EC directive on timesharing: one more reason to invest in Italy
by Federico Regaldo
A large amount of timeshares have been sold across national borders and too often the purchaser had no chance but to rely on the good faith or financial soundness of the property developer. With EC Directive 94/47, of 26 October 1994, to the purchaser that will invest its money in an Italian timeshare will be given an high degree of protection: several obligations to provide information, the duty to let a cooling-off period and a ban of penalties eventually attached to the rescission thereinafter derived integrate a system that already gives the defence consequent upon a direct ownership basis.
Most part of Italian timeshares are indeed structured on the co-ownership, laid down in article 1100 and following of the civil code. Although the use of an instrument older than the concept of timesharing can pose some theoretical problem (Italian civil code is dated 1942, while the first Italian timeshare plans were set down during the '70), the courts have solved most of them. Italian law offers therefore a great protection of the consumer, once acquired the right of property (in rem), because of the guarantees against the insolvency of the building company, the facilities in realising capital gains and the possibilities to exercise large checks on the management and to react to abuses committed by other timeshares purchasers or third parties.
Moreover, the presence of the notary gives further guarantees, like the absence of encumbrances other than that declared and the respondence to the town-planning.
The recent EC Directive aims to protect the timeshare purchaser before its willingness is coming to an agreement, so improving the shield already conferred by Italian law and limited, as we have just seen, to the phase extending after the acquisition of the right of property.
EC Directive 94/47 will be applicable to timesharing during 3 years or more and conferring the right to use a real estate (only for habitation purposes) for 1 week or more par year. Under the Directive, the agreement has to mention a large number of information as, for example, the legal status of the developer and nature of the right sold, a description of the estate or a detailed project of the building, enclosing the warranties upon the effective achievement or the reimbursement of the sums already deposited in case of failure. Further information has to be given upon the common facilities, the charges for the maintenance and time and procedure for exerting the right of rescission.
On this subject, it has to be pointed out that a cooling-off period of 10 days from the signing of the agreement has to be always observed, while a longer period of 3 months is established for the case of failure to provide the most important information; furthermore, in the former case, the purchaser is obliged to return the fees strictly connected to the signing and the rescission of the agreement only, while, in the latter, no charge is due.
Unfortunately, the time-limit for the implementation of the Directive on timesharing by the member States will expire only in April 1997 and, according to the case law of the European Court of Justice, there will be no way to rely upon it sooner. Finally, the Directive 94/47, as well as Italian civil code, does not prevent the purchaser from the risk due to the bankruptcy of the developer in the time elapsing between the signing of the preliminary agreement and that one of the definitive.
For these reasons, caution is still recommended.