CELEX: 51993PC0487
Language: en
Date: 1993-10-07
Title: Amended proposal for a COUNCIL DIRECTIVE on the protection of purchasers in contracts relating to the purchase of a right to utilize one or several immovable properties on a time- share basis

Sip-
                COMMISSION OF THE EUROPEAN COMMUNITIES
                                                                   COM(93) 487 final - SYN 419
                                                                   Brussels, 7 October 1993
        Î?SS
                                               Amended proposal for a
                                               COUNCIL DIRECTIVE
                   on the protection of purchasers in contracts relating to the purchase of a right
                        to utilize one or several immovable properties on a time-share basis
  tWWKSffiSS
                          (presented by the Commission pursuant to Article 149(3) of the
                                                    EEC Treaty)
 ei^/ï^îSïïSs^s
 ---pagebreak---                                                       X
                               EXPLANATORY MEMORANDUM
INTRODUCTION
Following the opinions delivered by the European Parliament1 and the Economic and Social
Committee2 on the proposal for a Council Directive concerning the protection of purchasers
in contracts relating to the utilisation of immovable property on a time-share basis\ the
Commission is asked to adopt an amended proposal m that it envisages keeping certain
features and possibly making certain other changes to its initial proposal The proposal,
modified in the light of the amendments proposed by the European Parliament, the opinion
of the Economic and Social Committee and the debates at Council level, is presented below
in compliance with Article 149(3) of the EEC Treaty
I.      Grounds for the proposal in terms of subsidiarity
        a)      What are the objectives of the measure envisaged with regard to the
                Community's obligations?
        R.      The creation of a foundation of common rules such as to ensure the legal and
                economic security of the consumer in a domain in which he is the weaker
                party; the elimination of inequalities which currently hinder the smooth
                functioning of the European market and freedom of movement.
        b)      Does the envisaged measure concern the exclusive competence of the
                Community or a competence that is shared with the Member States?
        R        A shared competence.
        c)       What is the Community dimension of the problem 0
        R        It lies in the transfrontier nature of time-share contracts, because most of the
                 holders of time-share rights exercise or will exercise their rights in Member
                 States other than the one in which they are resident; it also lies in divergences
                 in national legislation, since only four Member States have specific laws - all
                 of which are different and incomplete
        PI' 171 252 and IM 174 4 IS
        CMS 2(i(>/'H
        O.I C No 222. 2() S l)2 |> S
 ---pagebreak---    d)        What is the most effective solution when the Community's instruments are
             compaied with those of the Member States''
   R         Whatever approach is adopted by each Member State in this domain, there
             will always be an agreement which has to be signed by the parties and it is
            on this agreement that Community action must centre, in this sense it is
             necessary to lay down minimum information which the consumer must have
             prior to signature and a time limit, after signature, during which the
            consumer may withdraw from the contract Given the transfrontier nature of
             time-share contracts, this solution can only be realized at Community level
   e)        What is the concrete added value of the envisaged measure and what would
             it cost to do nothing?
   R          The measure will make it possible to overcome problems currently facing
            consumers, notably as regards the use of particularly aggressive sales
            techniques; it will also make it possible to control a major industrial sector
             where firms often have their head offices in a tax paradise and enable most
            of the Member States to legislate in this domain, because they are awaiting
             a Community text before going ahead with legislation.
            The measure will also promote the free movement of products, services,
             persons and capital, quite apart from the various procedures involved in
            timesharing.
            The consequence of inaction would be the continuation of the existing
             situation with its attendant frauds and irregularities in a domain of growing
             importance in the tourist sector.
   f)        What instruments are at the Community's disposal?
   R         A directive or a recommendation
   g)        Is a uniform rule necessary or is it enough to adopt a directive setting out
             general objectives to be implemented by the Member States 0
   R          A directive is the only appropriate instrument
II Elements of the initial proposal retained in the amended proposal
   The two fundamental features of the initial proposal, i e the vendor's obligation to
   provide an information document whose content constitutes an integral part of the
   contract and the provision establishing a cooling-off period after signature of the
   contract during which the purchaser may withdraw from the contract, are retained
   The criterion as to the language to be used is the same, i e a language which the
   purchaser declares that he knows
    The minimum character of the Directive is also retained as well as the impossibility
   for the purchaser to waive his rights under the Directive or for the vendor to disclaim
   liability
 ---pagebreak---      Finally, as regards the law applicable to the contract, the principle is upheld that the
     purchaser cannot be deprived of the protection accorded under the Directive through
     the choice of the law of a non-Member State, although the wording is simpler than
     in the initial proposal.
III. The amendments
1.   The title
     The title was changed in order to improve the terminology and to cover more
     exhaustively the characteristics of certain time-share arrangements which are widely
     used in certain Member States.
2.   The recitals
     Recitals 4, 5, 8 and 12 were adapted to the new title.
     Recital 9 was amended, in order to emphasise the fact that the Directive concerns
     only contractual aspects and in no way the law applicable to immovable property,
     which is exclusively the domain of the lex rei sitae.
     The amendments to recitals 12 and 13, and the new recitals 14, 15, 16 and 17, are
     explained together with the corresponding articles.
     The purpose of the new recital 18 is to point out that the entire text respects the
     principle of subsidiarity.
3.   The articles
     Article 2 : Definitions
     The new definition of time-share contracts takes into account an amendment
     proposed by the European Parliament and which was partly accepted by the
     Commission, designed to cover certain characteristics of one of the most widespread
     time-share schemes used in several Member States.
     The definition of immovable property also takes into account the Parliament's desire
     that the Directive should apply not only to existing buildings but also to buildings
     that are to be constructed and which are to be used only for dwelling purposes; hence
     buildings intended for office or other use are outside the scope of the Directive. The
     examples given in the initial proposal have been deleted.
     In the definition of vendor, the term "owner" was replaced by that of "holder" which
     is more appropriate when referring to a right.
     As to the definition of purchaser, although the content is the same, it has been
     modified in order to improve the text from the point of view of technical
     terminology.
