Timeshare Legislation

"Self regulation? Yes! Legislation - Best not...",
says the Timeshare Operator

Malta's growing timeshare industry is, as yet, not regulated by legislation. The Malta Timeshare Association has its own Code of Ethics, but Malta's accession to the European Union will require implementation of an EU Directive on Timeshare.

In July 1999, I had the opportunity to work with a group of hospitality students and their lecturer, Mrs Elaine Mortimer, on a project entitled "Timeshare in Malta for the New Millennium". It was certainly a learning experience for me, just as much as for the students, for I had never realised the importance as well as the potential of this growing industry. Indeed, despite the miniscule size of our islands, as many as 4% of British timeshare owners own a timeshare in Malta. It is claimed that as many as 100,000 visitors annually come to Malta through timeshare. As a law student, I found the students' research on timeshare legislation particularly interesting. Their treatment of legislation was refreshing, avoiding legalese and considering the practical aspects of legislation. My suspicions were immediately confirmed: Malta has yet no timeshare legislation, and it is only recently that the Malta Timeshare Association put into effect a Code of Ethics aimed at regulating OPCs. From the students' research, as well as from the comments made by participants at their final presentation, it seems that whilst the industry is proposing self-regulation, its members do not feel they should be "tied down" by legislation. I am left with no doubt however that Malta, when a member of the Union, will eventually be required to follow Directive 94/47/EC of the European Union, adopting legislation that will regulate the operators, essentially by increasing consumer protection. This legislation will effectively harness renegade operators who are tarnishing the image of our islands' industry.

The Directive covers timeshare contracts which are at least of a three-year duration and which relate to the use of one or more immovable properties for a specified or specifiable period of the year, which may not be less than one week. (Article 1) This effectively defines the term "timeshare".

The Directive enforces the obligation to provide information on the immovable property, and these include:

the exact location of the property and an accurate description
the state of completion of the property when this is still under construction, as well as the services and facilities to which it will have access

The contract itself must include the above information, as well as complete information that identifies the seller of the timeshare. If it does not include this data, then the purchaser has up to three months to cancel the agreement without obligation. This withdrawal period is reduced to a cooling-period of ten days minimum, where the information given in the contract is complete and as stipulated by Law.

In addition to the above, the purchaser is prohibited from making any advance payments whatsoever during this cooling-off period. In this way, the Directive effectively translates consumer protection into a tangible legislative requirement which will ensure that the consumer is not forced to make a summary decision to part with his money. This has to be seen in the light of the fact that a timeshare contract is often one of the largest investments a consumer is likely to make in his lifetime. Aggressive selling techniques by timeshare salespersons (or OPCs), whilst difficult to regulate, would then be off set by a mandatory cooling-off period.

The question begs itself: Why do timeshare operators in Malta shun legislation? Increased bureaucracy and a preference to self-regulation are the two main reasons put forward. What is certain however, is that ultimate EU membership will require implementation of the Directive aimed at regulating the industry.

The full text of the European Directive is available on the Europa website. If you would like more information about the students' project, or would like a copy of their research kindly e-mail me or their course tutor, Elaine Mortimer.