Introduction to the new EU Directive (written March 2009)

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17 Apr 2011

Introduction to the new EU Directive (written March 2009)

The Resort Development Industry is specifically regulated by national laws implementing the 1994 Timeshare Directive.

The 1994 timeshare Directive and its national implementation laws are based on three corner stones of consumer protection:

  • Ensuring that the consumer is given sufficient information in the contract on what they are actually buying to make an informed purchase decision;
  • Time to reflect on the purchase decision, which is embodied by a reflection period of a minimum of 10 days during which the consumer can withdraw from the contract without penalty; and
  • Ensuring that no monies can be paid during that period to the seller.

The national implementation laws differ significantly, which prompted RDO to call the Directive imperfect as early as 1999. RDO immediately complemented the Directive with a strict Code of Ethics ensuring that its members would grant consumers additional benefits when purchasing and enjoying timeshare from one of its members. RDO, for example, ensured that all its members across the EU would give consumers the same cooling off period, regardless of in which country they would purchase.

On 3 February 2009 the European Parliament and Council of Ministers adopted a new European Directive covering the sales and marketing of timeshare, long-term holiday products, resale and exchange.

This Directive will have to be implemented by all member states of the European Union by 2011. In the meantime current national laws apply.

The 2009 Directive further harmonises rules for the sale and marketing of timeshare and extends its scope to include sales and marketing of so-called long term holiday products, exchange and resale.

Once implemented across the EU a harmonised 14 calendar day cooling off period will apply during which the consumer will not have to make any payment and the same explanations of the product or service on offer apply in every EU member State.

The Directive establishes an all encompassing definition of timeshare so that timeshare in immovable property (canal boats) as well as variations on shared leisure real estate such as ‘fractionals’ and ‘private residence clubs’ in their current form on offer in Europe will also have to be sold with the well-known and accepted consumer protection rules of timeshare sales.

Discount Travel Membership Clubs, also known as holiday clubs, and defined in the Directive as long term holiday products, can only be marketed and sold with a 14 calendar cooling off period, a ban on any down payment during that period, and must explain to the potential purchaser what they are actually buying. Importantly, the buyer pays the company in equal yearly instalments over the duration of the contract and can withdraw every year when payment is due.

RDO fully supports the new Directive and will work in close cooperation with all the member states of the European Union to ensure an adequate implementation of the new Directive into national law.

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