 ---pagebreak---                                           4"
Article .* Obligations of the vendor
 The amendments are mainly due to the inclusion of certain changes proposed by the
European Parliament Hence paragraphs (a) and (b) take into account Parliament's
concern as to the problems which may arise for the purchaser as a result of failure
to comply with the time limits stipulated by the vendor or non-performance of the
services agreed by the vendor
The provisions in the initial proposal concerning building and authorisation rules for
occupying an immovable property have been removed because these questions are
more effectively regulated at national level; they are merely referred to incidentally
in the annex
The new paragraphs c) and d) incorporate certain parliamentary amendments
concerning certain obligations whose fulfilment by the vendor must be assured in the
contract
Article 4
As requested by Parliament, the new text deals more directly with the question of the
charges incumbent on the purchaser, while specifying that the charges for unsold
rights must be imputed to the vendor.
Article 5 (and recital 12)
The amendments to this article have the following major implications.
a)       the information document, already provided for in the initial proposal, must
         be made available to any person who requests it rather than just to any
         potential purchaser. It should be noted that the Annex to the amended
         proposal no longer refers to the information document but to the content of
         the time-share contract; however, this information document must contain
         certain items listed in the Annex.
 b)      the information contained in this document is an integral part of the contract,
         this principle was already contained in a recital of the initial proposal, but
          Parliament wanted it to be included in the binding part of the Directive
          Article 5(2) rules out any changes to the information contained in this
         document, unless these changes are agreed between the parties or are the
          results of circumstances independent of the vendor's volition.
 c)      all advertising must indicate not only the possibility o\' obtaining the
          information document but also where it can be had from
 Article 6 (and recital 1.Î) Minimum elements of the contract
 As indicated above, the minimum elements which the contract must contain are set
 out in an Annex to the amended proposal
 ---pagebreak---                                         G
Article 7 (and new recitals 14 and 16)
The first paragraph lays down a single cooling-off period as requested by the
Economic and Social Committee and in the light of the thinking of the delegations
at the meetings of the Council at minister level; in this sense the Commission has
opted for a longer deadline than was envisaged in the initial proposals, i.e. 28 days,
which is also the deadline requested by the Economic and Social Committee The
Commission took into account the fact that in certain Member States legislation
and/or practice require conclusion of a preliminary contract which may be legally
binding (for example, a pre-contract) or certain administrative steps, such as
engagement of a notary or land registration procedures; in these cases the period
begins to run from the date of signature of the preliminary contract
In the second paragraph, which relates to the way in which the right to withdraw is
exercised, the requirement that a registered letter be sent has been replaced by that
of a written communication sent in such a manner that documentary evidence of the
fact can be produced, as requested by Parliament
As to the third paragraph, this is a compromise amendment between the Commission
and the Parliament; pursuant to this compromise the vendor may not require advance
payments before expiry of the cooling-off period; however, if the parties agree, the
purchaser may make an advance payment before expiry of the deadline if this
agreement is given expressly and if it does not exceed 5% of the sale price including
taxes; if the advance contains fees for managing the dossier, i.e. possible notary and
registration fees, other administrative fees, etc., these may not exceed 1% of the sale
price, and in any event the vendor must provide sufficient security that he will be
able to effect reimbursement.
As to the period within which the vendor must reimburse the purchaser in the event
of withdrawal, he is granted one month from the date of communication of
withdrawal.
Article 8 (and recital 17)
This is a new article which relates to a subject which was not covered in the initial
proposal and which was included in the wake of the Council debates; it concerns a
loan contract linked to a contract for the purchase of a right to utilise one or several
immovable properties on a time-share basis
 Here the purchaser must be free to repudiate the loan contract if he decides to
exercise his right of withdrawal as provided for in Article 7
 Article 9 (and recital 15)
  The first part of the new text of this article takes up an amendment by Parliament
which merges into one paragraph the two paragraphs which this article had in the
 initial proposal; the expression "to be null and void" is replaced bv a different and
 more appropriate expression, so as to enable the Member States to stipulate possible
penalties
 ---pagebreak---                                           6> Oc-
As to the second paragraph, it replaces Article 9 of the initial proposal, which was
judged excessively complicated during the debates within the Council, the
Parliament and the Economic and Social Committee However, the basic principle
was retained, i.e that the protection accorded by the Directive to the purchaser
cannot in any way be lessened by the choice of the law of a non-Member State. This
isalso the wording chosen by the Council in Directive 93/13/EEC concerning unfair
terms in consumer contracts.
Article 10, 11, 12 and 13
The amendments made to these articles are purely formal and do not introduce any
changes of substance to the initial proposal
 ---pagebreak---                                                  ?
                            OPINION O P THE: P A R L I A M E N T
    Amendment      Initial proposal      Accepted by             Integrated
    No                                   the. Commission         (new numbering)
                   Title                 No
                   Recital No 3          No
    3              Recital No 12         No
    4              Recital No 14 a       No
    5              Title                 No
    6              Article 1             No
    7              Article 2.1           Partly                  Article 2
    48             Article 2.2           Partly                  Article 2
    9              Article 2.3           No
    10             Article 2.4           No
                                           j
    11             Article 3.1(a)                                Article 3(a) and (b)
                                         Partly
    12             Article 3.1(b)                                Article 3(c)
                                         Partly
    13             Article 3.1(c)                                Annex, items e) and f)
                                         Yes
    14             Article 3.1(d)                                Article 3(d)
                                         Partly
     15            Article 3.2
                                         No
     16            Article 4                                      Article 4
                                         Yes
     17            Article 5 1                                    Article 5 2
                                          Partly
     18            Article 5.2
                                          No
     19            Article 6
                                          No
     51            Article 7 I
                                          No
     21             Article 7 2                                   Not relevant
                                          Yes
     22             Article 7.3                                   Article 7 2
                                          Partly
     58 compromise  Article 7.4                                   Article 7 3
                                          Yes
(2)
 ---pagebreak---                                    *
Amendment Initial proposal Acceptedby     Integrated
No                         the Commission (new numbering)
24        Article 7b       No
25        Article 8        Yes            Article 9
26        Article 9        No
27        Article 9        Yes            Article 9.2
28        Article 10       No
29        Article 11       No
30        Article 12       No
31        Annex (a)        Partly         Amendments concerning
                                          the Annex are irrelevant
                                          because the new Annex no
                                          longer refers to the
                                          information document but
                                          to the time-share contract
32        Annex (b)        Yes
33        Annex (c)        Yes
49        Annex (c)        No
34        Annex(d)         Yes
35        Annex (e)        Yes
36         Annex (f)        Yes
 37        Annex (g)        Yes
 38        Annex (h)        Yes
 39        Annex (i) (j)    Yes
 40        Annex (I)        Partly
 41        Annex (m)        Yes
 42        Annex (n)        No
 43        Annex(o)         Yes
 44        Annex(p)         Yes
 ---pagebreak---            INITIAL PROPOSAI.                           AMENDED PROPOSAL
Proposal for a Council Directive concerning  Proposal for a Council Directive concerning
the protection of purchasers in contracts    the protection of purchasers in contracts
relating to the utilisation of immovable     relating to the purchase of a right to utilise
property on a time-share basis               one or several immovable properties on a
                                             time-share basis
THE COUNCIL OF THE EUROPEAN
COMMUNITIES
Having regard to the Treaty establishing the Unchanged
European Economic Community, and more
particularly Article 100a thereof,
Having regard to the proposal from the
Commission,                            \
In cooperation       with   the    Economic
Parliament,
Having regard to the opinion of the
Economic and Social Committee,
 1.     Whereas one of the main aims of the          Whereas one of the main aims of the
        Community is to complete the                 Community is to complete the
        internal market by 31 December               internal market; whereas it is
         1992 at the latest; whereas it is           important to adopt measures to
        important to adopt measures to               ensure that the internal market is
        ensure that the internal market is            established progressively; whereas
        established progressively; whereas           the internal market comprises an
        the internal market comprises an              area without internal frontiers in
         area without internal frontiers in           which goods, persons, services and
         which goods, persons, services and           capital can move freely.
