Update on illegal letting situation

[Janet]

I started this post a week ago, and I apologise for the unavoidable delay in publishing it but I needed to get legal confirmation before giving information of this importance.

The Supreme Court in Madrid, the highest Court in Spain, has issued a judgment on a separate issue which we have confirmed has legal application to the appeals currently underway against fines for illegal letting. The judgment, issued in December, concerned internet piracy, and a prosecution undertaken by the Technological Investigation Brigade (BIT) – the police unit behind the internet bullying warning that I posted HERE. In their prosecution of "internet pirates", the BIT had confirmed IP addresses and linked them to proven phone line ownership: their prosecution was of individuals identified by both IP and phone ownership.

The Supreme Court has now judged that to destroy the presumption of innocence, which is a fundamental constitutional right, more is needed than this form of identification, which is unsafe and illegal. This judgment is of considerable significance to the illegal letting situation since Turismo's inspectors have not even gone so far as such identification. They have merely taken adverts from the internet and not gone beyond that. They have certainly not even taken the next step of trying to identify who might have placed those adverts, let alone confirm identities through IP address and phone line ownership. As such, the Supreme Court judgment is of strong legal relevance to the defences now in appeal, and an adjunct to the already-submitted appeal has now been presented for José Escobedo's clients to the Courts, adding the precedent to the arguments used in the appeals. Anyone currently appealing should check with their lawyer that this is being done in their case.

In the meantime, we can now confirm the arrival in Tenerife of a change of tactic by the inspectors previously seen over recent weeks in the eastern islands. We cannot be sure that this is because the Government knows of the above Supreme Court judgment, but it seems quite possible. Inspectors are visiting complexes in the guise of "tourism standard quality surveyors", and are presenting themselves as such even to Presidents of communities to gain introductions to apartments, though door-to-door visiting is also being reported. These apparent "public officers" are asking the occupants of the apartments how long they are staying, how much their holiday cost, and whether they are happy with the tourist services included with their booking. They have a "questionnaire" for people to fill out. Evidently, owners in residence will not have a problem, but they need to inform any guests that they might be visited. Legal advice is that guests should acknowledge that they are not the owners, but insist that they are not authorized by the owners to answer any questions, nor to fill in any forms, nor especially to sign anything. If pressured, they should ask for the questionnaire to be left with them to be filled in at leisure and returned by post.

Finally, there are two further points that I've been asked to clarify. The first concerns three judgments issued by the Canarian High Court recently where fines have been overturned on the grounds of a successful appeal based on the EU's Bolkenstein Directive. It is too early to give firm legal opinion until these judgments have been considered in detail, and this is being done at the moment, but for now we can say that the rulings appear to be relevant to agents rather than individual owners. I stress that this is a provisional interpretation and I'll confirm further at a later date, but I would emphasise that it appears not to be of relevance to individuals, and that it in any case only refers to tourist-licensed apartments. It has absolutely no legal relevance to residential apartments which may not be let under any circumstances under legislation that is not in breach of the Bolkenstein Directive. The second point is that there appears to be misinterpretation of a proposed clause in the new law currently in Parliament about a two-year period of grace: again, this refers only to tourist apartments, not residential, and specifically to a period of grace for tourist apartments to be brought up to the minimum standard which the new law will also define. The new law, as proposed, does not envisage a two-year period of grace during which illegal letting may be carried on with impunity.

Once again I apologise for the delay in publishing this post, but it was essential that it was legally clarified and confirmed before it appeared. I had that legal clarification and confirmation only last evening. JA

[Myrtle Hogan-Lance]

Well, if this means that people can continue renting illegally in resident complexes, then I am sorry for those who live around their properties.  I cannot imagine anything worse than to buy on a residential complex only to discover I had front row seats to a never ending parade of holidaymakers. 

[Janet]

Well, if this means that people can continue renting illegally in resident complexes ...

It doesn't, turtle ....

What it means is that the government must do more than find an internet advert before they can fine someone and make a legal presumption of their guilt. They are, indeed, already doing more ... this is what seems to be behind their visits to apartments to get verbal or written admission of commercial letting.

There's no question that residential apartment letting is illegal, nor is there any question that the government is doing its utmost to stamp it out. What the government must do, however, is itself act legally and constitutionally correctly.

[Myrtle Hogan-Lance]

Oh, well then I'm sure they will.   

