Articles

”TIMESHARE” INVESTMENTS’ REGIME

11 November 2004 (Invest Romania)

In the process of implementing the acquis communautaire, the Romanian legal system has faces certain transformations manifested, among others, through the import of several legal institutions which have not been previously known or, even known, their implementation was impossible due to technical reasons. Such a trend has been registered in the real estate investments field where more investors are analyzing the opportunity and possibility to implement real estate development projects based on the timeshare ownership concept.

The institution is often defined as a divided/fractional form of ownership (usually having as object vacation properties) where the corresponding rights are vested in a number of persons, each of them having the right to use the property for specific periods of the year, usually of one week each.

Although, usually, the object of the timeshare property is represented by residential projects such as a condominiums, those who develop these kind of businesses, especially in USA, have applied the timeshare concept to other types of properties, such as houseboats, campgrounds and recreational vehicle parks. Virtually all timeshares are resort or vacation properties.

In respect of its legal nature, the timeshare ownership does not benefit in Romania of a special legal regulation. Therefore, in case of any attempts for implementing timeshare projects in Romania, all related issues should be clarified on a contractual basis, respectively by the agreements to be concluded between the developers/owners and potential buyers.

Significant steps have been made in this respect as the Parliament has approved the Law No. 282/2004, which transpose in the domestic legislation almost all the provisions of the Directive 94/47/EC of the European Parliament and the Council on the protection of purchasers in respect of certain aspects relating to the purchase of the right to use immovable properties on a timeshare basis („Timeshare Directive”).

As the Timeshare Directive, the Law No. 282/2004 defines the timeshare concept from the consumer protection perspective and by reference to the contractual instruments necessary to be concluded in order to establish the related rights. It does however not contain sufficient elements to clarify the legal regime of the rights which can be assigned/set up within the frame so established, using however the generic formula “special real property right or any other kind of right related to the use of such property”.

The difference between the two is important from their effects’ perspective (especially by reference to the implementation of such projects in Romania under the present legal framework), as the transfer of a real property right requires, in most of the cases, the performance of the publicity formalities in view of ensuring the opposability with the third parties of the right of the buyer, by way of registering it in special real estate publicity registers.

Even under the conditions of this lack of special legislation in Romania at the present moment, it can be assumed that the right set up by virtue of timeshare agreements is a real property right – timeshare ownership right/periodical or fractional ownership right. In fact, this conclusion is sustained by the provisions contained in the project of the new Civil Code, already submitted for public debates, which takes over and treats separately the new legal institution under the section dedicated to the legal modalities of the ownership right.

Until the express regulation of timeshare concept will be performed, its legal regime in Romania is to be established exclusively on contractual basis, with the observance of the provisions of the Law No. 282/2004 as well as of the other enactments in the field of consumer protection.