        capital can move freely;
 ---pagebreak---                                                            AO
    Whereas the European Parliament,                      2.      Unchanged
    in its resolution of 13 October 1988
    on the need to fill the legal gap in
    the time-share market'0, called on
    the Commission to submit a
    proposal for a directive to harmonise
    national legislation on time-shaire
    property ownership, whereas, in its
    resolution of 11 June 1991 on a
    Community tourism policy(2), the
    European Parliament took the view
    that the Commission should present
    a general time-share directive as a
    matter of urgency;
    Whereas, in the Community Action                              Unchanged
    Plan for Tourism ( 3 ) , the
    Commission's guidelines with a
    view to improving protection for
    tourists as consumers include
    'drafting a proposal regarding cross-
     border property transactions (time-
    sharing)';
     Whereas the time-share market is                             Whereas the purchase of a right to
    very largely of a transfrontier nature                        utilise one or several immovable
     by the reason of the geographical                            properties on a time-share basis is
     location of supply and demand in                             very largely of a transfrontier nature
     most cases, and hence has an impact                          by reason of the geographical
     on the free movement of persons,                             location of supply and demand in
     services and capital;                                        most cases, and hence has an impact
                                                                  on the free movement of persons,
                                                                  services and capital;
     Whereas, although most of the                                Whereas, although most of the
     Member States have as yet no                                 Member States have as yet no
     specific legislation on time-share                           specific legislation on the purchase
     contracts, others do, taking the view                        of a right to utilise one or several
     that the provisions of ordinary law                          immovable properties on a time-
     applicable to this type of transaction                       share basis, others do, taking the
     have failed to generate the requisite                        view that the provisions of ordinary
     legal clarity or the appropriate level                       law applicable to this type of
     of protection for consumers;                                 transaction have failed to generate
                                                                  the requisite legal clarity or the
                                                                  appropriate level of protection for
                                                                  consumers;
(1)  OJNoC290, 14.11.1988, p. 148
(2)  Resolution A3-155/91, point 91 (Document PE 152.802, p. 54).
(3)  COM(91)97final,p.20
 ---pagebreak---                                                yV-A
        Whereas the application of the rules         Unchanged
        of ordinary law in some Member
        States and of specific legislation,
        albeit with different rules, in others
        creates disparities which might
        hamper the orderly development of
        this sector of economic activity;
        whereas this situation is thus
        prejudicial to the proper functioning
        of the internal market.
        Whereas under the circumstances         7.   Unchanged
        and with a view to ensuring a high
        level of protection for consumers, it
        is essential to make provisions for a
        basic set of specific rules for this
        type of transaction, applicable
        throughout the Community;
        Whereas the legal concepts applied      8.   Whereas the legal concepts applied
        under national law to time-share             under national law to the purchase
        arrangements vary considerably               of a right to utilise one or several
        from one Member State to another;            immovable properties on a time-
                                                     share basis vary considerably from
                                                     one Member State to another;
:£# ;^I^Whereasit is nonetheless sufficient          Whereas it is nonetheless sufficient
        to harmonise the rules concerning            to harmonise the rules concerning
        time-share contractual transactions,         the contractual aspects of
        the law applicable in each case              transactions relating to the purchase
        deriving exclusivelyfromthe lex rei          of a right to utilise one or several
         sitae:                                      immovable properties on a time-
                                                     share basis, the law applicable to
                                                     each immovable property deriving
                                                      exclusively from the lex rei sitae,
 10.     Whereas, with a view to establishing    10.  Unchanged
         effective standards for protecting
         purchasers in this filed, it is
         necessary to stipulate minimum
         obligations which vendors must
         comply with vis-à-vis purchasers;
 11.     Whereas nothing must be done to         11.  Whereas nothing must be done to
         affect the freedom of Member States          affect the freedom of Member States
         to establish guarantees under their          to establish measures to ensure that
         own legislation in respect of the            the vendor fulfils his obligations;
         Vendor's obligations.