[Janet]

 As I posted on 14 March below, there are three recent judgments from the Canarian High Court where fines were overturned on the grounds of a successful appeal based on the EU's Bolkenstein Directive. I apologise for the delay in coming back to this to get the information out but felt that it was too important to post something that was possibly incorrect: as I said then, it was too early to give firm legal opinion until the judgments were considered in detail.

I now have the judgments and legal opinion in my possession, and can confirm that they have nothing whatsoever to do with the inspections made and fines imposed on individual property owners for commercial letting. The judgments relate entirely to SL companies operating without the legal requirement of "Autorización Previa". The Bolkenstein Directive means that it is no longer compulsory for businesses to get an administrative license before starting a holiday let business. Even more specifically, if there is no infraction or violation of the law, they cannot be fined, but if there is an infraction, with a commercial let that is otherwise illegal, they can be fined on the basis of that particular illegality.

To be explicit: the Bolkenstein Directives are concerned only with registered holiday companies, and then only with the issue of prior authorization to trade. The judgments have no relevance whatsoever to any illegal activities such businesses might be undertaking, and if found to be doing so, they can be fined for those activities. The judgments have absolutely no relevance to individual owners in any shape or form, for whom it can be considered as though the judgments did not exist. JA

[Janet]

The first appeals of fines issued under the Plan Especial went to Court last Thursday. Before the hearing, however, the judge called Alotca lawyer José Escobedo and the Government's lawyer into a meeting. Also present were a legal assistant from Tenerife Litigation (the office of the two Alotca lawyers, José Escobedo and Santiago Saenz), and the two chief Turismo inspectors.

Before I talk about the meeting I would like to clarify two things that have been the subject of much discussion and rumour. First, the judge confirmed that Canarian law is valid, and applicable, to these cases of fines against individuals for private holiday rentals. Secondly, he confirmed that previous judgments concerning "prior authorization" have no relevance at all to them.

The judge requested the meeting because he had certain things to say in general terms about the specific cases being heard and others like them still to come to hearing. These were that he considered the fine amount to be disproportionate (as I've previously posted, proportionality of punishment is written into the Spanish constitution); that Alotca lawyers had prepared a strong and detailed defence; that the Government nonetheless had a case that could be developed during a hearing; that such cases would take a considerable time to hear; and there were so many of them that Court time would be inordinate. As a result, he had consulted with other judges and it had been decided that all cases would be heard by that same judge through the one Court, number 4 in Santa Cruz.

Having made these comments, the judge then asked that a class action be formed for an out of Court settlement which would apply to all the appeals underway at present. Since Alotca has the vast majority of cases to be heard, and was behind the first appeals to be heard, the class action is to be conducted through Alotca, with cases being handled by other lawyers forming part of the Alotca action. The settlement will require a document to be signed by the appellants acknowledging that they had been in error, that this error had resulted in a breach of the law, that they accept a fine as punishment, and, naturally, confirm that there will be no future breaches. The document will stand as a legal judgment so that even with an out of Court settlement, any future fines arising from continued letting would be at the second offence level of up to €30,000.

The Government has been given a month to liaise with José Escobedo and Santiago Saenz to negotiate the settlement, involving the final document to be signed and the level of the fine: the judge said that in his opinion, it would reasonably be in the region of €5,000. The Court provided José Escobedo with a list of all cases involving other lawyers, and any appellant with a non-Alotca lawyer who wishes to join the class action must instruct their lawyer urgently to contact Tenerife Litigation so that their cases can be presented to Court as part of that action. Those who are already with one of the two Alotca lawyers need do nothing.

There is a video recording of Thursdsay's meeting which I watched this afternoon. I will have a copy uploaded onto my website as soon as it can be transposed into a file in a format that I can upload. I am dependent on the help of others to do this, so please bear with me.

José and Santiago ask that any enquiries come via me to free them up to get on with this work. Evidently they expect to hear directly from lawyers of those who have been fined and who are to join the class action. In terms of general questions, however, they ask people to email me. If anyone has just received a fine, or does so over the next few weeks, please also contact me urgently to find out what Alotca lawyers will need so that time is not wasted with them answering basic initial questions.

