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The timeshare agreement (second part)

Jun 11, 2013
The timeshare agreement (second part)

The legal framework

As of the beginning of the 90´s, some States of the Mexican Republic, (Quintana Roo, Guerrero and Jalisco) included certain regulation in special laws or in their Civil Codes to regulate the rendering of timeshare services, taking into account two fundamental aspects which are: (i) the constitutional prohibition in order for foreigners to acquire the direct ownership on the real estate properties in the coasts (article 27 of the Constitution) and (ii) the guarantees which should be minimally observed by whoever is dedicated to providing these services, mainly in regards to the real estate properties destined to the same, depending and in favor of the Compartidarios (those who acquire the timeshare service).

As of 1992, upon the effective date of the federal law on Metrology and Standardization, and with that the possibility of implementing official Mexican norms, work is initiated to provide the timeshare a general regulation applicable in the entire Republic, and derived from that need, the Official Mexican Norm was prepared NOM-029-SCFI-1993. Commercial Practices – Information Requirements for the Marketing of Timeshare Services. This norm is reviewed every five years in accordance to the provided by the third paragraph of article 51 of the mentioned law.

In the year of 1998, NOM-029-SCFI-1998 was published Commercial Practices – Information Requirements for the Marketing of Timeshare and on May 17th, of the year 2010, NOM-029-SCFI-2010 was published in the Official Federal Gazette, Commercial Practices-Information Requirements for the Rendering of Timeshare Service, the last version of this regulation, which was modified as per the petition of the service providers, since there was the possibility that resorts located in another country, could commercialize in Mexico, such situation was considered risky for the interests of the national industry.

In the civil code for the state of Jalisco, in its ninth title, that includes article 1115 through 1139, the right of use of timeshare is regulated. However this regulation is directed to the type of legal regime to which a construction is subjected and the chattel property that form this service, through the imposition of a lien of such assets and their necessary registration before the Public Registry of Property, in regards to the real estate property, for purposes of guaranteeing to the Compartidario, that the assets subject matter of the services, will have as destination the compliance of the same. (Article 1115 of the Civil Code of Jalisco).

However, in the timeshare service, there are several subjects that participate in the contract, as well as in the possibility that the purpose of the same is met.

On one side in the CCJ we find the following subjects:

  • Compartidarios.- Are those who acquire the timeshare service.
  • Compartidor.- The party imposed with a lien on the real estate and chattel property to comply with the timeshare service.
  • Operator.- Whoever has the care and maintenance of the resort.

Other subjects referred by the CCJ are the joint and several obligor to guarantee the correct rendering of the service for the Compartidarios. These subjects are referenced by article 1122 of CCJ that textually reads:

Article 1122. They are joint and severally responsible in favor of the Compartidarios:

In regards to the timely, prompt and appropriate delivery and in good status of the assets subject matter of the lien to be used in timeshare, the party encumbering or incorporator, the promoter, the developer and the salesperson or the natural persons or entities with whom he (she) contracted; In regards to the quality and hidden vices in the assets subject matter of the lien; the party encumbering or the incorporator, the operator , the constructor and the suppliers; and in regards to the exercise of the rights of the owners of this mode or compartidarios; the incorporator or party encumbering, and the operator.

I consider that the previous article, confuses the subjects that intervene in the timeshare system, since in reality the following subjects participate in this process by the compartidor:

  • The Developer.- Is the party who has the ownership of the chattel and real estate property destined for timeshare.
  • The Marketer.- Is the party selling to the Compartidarios the memberships of timeshare.
  • The promoter.- Is the person who promotes the sale of timeshare memberships, colloquially known an “OPC”. (Outside Public Contact).
  • The operator.- Is the one who provides the lodging services, as well as reservations and other services inherent to timeshare. (Hotel Operation).
  • The administrator, who generally is the developer and is in charge of the general administration of the resort, supervises that the operator complies with the services contracted by the developer or marketer with the Compartidario, as well as receiving and collecting the maintenance fees, the payment of memberships when these on sold on installments and the relationship with the exchange systems, as well as doing maintenance actions necessary for the good operation of the resort. The administration can rest on a third party, but the developer will always be responsible before the Compartidario for the services contracted.
  • The exchange company.- Which is the one who offers to the Compartidario the possibility of changing the place of use of the vacation periods covered by a timeshare membership, as per agreements executed with the resorts or their administrators.

The affiliation to an Exchange company is only possible when it is the owner of a vacation interval in the Tourist Resorts affiliated to the company and it is generally processed by the Developer at the time of the purchase.

In practice, the mentioned by the article in question is not applied, since the chain of joint and severally obligations between the subjects mentioned does not exist. How is it possible to establish a joint and severally responsibility in favor of the Compartidario, between a supplier and the operator, for example, bed linen cleaning, or of vices in the construction of a swimming pool? The responsibility is between the Compartidor and the Compartidario and those who have a direct relationship with them, for example the operator or the administrator, but not with the compartidario, since at the end, the Compartidor is responsible that the rendering of services is met directly or through third parties.

Carlos Román Hernández
Managing Partner.