 ---pagebreak---                                               A%
12. Whereas it is necessary to avoid any     12  Whereas it is necessary to avoid any
    misleading or incomplete details in          misleading or incomplete details in
    information concerned specifically           information concerned specifically
    with one sale of time-share rights,          with the sale of rights to utilise one
    whereas such information must be             or several immovable properties on
    supplemented by a document which             a time-share basis; where as such
    the purchaser must formally                  information must be supplemented
    acknowledge receipt of at the time           by a document which must be made
    the contract is signed, whereas this         available to any person who requests
    supplementary document must be               it; whereas the in formation
    drawn up in a language which the             contained therein must constitute
    purchaser states he knows; whereas           part of the contract for the purchase
    the items of information contained           of a right to utilise one or several
    therein must constitute an integral          immovable properties on a time-
    part of the time-share contract;             share basis;
13. Whereas, to give the purchaser the       13  Whereas, to give the purchaser the
    chance to realise what obligations           chance to realise what obligations
    and rights he has under the contract         and rights he has under the contract,
    he has to be given the right to              he has to be given a period during
    withdrawal for a period which takes          which he may cancel the contract
    account of the fact that the property        which takes account of the fact that
    is often situated in a State and is          the property is often situated in a
    subject to legislation which are              State and is subject to legislation
    different to those of the purchaser;          which are different to those of the
    whereas it is necessary to make               purchaser;
    provision for the purchaser to be
     informed by writing of this cooling-
    off period;
                                             14.  Whereas, in order to give the
                                                  purchaser a high level of protection
                                                  and in view of the specific
                                                  characteristics of systems for
                                                  utilising immovable properties on a
                                                  time-share basis, the contract for the
                                                  purchase of a right to utilise one or
                                                  several immovable properties on a
                                                  time-share basis should contain
                                                  certain minimal elements; whereas
                                                  this contract should be drawn up in
                                                  a language which the purchaser
                                                  declares he knows.
 14   Whereas the protection afforded to      I5    Whereas there is a risk, in certain
      the purchaser must be supplemented          cases, that the consumer may be
      in terms of private international law,      deprived of the protection accorded
      given the time-share contracts are          by. this Directive by specifying the
      very often transfrontier in nature;         1 aw of a non-Member State as the
                                                   law applicable to the .contract,
                                                   whereas, consequently. ri _is
                                                   necessary. to include m_. this
 ---pagebreak---                                        •  * * >
                                                Directive provisions designed to
                                                avoid this risk,
Is  Whereas nothing must be done to      !(>    Whereas_the requirement, on the
   prevent Member States from                   Part;_pf the yendor, that advance
   maintaining or adopting provisions           payments be made before expiry of
   which give the purchaser greater             the cooling-off period may
   protection in connection with time-          constitute^ _ a risk of financial
   share contracts,                             insecurity forthe purchaser, whereas
                                                it is necessary to eliminate this risk
                                                by prohibiting advance payments
                                                before expiry of this period; whereas
                                                this prohibition does not prevent the
                                                parties from agreeing on the
                                                payment of an advance before
                                                expiry of the period; whereas it is
                                                necessary, in order to secure the
                                                maximum amount of financial
                                                security for the purchaser, to limit
                                                such advances and to ensure
                                                reimbursement of the purchaser in
                                                the event of cancellation of the
                                                contract;
                                          17.   Whereas, in the e v e n t of
                                                cancellation of a contract for the
                                                 purchase of a right to utilise one or
                                                 several immovable properties on a
                                                 time-share basis whose price is
                                                 entirely or partly covered by a loan
                                                 granted to the purchaser, the
                                                 purchaser must also be free to cancel
                                                 this loan contract;
                                           18    Whereas, finally, the aim of the
                                                 present Directive is the creation of a
                                                 set of commun rules assuring the
                                                  legal and economic security of
                                                  purchasers in an area where they are
                                                  i nasi tuation of inferiority compared
                                                  tQ other interested parties; whereas
                                                  the.pxesen^Djreçjiy_e wi 1J allow the
                                                  bal an ce to be redressed between the
                                                  interested parties, necessary for the
                                                  smonth, functioning of the market;
                                                  whereas the differences in national
                                                   1 egi si at;ioni the tern tori aj_ Ji rnjis^ of
                                                   this legislation., and the evidently
                                                  transfrontier nature of the market
                                                   mean that a high level of protection
                                                   l*°.r.purchasers, is only possible at
                                                   Community. JeyeL gjven the joint
 ---pagebreak--- ^
  competence of the Community with
  the Member States in this area, the
  protection of purchasers. m___the
  conditions laid down by the present
  directive, seems necessary at
  Community level in order to support
  and supplement the policy followed
  by the Member States at national
  level; whereas the appropriate
  instrument to attain the objective is
  a Directive; whereas th ^provisions
  of this present Directive are hence
  coform with the principle of
  subsidiarity.
 ---pagebreak---                                                     AS
             INITIAL PROPOSAL                               AMENDED PROPOSAL
   HAS ADOPTED THIS DIRECTIVE                        MAS ADOPTED THIS DIRECTIVE:
                    Article I                                        Article I
The purpose of this Directive is to                The purpose of this Directive is to
approximate the laws, regulations and             approximate the laws, regulations and
administrative provisions of the Member           administrative provisions of the Member
States in respect of contracts relating to the    States in respect of contracts relating to the
utilisation of immovable property on a time-      purchase of a right to utilise one or several
share basis.                                      immovable properties on a time-share basis.
                    Article 2                                        Article 2
For the purposes of this Directive:               For the purposes of this Directive:
         'contract relating to the utilisation of         "contract relating to the purchase of
         immovable property on a time-share               a right to utilise one or several
         basis', hereinafter referred to as               immovable properties on a time-
         'time-share contract', means any                 share basis", hereinafter referred to
         contract by which a vendor transfers             as "time-share contract", means any
         or undertakes to transfer to a                   contract by which a vendor transfers
         purchaser, on payment of a certain               or undertakes to transfer to a
         price, a real property right or amy              purchaser, on payment of a certain
         other right relating to the utilisation          price, a right having either the
         of immovable property at a certain               characteristics of an obligation or
         time of the year, which may not be               the characteristics of a real right, and
         less than one week, covering a                   accorded for a minimum period of
          minimum of three years,                         three years, to utilise one or several
                                                           immovable properties during a
                                                           determinable time of the year;
          "immovable property" means any                   "immovable property" means any
          building or part of a building to                building or part of a building already
          which the time-share contract                    built or to be built, for use as a
          relates, such as a house, flat                   dwelling, to which the right which is
          bungalow, studio flat, etc.,                     subject of the time-share contract
                                                           relates;
          "vendor" means any natural or legal              "vendor" means any natural or legal
          person who, in transactions covered              person who, in transactions covered
          by this Directive and in his                     by this Directive and in his
          professional capacity, transfers or              professional capacity, transfers or
          undertakes to transfer to a purchaser            undertakes to transfer the_jight
          a real property right or any other               which is subject of the time:share
          right relating to the utilisation of             contract, where he himself is holder
          immovable property, where he is                  of this right or has been authorised
          himself the owner of the said                    by the holder to proceed with this
          property to which the right refers or            transfer;
          is authorised by the owner to carry
          out such transaction,
 ---pagebreak---                                                    AG
       "purchaser" means any natural                    "purchaser" means any natural
       person who, in transactions covered              person acting in          transactions
       by this Directive, acts as a                     covered by this Directive for
       consumer, i.e. for the purposes                  purposes which may be regarded as
       which may be regarded as being                   being outside his professional
       outside his professional capacity                capacity to whom the_right_which is
                                                        subject of the time-share contract is
                                                        transferred.
