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January 2012 N° 2012/01 |
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On 16 September 2011, the Belgian Official Gazette published the Act of
28 August 2011 on the protection of consumers in respect of agreements
relating to timeshare, long-term holiday products, resale and exchange1. This Act of 28 August 2011, which entered into force on 26 September
2011, repeals the former Act of 11 April 1999 on agreements relating to the
purchase of the right to use immovable properties on a timeshare basis2. In this newsletter, Stibbe provides you with
a brief overview of the most fundamental changes laid down by
the Act of 28 August 2011. 1. The new Act on agreements relating to timeshare 3. Overview of the most important provisions and novelties 4.
Conclusion 1.
The new Act on agreements relating to timeshare The Act of 28 August 2011 on the
protection of consumers in respect of agreements relating to timeshare,
long-term holiday products, resale and exchange (hereinafter the “New Act”)
is the result of the Belgian legislature’s implementation of directive
2008/122/EC (hereinafter the “Directive”).
The Directive is a maximum
harmonization directive. This means that Member States are obliged to
implement the Directive’s provisions in national law in a way that accurately
reflects and neither exceeds nor falls below the requirements in relation to
the areas covered by the Directive. In light of the many inevitable changes
the Directive entails, the New Act replaces the entire former Act of 11 April
1999 on agreements relating to the purchase of the right to use immovable
properties on a timeshare basis (hereinafter the “Former Act”). After more
than ten years, the New Act therefore expands the purpose and the scope
initially anticipated by the Former Act, actualizes certain elements, and
offers a set of clear, modern and simplified rules. After the adoption of the Former Act,
new products and contracts, which were not covered by any legislation, have
been developed. These new products include those which can be called
"timeshare-like products" (such as timeshare in canal boats, cruise-ships
and caravans, or contracts for less than 3 years) as well as the so-called
"holiday discount clubs". Resale and exchange of timeshare schemes
were not covered either by the Former Act. Some of the new products and some
transactions related to timeshare, particularly resale, caused high levels of
detriment to consumers since they were not covered by the Former Act. Such
detriment was evidenced by a significant number of complaints and unfair
competition towards honest traders. The New Act will thus try to enhance
consumer protection by extending the scope of the current rules to also
include the new products which have emerged in the market, such as holiday
clubs. Resale and exchange will be covered as well. The New Act should ensure that
consumers are equally well-protected and will create a level playing field in
the market for timeshare and other holiday-related products. 3. Overview of the most important
provisions and novelties 3.1 Definitions The Former Act
referred to a “contract relating
directly or indirectly to the purchase of the right to use one or more
immovable properties on a timeshare basis”, yet the New Act applies to “an agreement relating to timeshare”.
Consequently, the two Acts define contract differently. The Former Act
defines this as “any contract or group
of contracts concluded for [more than one year] under which, directly or
indirectly, on an exclusive basis or not, a real property right or any other
right relating to the use of one or more immovable properties is established,
or is the subject of a transfer or an undertaking to transfer for a specified
or specifiable period of the year of at least two days”. The New Act
states that it is “a contract or group
of contracts of a duration of more than one year
under which a consumer, for consideration, acquires the right to use one or
more overnight accommodation(s) for more than one period of occupation”. In light of
this expanded scope, the New Act includes several new definitions (i.e., “long-term holiday product contract”, “resale contract”, “ancillary agreement”, etc.). Besides
the scope of the New Act, the most significant change with regard to the
definitions lies in the different actors to whom both Acts apply. The Former
Act referred to “Vendor” and “Purchaser”, whereas the New Act refers
to “Traders” and “Consumers”. It is thus
clear that the New Act covers a broader playing field and emphasizes the
protection of the “Consumer”, who
is the person “using” the
property/product in question as opposed to the “Purchaser”, who is the person “acquiring” a certain right on the property/product in question. 3.2 Advertising
and pre-contractual information Although the
Former Act already included several stringent obligations with regard to
advertisements and pre-contractual formalities, the New Act takes it one step
further and attempts to harmonize the required information. For example,
the New Act foresees that “where a
timeshare, long-term holiday product, resale or exchange contract is to be
offered to a consumer in person at a promotion or sales event, the trader
must clearly indicate the commercial purpose and the nature of the event in
the invitation. The pre-contractual information is to be available to the
consumer at any time during the event”. In addition, a timeshare or a
long-term holiday product may not be marketed or sold as an investment. In order to
ensure that proper communication of the pre-contractual information is
harmoniously implemented in all Member States, the New Act now stipulates
that standard agreements, a copy of which is annexed to the Act, must be
added to the initial offer to the consumer by the trader. This requirement
thus replaces the Former Act’s mandatory remittance of a prospectus. Moreover,
the contents of the standard agreements must be respected when drafting the
final agreement. These standard agreements contain the mandatory provisions
which the Former Act already enumerated (i.e., identity of the parties,
information on the acquired rights, information on the real property, etc.). Finally, the
pre-contractual information as well as the final written agreement must be
drawn up in the language or one of the languages of the Member State where
the consumer is resident or of which she or he is a national, at the choice
of the consumer, provided it is an official language of the European Union. 3.3 Right
of withdrawal The consumer
is given a period of fourteen calendar days to withdraw from any timeshare,
long-term holiday product, resale or exchange contract, without giving any
reason, owing any cost, or paying any indemnity. Under Belgian law, it should be noted that
the consumer now has slightly less protection since the former withdrawal
period was fifteen working days. The
withdrawal period will be calculated: (a) from the day of the conclusion of
the contract or any binding preliminary contract; or (b) from the day when
the consumer receives the contract or any binding preliminary contract if it
is later than the date referred to in point (a). Whereas the
Former Act required the final agreement to contain information on the period
