Can a community stop holiday rentals?

I recently wrote about the new regulations which require a majority of owners to ban holiday rentals within a community.

As a result we began to receive a number of emails from concerned owners who received a notification from their community as per the one below:

“We have an apartment in San Pedro we rent out through online portals like Booking.com. We pay the community fees, but now we have received an email from the president saying that three-fifths of the owners have voted to stop others from renting out their properties for holiday rentals. We understand that as we have been renting our apartment out for two-and-a-half-years and have a license that we are not affected by this ruling? We look forward to your reply.”

Legal Opinion

It led me to seek out a legal opinion, with lawyer Adolfo Martos Gross of GAM Abogados, who confirmed the owner was in the right.

He confirmed that there was a significant change in the law on March 1 (Royal Decree 7/2019), which indeed required three-fifths of a community to agree in order to adopt a resolution that limits holiday rentals, when previously unanimity was needed.

The new law also stated that the owner of a holiday rental property should pay more community charges than the rest (up to a maximum of 20% more).

However, and this is important, the new law ruled that new resolutions ‘shall not have a retroactive effect’.

So if a client can demonstrate they were renting the property out prior to the introduction of the ban, and moreover had a valid license to do so from the Junta, the community would have no rights to limit the holiday rental activity.

The legistlation is as clear as mud

However – what about other cases where the situation is less clear cut?

Say owners who were intending to rent but who had not got around to applying for a license before the ban was introduced?

Or someone who purchased earlier in the year and was in the middle of a reform with the intention of renting when suddenly the community ban came in?

Adolfo believes the new rules should not affect current owners, whether or not they have begun renting because that entails a limitation on ownership that did not exist when they bought the property.

He believes limitation can only be imposed on future buyers, but as no case law yet exists there is no way to clarify such ambiguities.

There are further issues as the new law fails to insist that new community rulings are registered in the Land Registry.

This is important because by being registered they are enforceable to future owners and provide transparency for buyers.

Note to buyers: Since there is no demand for these rules to be recorded in the public community statutes or land registry, it is very important for prospective buyers to check (or ask their lawyer to check) the minutes of community meetings (which are not public).

These could show that a restriction has been introduced.

Similarly, buyers who purchased in good faith and were not aware of the limitations of use approved by the community, because they have not been made public, may have grounds for objection.

We’ll come back to this topic as and when matters become clearer (or not)!

By Adam Neale | Property News | October 18th, 2019

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