                  Article 3                                        Article 3
Member States shall make provision to          Member States shall make provision in their
ensure that, in the time-share contract, the   legislation to ensure that, in the time-share
vendor guarantees, more particularly:          contract, the vendor shall ensure, more
                                               particularly:
                                               a
a)     that the immovable property, and          )      that, if the immovable property is
       any connected facilities, has been               still to be built, the work will be
       built or will be built according to the          performed within the envisaged time
       state of the art and under such                  limits;
       conditions as to obtain from the
       authorities of the country in which     b)       that adequate guarantees will be
       the property is or will be situated the          provided to compensate for possible
       necessary authorisation, according               loss to the purchaser resulting from
       to the national law, so that he can              delay, defective performance or non-
        effectively occupy the property;                performance of the services
                                                        incumbent on the vendor;
b)     the transfer to the purchaser, on       c)       that the transfer to the purchaser, on
        payment of the price stipulated in              payment of the price stipulated, of
       the time-share contract, of the real             the right which is subject of the
       right or any other right of use in               time-share contract shall take place
        respect of the property, exclusive of           simultaneously and shall be
        all charges or subject only to such             exclusive of all charges, with the
        charges as are stipulated in the time-           exception of those enumerated in the
        share contract;                                 time-share contract, conferring on
                                                         him the right to do as he wishes with
                                                         the properties or shares concerned
c)      where appropriate, the purchaser's      Deleted
        right to use, in addition to such
        common services as lighting,
        cleaning, refuse collection, etc.
        special facilities such as swimming
        pools, tennis courts, golf courses,
        saunas, etc exciting at the time of
        signature of the time-share contract
        or in the future, subject to the
        conditions stipulated in the time-
        share contract or otherwise provided
        for by the vendor.
 ---pagebreak---                                                  Al
d)   the purchaser's right to be involved    d)          where relevant, the purchaser's right
     in the process of making any                        to be involved i.a.An_.aj)riropnate
     decisions       concerning        the               manner in the process of making any
     administration of the time-share                    decisions        concerning       the
     scheme and the management and                       management and maintenance of the
     maintenance of the property to                      immovable property. The purchaser
     which the time-share arrangement                    may d e l e g a t e t h i s right of
     relates. The purchaser may .delegate                participation provided this is done in
     this right provided this is done in a               a separate document and subsequent
     separate document and subsequent                    to signature of the time-share
     to signature of the time-share                      contract; such delegation of powers
     contract, such delegation of powers                 may be revoked at any time.
     may be revoked at any time
2.   Member States shall make provision      deleted
     in their legislation for appropriate
     measures to ensure that the vendor
     gives adequate           guarantees
     concerning, where appropriate:
     correct completion of the property,     deleted
     reimbursement of any advance            deleted
     payment, in the event of non-
     completion of the property or in
     exercise of the right to withdrawal
     within the meaning of the Article 7,
     without prejudice to the terms of
      Article 7(4).
                Article 4                                           Article 4
The Member States shall make provision       "Member States shall make provision in
for:                                         their legislation for the bases for calculating
                                             the breakdown of common and occupation-
 1)    measures to establish the purchaser's  linked charges between the purchasers,
      rights and obligations in respect of    corresponding to their share of the right to
      the management and maintenance of       U.t'h.se the ^property; where relevant, the
      the property to which the time-share    share of each category of charges to which
      arrangement relates, such measures      each purchaser is liable shall be fixed
      shall be in conformity with point       separately. Charges for unsold rights of
      (m) of the Annex;                       utilisation may not be apportioned down
                                              among the purchasers who have already
                                              sjJi.!.!ed an undertaking but must be imputed
                                              to the vendor
 2)   the bases for the breakdown of
      common and         occupation-linked
      charges, in annual terms, in which
      the purchaser is required to
      participate, such bases shall lay
      down clearly and unequivocally, and
 ---pagebreak---                                           vt8
in conformity with the terms of
point (j) of the Annex, the share of
each category of charges to which
each purchaser is liable, in the light
of the situation and category of the
property to which the time-share
arrangement relates, and the period
and duration of the time-share right.
           Article 5                                    Article 5
Member States shall make provision     "1    Member States shall make provision
for measures to ensure that the              in their legislation for measures to
vendor is required to make available         ensure that the vendor is required to
to any potential purchaser a                 make available an information
document providing information in            document to any person who
an unequivocal, detailed and                 requests one. This document, in
complete form on at least the items          addition to the general description of
set out in the Annex.                        the property to which the right
                                             which is subject of the time-share
The document shall be in a language          contract relates, must at least contain
which the purchaser states he                concise and precise information on
knows.                                       the items indicated in points a), c).
                                             d). f). gV and k) of the Annex as
                                             well as particulars on how to obtain
                                             additional information.
                                       2.    Member States shall provide in their
                                             legislation that the information
                                             contained in the document referred
                                             to in paragraph 1 is an integral part
                                             of the time-share contact;
                                              Except by express agreement
                                              between the parties, the only
                                              changes to this information which
                                              are admissible are those which relate
                                              to circumstances independent of the
                                              vendor's volition
                                              Changes made to this information
                                              must be communicated to the
                                              purchaser before conclusion of the
                                              contract. The _.contract must
                                              expressly mention these changes.