On a wider basis, Alotca is about to start negotiations with the OCU (organización de consumidores y usuarios), the Spanish Consumers Organization, which is preparing to fight the recently announced national proposals to limit tourist letting throughout Spain. The fight is very far from over, but with regard to the fines issued so far, we at last have clarity. JA

[Janet]

There is a recording on the link below of my interview with Atlantis FM this morning on this subject. Thank you to Jon Maxfield for the airtime to get the message out there as widely as possible.

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[Janet]

I've been asked to point out that the offer of a class action with a €5,000 fine for signing a document is only available  to those cases which form the majority of Alotca appeals - i.e. those whose fines started at €18,000 and which were reduced on first appeal to the government to €13,800. All cases in the class action must be identical, and clearly, not all are, with some owners being fined on the basis of random inspections and/or private adverts, others for running multiple properties as a business, and yet others who have been denounced by communities or neighbours etc.

As a general rule, anyone who has ended up with a confirmed fine of above €13,800 will have been fined for a different type of infraction - very generally these will be for offences against the "principio de unidad de explotación e intermediación turística", i.e. sole agent system, or multiple apartment letting. All Alotca clients who fall into the class action category will now have received, or will shortly receive, an invitation to join the class action. As of today, I can confirm the outcome one of these (different) types of cases where the appeal (not via Alotca) was rejected yesterday by the Court and the Government's fine upheld ... and with no possibility of appeal granted. JA

[Janet]

First of all apologies: we are not going to post the video recorded during the meeting at Court the other day. Alotca lawyers have had serious misgivings about making it public, not least because it is in Spanish and will not only be incomprehensible to those who do not understand the language, but because it will also be impossible to contain any misinterpretations, confusions or misunderstandings that might arise. The main reason, however, is that its further dissemination and discussion cannot be contained, and given that sensitive negotiations are now on the point of starting, it is essential not to jeopardise the appellants' cases. Widespread comment on the video, perhaps with it even being uploaded to youtube, would be unhelpful to say the least, and might even serve to create an environment in which Turismo becomes antagonised or defensive.

This is the thinking behind the decision not to release the video, but José Escobedo will instead write a legally detailed piece for me to post with a screenshot of the video explaining the current situation and the discussion in the meeting that led to the negotiations now about to take place. He has also asked me to stress that while Alotca has the majority of the cases, and in our opinion the best strategy and defence (we can't go into detail for what I hope are obvious reasons), he and Santiago are not miracle workers. They will, however, put all their expertise and commitment into the negotiations and hope, with good reason, for a satisfactory outcome.

I've been asked to stress, once again, that while all identical cases, and even those that can be argued to be identical, will be put into the class action, there are other types of cases being heard in other Courts. The situation is not a simple, black and white issue, so there is much room for confusion to be created when people have partial or unvalidated information.

On a matter that is giving rise to lots of questions, I can confirm that anyone who is at the stage of appeal to the Courts with a non-Alotca lawyer can request to join the class action: they just need to instruct their lawyer to contact Tenerife Litigation in La Caleta, and the lawyers can decide between them whether the case is of a type that can be added to the action. Anyone at that stage will already have had their appeal presented to Court and so could not switch lawyers even if they wanted to. Anyone who is still at the stage of first phase appeal to the Government can, however, if they so wish, switch to Altoca.

Please note that I say this in response to queries that I have received, and José Escobedo and Santiago Saenz want to make it crystal clear that this does not represent any sort of touting for business. Finally, anyone who is already with either Alotca lawyer need do nothing unless they wish to opt out of the class action: if their case is such that it can be added to the action, it will be added automatically unless they instruct to the contrary; if their case is different, and such that it is not appropriate to the class action, it will be defended in the Court according to the instruction already agreed.

Thank you to everyone for bearing with us: it is a phenomenally busy, and complicated, time. We do hope you understand the reasoning behind the decision not to upload the video, and will have a legally-detailed and qualified piece here for you as soon as José has the time to write it up. JA

[Janet]

Just to update on the class action. Many will already know that the Government overruled its own lawyers and refused the judge's suggestion for negotiation. This means that the class action cases have to be heard. Immediately after Alotca discovered that the Government intended to continue with the execution of the fine, an application was submitted to the court to hear all identical cases (same fine and same infractions) in one class action. This was in Court on Monday, but the judge postponed the hearing until 26 September. The outcome will probably be announced a month after the hearing itself finishes – and we don't know how long that will be. JA