or the periods of the year wherein the right of withdrawal could be
exercised, the mortgage situation of the real property as well as a statement
that the acquisition of the real property would not entail any additional
cost other than those mentioned in the agreement, the New Act stipulates that
a separate standard withdrawal form must be provided to the consumer prior to
the signing of the agreement. This
separate standard withdrawal form must be provided to the consumer in
writing, on paper or on another durable medium, and meets the abovementioned
language requirements. In the event
such separate standard withdrawal form is not provided to the consumer, the
withdrawal period will be one year and fourteen calendar days. If such form has been filled in by the
trader and provided to the consumer in writing, on paper or on another
durable medium (meeting the abovementioned language requirements), within one
year from the day referred to above in the second paragraph of this section
3.3, a withdrawal period of fourteen calendar days will start as from the day
the consumer receives that form. Similarly,
where the information referred to in the standard agreements as well as the
applicable standard information form has not been provided to the consumer in
writing, on paper or on another durable medium (meeting the abovementioned
language requirements), the withdrawal period will be three months and fourteen calendar days. If
the information referred to in the standard agreements as well as the
applicable standard information form has been provided by the trader to the
consumer in writing, on paper or on another durable medium (meeting the
abovementioned language requirements), within three months from the day
referred to above in the second paragraph of this section 3.3, a withdrawal
period of fourteen calendar days will start as from the day the consumer
receives that form. 3.4 Advance
payment In relation
to timeshare, long-term holiday products, and exchange contracts, the trader
is prohibited from requesting - either on his/her own behalf or for that of
any third party - any advance payment, provision of guarantees, reservation
of money on accounts, explicit acknowledgement of debt, or any other
consideration to the consumer before the end of the withdrawal period. As to
the resale agreements, these prohibitions apply in any way possible to the
period prior to either the actual sale or the end of the agreement. In relation
to the agreements regarding long-term holiday products, payments will be made
according to a staggered payment schedule. Any payment of the price specified
in the contract made not in accordance with this payment schedule is
prohibited. The payments, including any membership fee, are divided into
yearly installments, each of which is an equal value. The trader will send a
written request for payment, on paper or on another durable medium, at least
fourteen calendar days in advance of each due date. From the second
installment payment onwards and without prejudice to the provisions of law
which regulate the termination of the agreement, the consumer may terminate
the contract without incurring any penalty by giving notice to the trader
within fourteen calendar days from the date of receiving the request for
payment of each installment. 3.5 Penalties The New Act
forbids the following types of provisions and deems them null and void by
operation of law: - Any provision
pursuant to which a consumer waives his/her rights conferred on him/her by
this Act, when the applicable law is that of a Member State; -
Any provision pursuant to which a consumer is
deprived of the protection granted by this Act, when the applicable law is
that of a third party country, if: ·
for the agreement related to real property under
this Act, the real property is located on the territory of a Member State; ·
for the other
agreements under this Act, which are not directly related to real property,
the trader pursues commercial or professional activities in a Member State
or, by any means, directs such activities to a Member State and the contract
falls within the scope of such activities. The warning
procedure described in Article 22 of the New Act (i.e., a public officer can
be appointed by the Minister of Economic Affairs to address a warning to the
offender of any of the Act’s provisions) adds a publicity element to the
concept of warning mentioned in the Former Act. This Article states that the
obligation of the offender to stop committing the breach can be publicly
announced. Finally,
when compared with the Former Act, the New Act foresees higher fines in the
event of a breach of a contractual obligation (€250 to €20,000 instead of
€150 to €10,000). Based on an
analysis of both Acts, it is obvious to conclude that the New Act covers a
broader playing field, inspired by the economic reality and evolutions.
Whereas the Former Act applied to agreements relating to the purchase of the
right to use immovable properties on a timeshare basis and determined the
relationship between a vendor and a purchaser, the New Act applies to
agreements relating to timeshare (including those related to movable
properties), long-term holiday products, resale and exchange, and determines
the relationship between a trader and consumer. Where the
Former Act was entered into force subsequent to the implementation of a
minimum harmonization directive, the New Act is the result of an attempt to
maximally harmonize the regulations applicable in the Member States. The
obligations mentioned in the New Act should therefore reflect what will be
available throughout the entire European Union. The use of the standard
agreements is the best example hereof. Finally,
additional obligations and formalities render the New Act more strict and
complex which is most likely to protect consumers (for example, by way of
requiring that a withdrawal form be used, and imposing higher fines, etc.)
from traders with bad intentions.
Footnotes 1. On the same day, the Belgian Official Gazette published the
ancillary Act of 13 August 2011 on the action in cessation of a breach on the
Act of 28 August 2011 regarding the agreements relating to the purchase of
the right to use immovable properties on a timeshare basis. 2. In order to
reflect the expanded scope of the new Act of 28 August 2011, the ancillary
Act of 13 August 2011 (which also entered into force on 26 September 2011)
amends the former Act of 11 April 1999 with regard to its content relating to
the action in cessation of a breach of an agreement relating to the purchase
of the right to use immovable properties on a timeshare basis. All rights reserved. Care has been
taken to ensure that the content of this e-bulletin is as accurate as
possible. However the accuracy and completeness of the information in this
e-bulletin, largely based upon third party sources, cannot be guaranteed. The
materials contained in this e-bulletin have been prepared and provided by Stibbe for information purposes only. They do not
constitute legal or other professional advice and readers should not act upon
the information contained in this e-bulletin without consulting legal
counsel. Consultation of this e-bulletin will not create an attorney-client
relationship between Stibbe and the reader. The
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