 Any other form of advertising shall          Any _ advertising relating to j h e
 indicate the possibility of obtaining        immovable property in question
 the document                                 shall indicate the possibility of
                                              obtaining the document referred to
                                              in paragraphe]. as well as where it
                                              can be had from.
 ---pagebreak---                                                             ^9
                   Article 6                                              Article 6
Member States shall make provision to                           "Member States shall             make
ensure that the time-share contact, which                       provision to ensure that the     time-
must be in writing, contains at least the                       share contract, which must       be in
following items:                                                writing, contains at least the   items
                                                                mentioned in the annex.
a)     a detailed and unequivocal
       description of the property in respect                   The document shall be in a language
       of which the time-share right is                         which the purchaser states he
       transferred to the purchaser. This                       knows.
        description must be in conformity
        with the information contained in
       point (a) of the Annex;
b)      the precise type of time-share right
        which is being transferred to the
        purchaser. This type of right must
        feature among those referred to in,
        point (d) of the Annex;
c)      the period and date, in words, within
        and from which the purchaser may
        exercise his time-share right, such
        information being in conformity
        with the information contained in
        point (f) of the Annex,
 d)      express reference to the other items
         indicated in the Annex;
 e)      the date, in words, of signature of
         the contract;
 f)      the p u r c h a s e r ' s d e c l a r a t i o n
         indicating that he has received and
         understood the document referred to
         in the first subparagraph of
          Article 5(1) in accordance with the
         second paragraph thereof.
                    Article 7                                               Article 7
 Member States shall make provision for:                 Member States shall provide: _jn          their
                                                         legislation that
          the obligation on llw vmini In                  I       the conduit shall become definitive
          inform the purchaser, in writing, at                    provided the. purchaser, has not
          the time of signature of contract,                      exercised his. right.„of__withdrawaI
          that the contract will take effect                      with a period of at least 28 calendar
          unless the purchaser withdraws                          days from the date of signature of
          within a period of:                                     the contract or, in..ilie_ev.e_nt._of
 ---pagebreak---                                               conclusion of ai preliminary but
                                              legal\y binding contract, from the
                                              date of signature of this contract;
             at least 14 calendar days
             from the date of signature of
            contract, or
             at least 28 calendar days
             from the date of signature of
             contract where the time-
             share right can be exercised
             in a country other than
             where the purchaser has his
             normal residence,
2. the information referred to in point 1
   to be contained in the contact in an
   unequivocal and clearly legible form
   and at least in the same point as the
   rest of the contract, immediately
   preceding the signatures of the
   parties to the contract;
3. the right of withdrawal provided for    2. With a view to exercising this right
   in point 1 to be exercised by the          of withdrawal, the purchaser shall
   purchaser by notifying the person          address a written communication to
   whose name and address figure in           the person whose name and address
   the contract for the purpose . As           are indicated in the contract for this
    regards compliance with the                purpose. As regards compliance
    deadline, it is sufficient for             with the deadline, it is sufficient for
   notification to be sent, by registered      the communication to be sent in
    letter, before expiry of the relevant      such a manner that documentary
    deadline;                                  evidence of the fact can be produced
                                               before expiry of the deadline;
    measures designed to:                  3.  The vendor may not require advance
                                               payments from the purchaser before
    a)        lay down the conditions in       expiry of the deadline mentioned în
              which, where the purchaser       paragraph 1. However, the parties
              exercises the right of           may agree on payment of an
              withdrawal provided for in       advance i_.__.this agreement is given
              point 1, any sums which          cxpjessjy _md_if the advance does
              may be reimbursable are          not exceed 5% oi^ the value of the
              calculated so as to ensure       •su!_Çvincluding taxes, to the extent
              that reimbursement does not       th_at_ _such an advance contain s
              entail any       unjustified      expenses for managing the dossier,
              enrichment for either of the      such expenses may not exceed a
              parties concerned;                maximum of 1% of the sale price
                                                and must be mentioned sepaLately in
     b)       establish the deadline for        the contract A s to a possible
              reimbursement                     advance payment, the vendor must
 ---pagebreak---                                           *1
                                                   provide adequate guarantees forjjs
                                                   reimbursement. If the purchaser^n
                                                   due form and within jhe agreed
                                                   deadline, exercises his;.._ng!lL_p\
                                                    withdrawal, the advance payment,
                                                    where relevant less the fees for
                                                    managing the dossier, shall be
                                                    reimbursed within a month at the
                                                    latest, starting from the date of
                                                    communication of withdrawal-
                                                                 Article 8
                                           "Member States shall provide in their
                                           legislation that:
                                           a)       if the price is entirely or partly
                                                    covered by a loan granted by the
                                                    vendor or.
                                           b)       if the price is entirely or partly
                                                    covered by a loan accorded to the
                                                    purchaser bv a third party on the
                                                    basis of an agreement concluded
                                                    between the third party and the
                                                    vendor, the purchaser shall be free to
                                                    withdraw from the loan contract if
                                                    he chooses to exercise his right of
                                                    withdrawal providedforin Article 7;
                                                     in such cases the purchaser must
                                                     cancel the loan contract before
                                                     expiry of the deadline referred to in
                                                     paragraph 1 of that article. The
                                                     procedures for exercising the right to
                                                     cancel the loan contract shall be
                                                     determined by the Member States,
                Article 8                                         Article 9
Member States shall make provision for:              Member States shall provide in their
                                                     legislation that clauses under which
1     any clause under which the                     the purchaser renounces his right to
     purchaser renounces his right to                benefits under this Directive or
     benefits under this Directive to be              under which the vendor disclaims
     null and void;                                   liabilities arising from this Directive
                                                      shall not bind the purchaser under
2    any clause under which the vendor                the conditions laid down by then
     is exonerated from liability arising             national laws
     from this Directive to be null and
     void                                             Member States shall take the
                                                      measures neçessary_ to ensure that
                                                      the purchaser shall not be depnved
 ---pagebreak---                                                   SIX
                                                          of the protection accorded by this
                                                          Diieçtiye thrpugh choice of the law
                                                          of a non-Member State as the law
                                                          applicable to the contract-
                   Article 9                      deleted
Member States shall make provision,
notwithstanding a choice of the law by the
parties to the contract or the application of
the objective criteria of international private
law for determining which law shall apply,
for the purchaser not be deprived of the
protection given him by this Directive;
a)      if the property to which the time-
        share in a Member State and
        i)      if conclusion of the contract
                was preceded in that
                Member State by a specially
                drafted proposal or by
                advertising, and if the
                purchaser has completed in
                that same Member State the
                necessary legal steps for
                completion of the contract;
                or
         ii)    if the vendor or his
                representative received the
                order from the purchaser in
                that Member State;
                or
         iii)    if the purchaser went from
                 that Member State to a
                 foreign country and signed
                 the ti me-share contract th ere,
                on condition that the journey
                 was organised by the vendor
                 for the purpose of inducing
                 the purchaser to conclude
                 such a contract.
