Introduction
Recently, I handled a case in which the timeshare holders had concluded ‘lease contracts’ with a resort decades ago. The contracts met all the requirements of a timeshare, i.e.: i) the contracts were concluded for at least three years, ii) a one-time purchase price was paid, iii) for a personal right of use of certain units in the resort, iv) for at least 1 (one) week per year. Nonetheless, the contracts are not protected under the timeshare laws of Aruba. Here’s the reason why.
Newly introduced timeshare laws in Aruba, and protection
The timeshare laws were introduced in Aruba on November 1, 2012. The regulations are meant to protect timeshare holders. An example of this entails the compulsive requirement to incorporate a rescission period of 5 days in the contract during which the purchaser may annul and reverse the purchase without reason, with full reimbursement of the purchase price.
Another example entails the incorporation in the contract of the full and accurate information regarding the seller. If this information is incorrect, the rescission period could be extended with (a maximum of) 30 days. The buyer would then still be able to rescind the purchase after 35 days of having received the contract. I have had a timeshare resort here in Aruba reimburse the full purchase price of the timeshare contract for a client, after it came to light that the information in the contract was not up to date with changes made in the statutory name of the company (the rescission period was extended as a consequence whereof client was still able to rescind the purchase).
Timeshare laws do not apply retroactively
The timeshare laws only apply to contracts concluded after their introduction, i.e. November 1, 2012 (which is relatively recent). Timeshare contracts concluded prior to said date are not protected under said laws. In other words, the timeshare laws have no retroactive effect.
The implications should not be underestimated. The timeshare laws not only protect the purchaser of a timeshare, they may also guarantee the establishment of an association, with the sole purpose to protect, warrant and secure the rights of the timeshare holders. The latter is conditional to the issuance of the timeshare in the form of a proprietary right, i.e. a part-time right of apartment. I refer to my previous timeshare article in which I discuss this topic in more detail.
Legal status of timeshares dating from prior to November 1, 2012
The abovementioned does not mean that holders of ‘old’ timeshare contracts would be unprotected and without rights, however.
Based on case law, timeshare contracts are generally regarded as lease contracts. A relevant case in this regard is ‘Plaintiff vs NV Kura Hulanda (Westpunt)’. The point of discussion was whether the timeshare contract of plaintiff could be regarded as a lease agreement. The Highest Court decided that this was indeed the case, notwithstanding the fact that the contract was concluded for 99 years. In the case ‘Pelican Owner vs Reahl’, it was also decided that the timeshare contract was a lease contract.
It should be noted that according to the decision made in the case ‘Plaintiffs vs AKGI Royal Palm C.V.O.A.’, it is also relevant whether the parties, when concluding the contract, had the intention to conclude a contract entailing the essential elements of a lease. If not, then the contract may still not qualify as such.
Protection on the basis of lease laws
Hence, timeshare contracts dating from prior to November 1, 2012, would (or could) be regarded as lease contracts. As a consequence thereof, the laws on lease and the protections granted therein would be applicable. For instance the rule that a sale does not annul existing lease contracts. If the resort is sold to a third party, then the third party becomes a party to the lease contracts. Existing rights and obligations on the basis of the lease contracts at the moment of change of ownership are upheld and respected. Another protective clause includes the obligation of the lessor to properly maintain the unit.