publishes industry questionnaire on timeshare

The questionnaire is designed to collect the views of industry stakeholders on the administrative costs of current legislation, as well as the impacts of possible forms of future legislation in the field of timeshare. The aim of DG SANCO in distributing the questionnaire is to elicit a large range of industry views on the topics asked, and use the responses received as evidence in the impact assessment, which will accompany a possible proposal to revise the directive. The questionaire is available here Submissions to sanco-b2@ec.europa.eu are welcome by 11 September 2006.


(Originally posted by Michael Wukoschitz)