 ---pagebreak---                                                  âb
                 Article 10                                      Article 10
                                               The Member States shall make provision in
                                               their legislation for the consequences of
                                               non-observance of the provisions in this
                                               Directive.
The Member States shall make provision in
their legislation for the consequences of
non-compliance with the provisions in this
Directive.
                 Article 11                                      Article 11
This Directive shall not prevent Member        Member States may adopt or maintain, in
States from adopting or maintaining            the domain covered by this Directive,
provisions which are more favourable with      stricter provisions which are compatible
regard to protecting the interests of the      with the Treaty, in order to ensure a higher
purchaser in the field in question, without    level of protection for the purchaser-
prejudice to their obligations under the
Treaty.
                 Article 12                                      Article 12
Members States shall bring into force the               Member States shall bring into force
law, regulations and administrative                    the laws, regulations and
provisions necessary to comply with this               administrative provisions necessary
Directive by 31 December 1994. They shall              to comply with this Directive by
immediately inform the Commission                       31 December 1995. They shall
thereof. When Member States adopt these                 immediately inform the Commission
provisions, these shall contain a reference to         thereof.
this Directive or shall be accompanied by
such reference at the time of their official            When Member States adopt these
publication. The procedure for such                     provisions, these shall contain a
reference shall be adopted by the Member                reference to this Directive or shall
States.                                                 be accompanied by such reference at
                                                        the time of their official publication.
                                                        The procedure for such reference
                                                        shall be adopted by the Member
                                                        States.
                                                        Member States shall communicate
                                                        to the Commission the text of the
                                                        fundamental provisions of internal
                                                        law which they adopt in the domain
                                                        covered by this Directive.
                 Article 13                                      Article 13
This Directive is addressed to the Member      This Directive is addressed to the Member
States                                          States
 ---pagebreak---                                               ^</
                                           ANNI'X
          IMTIAI^PROPOSAL                                 AMKNDKD PROPOSAL
Minimum list of items to be included in the     Minimum list of items to be included in the
document referred to in Ailicles 5(1) and       contract referred to in Article 6
6(d)
a)    A description of the immovable            a)      Identity and place of residence of
      property to which the time-share                 the parties, with a precise indication
      rights relate or will relate, giving             of the legal status of the vendor at
      details of geographical situation,                the time of conclusion of the
      whether the property has already                  contract, as well as. where relevant,
      been built, is being built or is                  the identity and place of residence of
      planned and stating that it has been              the owner of the immovable
      built or will be built according to the           property.
      state of the art and so as to obtain
      from the authorities of the country in
      which the property is or will be
      situated the necessary authorisation,
      under national legislation, so that the
      property in question can effectively
      be occupied.
b)    The nature of the vendor's title to the   b)      The precise nature of the right which
      land on which the immovable                       is subject of the time-share contract
      property is or will be located; any
      charges to which the property is
      subject (e.g. mortgages easements);
      whether the vendor has been granted
      the requisite permits (e.g. building,
      connection to telephone, electricity,
      water, gas, TV services, etc.).
c)    The precise legal structure of the        c)       When the property to which the
       time-share and its duration.                      time-share right relates is a specific
                                                         one, a precise description of the
                                                         property and its location.
 d)    An indication of the time-share           d)      Whenever the immovable property
       rights offered by the vendor and                  is under constructjon
       their duration; the number of
       properties constructed, under                      1)      the_^iate of completion of
       construction or planned; the                              the construction
       furnishings and fittings associated               2)      estimated date of completion
       with each property                                        ofjhe works,
                                                         3)      if it is a specific immovable
                                                                 property, the. nuniber of the
                                                                 building permitjand the full
                                                                 name, and address of the
 ---pagebreak---                                              àHS.
                                                        authorities or authorities
                                                        responsible,
                                               4)       the state of completion of
                                                        common services rendering
                                                        the immovable property
                                                        operational (gas, electricity,
                                                        water, telephone).
                                               5)       the guarantees referred to in
                                                        Article 3(b);
e) The total number of time-share         e)   the common services (lighting,
   rights in each property.                    water, maintenance, waste removal)
                                               to which the purchaser has or will
                                               have access and the applicable
                                               conditions;
f) A clear and precise description of     f)   sport and leisure facilities to which
   the fixed and variable periods of           the purchaser has or will have
   occupation, stating the arrangements        access, and, where relevant, the
   for determining such periods.               applicable conditions;
g) The date on which the purchaser        g)   a precise indication of the period or
   may occupy the property.                    periods during which the right which
                                               is subject of the time-share contract
                                               may be exercised and, where
                                               relevant, the duration of the scheme
                                               that has been established; the date
                                               from which the purchaser may
                                               exercise the right which is subject of
                                               the time-share contract;
h) Common facilities (e.g. swimming       h)   the total price which the purchaser
   pool, sauna, tennis courts, golf            must pay to exercise the right which
   courses, etc.) and existing and future      is subject of the time-share contract;
   services to which the purchaser is          this shall include the sum which
   entitled, and the date on which such        must be paid by the purchaser for
   facilities and services may be used         utilisation of common services and
   by the purchaser.                           facilities, the basis for calculating
                                               the charges linked to occupation of
                                               the immovable property by the
                                               purchaser, mandatory legal charges
                                               (taxes, dues) and additional
                                               administrative              charges
                                               (management, upkeep, repairs);
i) The total cost for the purchaser,      i)   a clause mentioning that the
   laying down clearly and                     purchase shall not involve any
   unequivocally the cost of the various       outgoing, charge or obligation other
   time-share rights over the various          than those stipulated in the contract;
   periods of the year, where a
   leasehold arrangement is involved,
   the rent must be specified.
