We will discuss here the amendments that many property owners’ associations in Spain are signing to prohibit vacation property rentals in their buildings and residential complexes. Nowadays, this is the subject of a fierce debate.
In some areas of Catalonia, Andalusia, or the Community of Valencia, the term “overexploitation” is already being used to talk about this type of activity. In Málaga, for example, more than 35,000 dwellings are currently registered as vacation property rentals. It is the Spanish province with the largest number of this kind of rental units.
What sort of problems can tourist homes cause to other residents?
Many residents complain about the continuous inconveniences caused by these activities —travellers with suitcases coming in and out at any time of day or night, excessive noise, anti-social behaviours, thefts, build-up of rubbish and dirt, deterioration of common areas, and many others. All this has led many homeowners’ associations to modify their by-laws to prohibit tourist rentals.
What has changed so that homeowners’ associations can now prohibit holiday rentals?
The legal basis for this is a modification introduced in 2019 in article 17 of the Spanish Horizontal Property Law. As a result of this legal reform, homeowners’ associations can approve amendments that regulate, limit, or simply prohibit tourist rental services in their housing communities. In other words, the fact that an owner has a tourist license could not be considered, in principle, a blank check to carry out the activity. He/she should also have the authorization of the homeowners‘ association.
However, some of the language employed in the law have led to disputes. The reason is that this law speaks of limitation or condition, but not of prohibition.
Is prohibition of tourist rentals contrary to the right to ownership?
The Spanish Supreme Court has not yet ruled on how the modification introduced in 2019 in the Horizontal Property Law should be interpreted. Therefore, so far there are very different sentences one way or another, and each court is reasoning on a case-by-case basis. However, it does seem clear that judges in Spain are ruling in favour of one of the following three positions:
1. The minority standpoint, adopted by some courts, such as the Provincial Court of Madrid, holds that homeowners’ associations can NEVER prohibit vacation property rentals. Any amendment in this sense would be contrary to the right to ownership referred to in Article 33 of the Spanish Constitution. For this reason, it would be unconstitutional and, consequently, null and void.
2. A second position interprets that, with this legal reform, the law allows homeowners’ associations to prohibit tourist rentals for the sake of the general interest of the housing community, provided that such amendments are approved unanimously. However, in this case the single vote of the affected owner would be enough to turn down the proposal and prevent the agreement from moving forward.
3. The third and final position maintains that, although article 17.12 of the Horizontal Property Law only refers to regulating or limiting the activity, it can also ban the rentals with a vote in favour of 3/5 of the owners.
It should be noted that —for the prohibition amendment to be applicable to third parties— it must be duly recorded by the corresponding Land Registry and be specific for vacation rental activities.
If the homeowners’ association prohibits tourist rentals, can the prohibition be applied retroactively?
No. In general, these amendments will not have retroactive effects. In other words, those owners who were already renting their properties as holiday homes before homeowners’ associations approve the prohibition may continue to carry out said activity freely. The prohibition will only affect those owners who intend to use their properties as tourist rentals in the future.
That said, there are also dissenting views on this matter, and a broad range of cases.
Increase in owners association fees for tourist homes
The law allows homeowners’ associations to increase the fees paid by vacation rentals properties by up to 20%. But, can this increase be applied to owners who already had a tourist rental license before the increase in fees was approved?
So far, this matter has only been studied by the Provincial Court of Guipúzcoa, which has ruled that no increase can be applied to these owners.
However, some lawyers and property managers argue that this is unfair treatment towards future owners of tourist homes in that community, who will have to pay said increase. According to this view, an increase in owners association fees can never be applied retroactively to those owners who have a tourist rental license before an increase is approved. This means they cannot be charged “extra” for their past tourist rental activity, but they must pay the fee increase from the time the amendment is approved onwards.
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