The prohibition of tourist rentals in communities of owners

21 November, 2024
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Real Estate
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Amaia Forcada


#### Regarding the Judgment of the Plenary of the Civil Chamber of the Spanish Supreme Court of October 3, 2024

On October 3, 2024, the Plenary of the Civil Chamber of the Spanish Supreme Court issued judgment 1232/2024, with Pedro José Vela Torres as the reporting judge. The ruling supports the authority of communities of owners to prohibit tourist rentals in their buildings.

Factual background

The case involves a community of owners of Madrid. On April 20, 2020, a meeting was held where a resolution was passed to prohibit tourist rental activities with a majority exceeding three-fifths. There was no unanimity, as one owner abstained and another voted against it.

On February 4, 2020, the meeting minutes were sent to all property owners, including those absent, and no objections were raised within the legal period of 30 calendar days. Thus, the resolution was deemed approved.

The proceedings

On December 30, 2020, Delsa Patrimonial Management Group, S.L., one of the property owners, filed a lawsuit requesting the annulment of the resolution on the grounds that it was not adopted unanimously. The community of owners opposed the lawsuit.

In the first instance, the Court of First Instance No. 43 of Madrid dismissed the lawsuit, holding that a three-fifths majority was sufficient to adopt such resolutions under Article 17.12 of the Horizontal Property Act.

However, Section 10 of the Provincial Court of Madrid upheld the plaintiff’s appeal, ruling that tourist rental activities could be limited or conditioned but not entirely prohibited. Consequently, it annulled the resolution.

Legal framework

Article 17.12 of the Horizontal Property Act states:

Decisions of the community of owners’ meeting shall be subject to the following rules:

[…]

12. The resolution to limit or condition the activity referred to in letter (e) of Article 5 of Law 29/1994, of November 24, on Urban Leases (tourist rentals), in the terms established in the sectoral tourism regulations, whether or not it involves an amendment to the founding deed or bylaws, shall require the affirmative vote of three-fifths of all property owners who, in turn, represent three-fifths of the ownership quotas. Likewise, the same majority shall be required for resolutions establishing special expense contributions or increases in the participation in common expenses for the property where such activity takes place, provided these changes do not involve an increase exceeding 20%. These resolutions shall not have retroactive effects.

Resolution of the case by the Spanish Supreme Court

Against the ruling of the 10th Section of the Provincial Court of Madrid, the community of owners filed a cassation appeal, arguing that Article 17.12 of the Horizontal Property Law had been incorrectly applied in relation to the interpretative rules contained in Article 3.1 of the Spanish Civil Code. They contended that the powers of limitation and conditioning include prohibition.

In this ruling, the Supreme Court recalls that in previous decisions:

–> It has accepted the possibility of establishing limitations or prohibitions on property aimed at protecting the general interest of the community, such as prohibiting certain activities or changes in the use of the property. However, to be effective, these must be explicitly stated and, to be enforceable against third parties, registered in the Property Registry; and

–> It has declared that the interpretation of limitations must always be restrictive in nature, as any restriction on property rights must be.

Furthermore, the court notes that the Constitutional Court deemed prohibitions on activities in private areas to be in compliance in rulings dated October 21, 1993, and March 8, 1999.

Focusing on the issue in dispute, the Supreme Court states that the interpretation of Article 17.12 of the Horizontal Property Law must be conducted following traditional criteria: literal, systematic, historical, sociological, and teleological, while also allowing for recourse to additional criteria.

Regarding the literal criterion, the Supreme Court highlights that the Real Academia Española (RAE) defines “limit” not only as “to set boundaries for something” but also as “to define the scope of authority or the rights and powers of someone.”

Thus, affirms that it can be interpreted that the authority granted to communities of owners to limit the activity of tourist apartments within the property can also imply their complete prohibition, as this represents the ultimate boundary. And reinforces this interpretation bringing up the definition of “limit” in the Diccionario Panhispánico del Español Jurídico, which describes it as “the delimitation of a territory, a right, or the scope of administrative or jurisdictional competencies.” Therefore, the court concludes that the legislator has allowed communities of owners to delimit the exercise of tourist apartment activities, including the possibility of prohibiting them.

Regarding the teleological criterion, the Supreme Court reminds that, to ascertain the objectives of a law, jurisprudence often refers to its preambles or explanatory statements, as these are useful tools to reveal the rationale behind the legislation.

In this case, the court refers to the preamble of Royal Decree-Law 7/2019, of March 1, on urgent measures concerning housing and rental issues, which introduced Article 17.12 into the Horizontal Property Law, stating that the legislator justified the urgency of this provision due to citizens’ difficulties in accessing rental housing and a notable increase in rents. The court then cites two excerpts from the preamble: one stating that the rising phenomenon of tourist rentals is one of the factors driving up rents, and another explaining that the law specifies the qualified majority required for communities of owners to limit or condition such activities or to establish special fees or increased contributions to shared expenses.

Based on this, the Spanish Supreme Court considers that the spirit and purpose of the law support the interpretation that limiting the activity of tourist rentals includes their prohibition, specifically stating the following:

“The legislator’s intent is favorable to residential leasing over tourist rentals, which are to be restricted to increase the stock of housing available for sale and rent, with a consequent impact on prices and a corresponding reduction in the burden on family economies. Merely conditioning or restricting this activity does not address, to the same extent, the challenges of housing access that this legislative measure seeks to resolve.”

The court further notes that Article 17.12 of the Horizontal Property Law represents an exception to the rule of unanimity, introducing the double majority requirement of three-fifths. Consequently, it asserts that subjecting the prohibition of tourist rental activities to unanimous approval by property owners would contradict the intent of the law, as a single owner wishing to engage in such activities could veto the measure by voting against it.

For these reasons, the Spanish Supreme Court upholds the cassation appeal filed by the community of owners, overturning the ruling of the 10th Section of the Provincial Court of Madrid and affirming the first-instance judgment.

In short

Communities of owners may prohibit tourist rental activities in their buildings provided that the agreement is approved by a double majority of three-fifths.

Let’s look at an example of what this double majority means in practice: if the community of owners is composed by a total of 10 owners, at least 6 must vote in favor, provided they represent 60% of the ownership quotas. If they represent less (e.g., 45%), additional owners would need to vote in favor to reach 60%.

It’s important to note that abstentions and votes from absent owners who were duly summoned to the meeting are counted as affirmative votes, provided they do not object to the resolution by notifying the association’s secretary within 30 calendar days.

This rule applies throughout Spain except in Catalonia. In this region, the majority required to prohibit tourist rentals in communities of owners differs. The regulations require a four-fifths majority of owners with voting rights, who must also represent four-fifths of the ownership quotas (Article 553-26.2.a of the Catalan Civil Code). In this case, the double majority is not required for all the owners that compose the community of owners, as is the case with the Horizontal Property Law, but only for the owners that have the right to vote.

At MES Advocats, we provide comprehensive legal advice, support, representation, and defense for both communities of owners and individual owners. If you need more information or are interested in obtaining a quote, you can contact our real estate law team through this link.

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