 ---pagebreak---                                                 .&,
    The annual cost which the purchaser      j)     whether or not the purchaser jnay
    is expected to assume for use of the            participate, in an exchange project
    common facilities and services, the             and/or resale of the rightwhich is
    annual amount of charges related to             subject ofthe time-share contract, as
    occupation of the property by the               well as possibIe costs if the vendor
    purchaser; the annual statutory and             should organjse a system of
    mandatory charges (e.g. taxes, fees,            exchange and/or resale; where
    etc.) and the annual administrative             relevant, a statement to the effect
    overheads (e.g.          management,            that sale ofthe right which is subject
    upkeep, repairs, etc ) and their                ofthe time-share contract cannot be
    expected development, any costs                 assured at a fixed price or within a
    payable by the purchaser for special            fixed period;
    services on request
k)  The guarantee         referred    to  in k)     information on the right to withdraw
    Article 3                                       from the contract, precise indiçati.on
                                                    of the nature and quantity of fees
                                                    which will not be reimbursed to the
                                                    purchaser pursuant to Article 7(3),
                                                    should he exercise his right to
                                                    withdraw; where relevant,
                                                    information on the possibility of
                                                    withdrawing from the loan contract
                                                    linked to the time-share contract in
                                                    the event of withdrawal from the
                                                    latter;
1)  Clear and unequivocal details of         1)     date and place ofthe signature of the
    conditions, limits and cost of time-            contract by both of the parties.
    share exchange and resale services,
    where these services exist; if thy do
    not exist, this must be indicated. At
    any event, there must be a statement
    to the effect that the sale of time-
    share rights cannot be assured at a
     fixed price of within a fixed period.
m)   Measures which have been or will
     be taken in respect of the
     m a n a g e m e n t, u p k e e p    and
     maintenance of the property, and
     any measures adopted or to be
     adopted relating to the purchaser's
     participation in the administration
     and management
(n)   The period within which the
     purchaser can exercise his right to
     witluliaw from the contract, as
     referred to in Article 7, the
     ariangements for so doing and the
     effect of withdrawn!!'
 ---pagebreak---                                    §Cf
                      Revised impact assessment form
IMPACT OF THE PROPOSAL ON BUSINESSES WITH SPECIAL REFERENCE TO SMALL
AND MEDIUM-SIZED ENTERPRISES.
Title:          Amended proposal    for a Council    Directive on the
                protection of purchasers in contracts relating to the
                purchase of a right to utilise one or several immovable
                properties on a time-share basis.
Reference No: C0M(92) 220 final - SYN 419.
1        Taking account of the principle of subsidiarity, why is
         Community legislation necessary in this area and what are its
         main aims?
         Contracts relating to the purchase of a right to utilise one
         or several immovable properties on a time-share basis are of a
         distinctly    transfrontier nature; the great majority of
         Community citizens who hold time-share rights have their
         timeshares in a Member State other than their country of
         residence. Moreover, only four of the Member States have
         specific - and highly divergent•- legislation on timeshares.
         Community purchasers can only be protected by Community
          legislation.
         The main aim of the proposal is to create a foundation of
         common rules so as to give the consumer legal and economic
         security in a domain in which he is weaker than the other
         parties concerned.
The impact on business
2        Who will be affected by the proposal?
         Companies selling time-share rights. This is a relatively new
         sector which is burgeoning throughout the Community, and
         mainly consists of small and medium-sized enterprises, many of
         which are immune from any supervision in the Member States
         where they sell their services because their head offices are
         often located in tax havens; these enterprises offer their
         services in premises located at seaside and mountain tourist
         resorts (such as ski resorts, the Mediterranean coast,
         Atlantic islands).
3        What measures will businesses have to take to comply with the
         proposal?
         Before signing the contract they will have to provide the
         purchaser with more precise and detailed information on the
         rights they are offering, and they will also have to give
         purchasers a cooling-off period during which they may withdraw
         from the contract without incurring a penalty. This cooling-
 ---pagebreak---                                             ZÇ
         off period, which in the amended proposal has been extended to
         28 days, may add to the costs of firms in the sector; firms
         will also have to take into account that, during the cooling-
         off period, advance payments may not be requested unless the
         purchasers concur and that such payments may not exceed 5% of
         the sale pr ice.
         What economic effects is the proposal likely to have?
                on employment
                on investment and the creation of new businesses
                on the competitive position of businesses
         The instrument should have no particular effect on employment,
         while the creation of new businesses will be eased given that
          increased market transparency will have beneficial effects on
         competition. However, there may be a negative effect on cash
         flow, mainly because of the extension of the cooling-off
         period and the restrictions on advance payments.
         Does the proposal contain measures to take account      of  the
         specific situation of small and medium-sized firms?
         Firms, whatever their size, have nothing to fear from the
         proposal provided they are serious and honest. The aim is to
         target bogus firms which conceal their activities from the
         authorities and practice what amounts to unfair competition to
         the detriment of the honest firms in the sector; hence the
         objective is to put at end where possible to certain
         commercial    practices  which   may   Jeopardise  the   smooth
         functioning of the market.
Consultation
         List of organisations which have been consulted      about  the
         proposal and outline of their main views.
         European Timeshare Federation. The ETF is for the proposal,
         although it would have preferred a shorter cooling-off period.
         This federation of timeshare firms hopes that the Directive
         will shake out the market by leading to the disappearance of
         firms which use unfair commercial practices (under the cover
         of anonymity) and which are responsible for the bad reputation
         the sector has at present.
         Consumers' Consultative Committee: very much in favour.
         Standing Committee of Notaries in the EC: for the proposal
         because it will increase market transparency and improve the
         protection of purchasers.
 ---pagebreak---                                                                      ISSN 0254-1475
                                                              COM(93) 487 final
                                                      DOCUMENTS
EN                                                                              10
                                 Catalogue number : CB-CO-93-520-EN-C
                                                             ISBN 92-77-59724-0
Office for Official Publications of the European Communities
L-2985 Luxembourg