• ‘Fractional’ property sales that are really timeshare sales are illegal (Spanish supreme court)
• Requiring clients to sign before notaries and witnesses compounded the ruse (Consumer Timeshare Association)
• 2017 likely to see many more claimants come forward to dispute their ‘fractional’ ownership (Timeshare.lawyer)

Fractional ownership in its true form is a legal way to purchase a portion of a property. However, not all fractional ownership properties that are sold are what they appear to be, meaning that some ‘fractional’ ownership sales can actually be deemed illegal.

Belinda Rollins, Legal Support Manager at timeshare industry specialists Timeshare.lawyer, explains,

The key difference here is that fractional ownership involves the buyer owning part of a physical thing, such as a property, while timeshare ownership involves buying units of time. Where some unscrupulous companies have dressed timeshare up as a fractional investment, the Spanish supreme court has ruled that the sale was illegal.”

According to the Timeshare Consumer Association, the alleged fractional sales (in the case of Puerto Calma Holiday Club Finland, which was the timeshare company at the centre of the case) were very convincing. Clients were required to sign paperwork in front of a witness and a notary as part of the purchase process. However, as the purchase did not result in the client owning any shares of the actual property, they were not in fact purchasing a fractional investment but a timeshare.

The Spanish ruling came into force in October 2016 and its effects are still to be fully felt according to Timeshare.lawyer’s Belinda Rollins. She comments,

“There are still a lot of fractional property ‘owners’ out there who don’t yet realise that they’ve been mis-sold a timeshare as a fractional investment. We’re expecting a lot more people to come forward in 2017 as news of the ruling spreads further. I would encourage anyone who has bought a fractional ownership property to contact Timeshare.lawyer as soon as possible to check their paperwork and be certain that they’ve actually bought what they think they’ve bought.”

The Spanish supreme court’s ruling made clear that selling timeshares dressed up as fractional ownership properties evades timeshare law. The clients in question were granted compensation as a result.

The past couple of years have seen quite a shakeup of the timeshare industry thanks to the intervention of the Spanish supreme court. The fractional/timeshare ruling follows an earlier ruling that determined grounds for timeshare contracts to be deemed illegal if they last longer than 50 years, are for floating week products or involved taking money during the cooling off period. That decision has already resulted in some €4.5 million of compensation being awarded to timeshare owners, according to the Timeshare Consumer Association. One wonders how much additional compensation will now result from the fractional ruling.