REPORT FOR THE OWNERS
(See suggestion at bottom)
 

Mr. Enrique San José Santa Cruz, owner of several weeks in Palm Oasis and member of the Independent Comité for the Protection of the Weekowners in Palm Oasis, travelled in February 2004 to Canarias and during two weeks he investigated several subjects of general interest during his holidays.

Most of the times he met Mr. Ramón Alzola, Secretary of the Directive Assembly and Administrator’s Representative, from who he received attentive and kind attention.

Nevertheless, Mr. San José did not always get concrete answers to his questions and in many subject he has come to conclusions basing in the information available.

After this introduction please find in an abbreviated form the conclusions about some of the most important subjects that the owner are worry about. It is known the risk of making some mistakes in some comments, but anyway it must be taken in mind that it is difficult to get detailed information about the resort.

I.- About estate 235

Estate 235 is a private property inside the touristic resort. As it is writen in the title deed of New Construction and Horizontal Division, it is an:

“Estate in basement and ground floor of the main building ...” and has as inseparable enclosures: the area of the courts, the pool bar with its correspondent terrace and the two-floors service module.

This means regarding the specific locals, that it is part of estate 235:

a)      The basement parking
b)      The pub-bar
c)      The gym
d)      The game room
e)      The resort warehouse
f)        The local of the laundry
g)      The local of the warehouse and maintenance workshop of the resort
h)      The bathrooms of the employees in the basement
i)        The employees’ dining room
j)        The local of the basement kitchen
k)       All other locals, bathrooms and living rooms of the basement
l)        The local of Reception of the Touristic Resort
m)    The local of the Reservations Department
n)      The local of owners touristic Information
o)      The lobby of the main entrance of the resort
p)      The office of the resort’s director
q)      The local of the restaurant and its enclosed areas
r)       The local of the ancient room where the sales were made
s)       The local of the minimarket
t)        The pool bar and its terrace
u)      The tennis courts

What it is surprising about the existence of this private estate 235 is that the owners were not informed in the purchasing moment about it and its exclusive and private character, given that together with the documents received there appear several of the locals that now are part of this estate 235. The paragraph in the private contract of purchasing-sale regarding the common areas were misleading, given that it was not necessary to specify, due to its own nature, that the stairs, access and corridor areas were accesible for the owners. That means, that the inclussion of the paragraph brought to the interpretation that the areas and locals indispensable for the resort functionality (as reception, offices, warehouse, parking, a.s.o.) were part of the common property of the resort. This estate 235 seems to collide with the ideas of Law 42/1998 when in its Arguments Exposure it is written: “ ... In addition, it is established that the rules can only fall on a bulding, estate ensemble or a part of those architectonically differenced ...”. Also article 4.1 b) says: “ ... Having obtained from the competent authorities the necessary licenses for developing a touristic activity, opening ones, and the necesarry for the first ocupation of the lodgings, common areas and accessory services that were necessary for the destination and the correspondent habitability cedule ...” (the underline is ours).

It is proved that the weeks owners in Palm Oasis, through their maintenance fees, pay rent to the owner of private estate 235, at least, for following locals:

a)      The gym
b)      The game room
c)      The resort’s warehouse
d)      The local of the laundry
e)      The local of the warehouse and maintenance workshop of the resort
f)        The bathrooms of the employees at the basement
g)      The local for the Reception of the Touristic Resort
h)      The local of the Reservations Department
i)        The local of the owners touristic Information
j)        The lobby of the main entrance of the resort
k)      The office of the resort’s director

It has to be said very clearly that the rent cost represents an important part of the maintenance fee. On the other hand, the private character of these locals can set in a precary situation the normal running of the resort given that no formal obligations are known of property of estate 235 with the timeshare ownership.

No explanations are found about the fact that the Canarias Goverment and its touristic authorities were capable of giving license for developing a touristic activity, nor an opening permission, to a touristic resort that does not count, as a whole ensemble, with the minimal installations requested for the indicated quality level. In this sense, we do not know why a limited company has been admitted and not a limited liability company, and if Palm Oasis Mantenimientos S.L. has satisfied the securities that the Law establishes. At least, the audit does not indicate this.

Therefore the worries of the Committee about the existence of estate 235 have fundament and have to be object of a legal study, given that supposedly several legal dispositions have been broken, including the Spanish Timeshare Law and the laws of the Touristic Ordinances of the Autonomous Community of Canarias.

II.- About the drastic increasement of the maintenance fee

There are no legal fundaments for the increasement of the maintenance fee produced after the General Assembly of Owners in December 2001.

The Statutes of the Owners Community establish the annual application of the Retail Price Index of the maintenance fee in order to adjust it to the increasement of life cost.

On the other hand, each owner has signed a contract with Palm Oasis Mantenimiento S.L. where the price for the maintenance services supplied is fixed. It is not very clear how this contract is modified regarding price and services without the consent of one of the parts, in this case the owner one, and without protecting this modification by any treating documents of the community rules nor of the timeshare.

It is very surprising that existing the mentioned regulating title deed, which is given with the assistance of the service company, in this case Palm Oasis Mantenimiento S.L., and where it is established (and the company takes the compromise) that this company will give the maintenance services to the price fixed in the purchasing-sale contracts previously signed (180,- euro in case of T1, for example) and in the informative binding document, in a few months this same company call to a General Assembly of Owners for presenting them a budget that almost duplicate the compromised written price. And with this, also, duplicates the amount of its charges.

To the irregularity before, it must be added, between others, the following significant facts:

a)        That the mentioned General Assembly of Owners was convocated without guaranteeing that all the owners receive the invitation in time.

b)       That the elected date for the meeting was totally unproper and inconvenient (27^th December 2001) difficulting the assistance of the owners, even of those who live in the Gran Canaria island.

c)        The company Olmos y Cedros S.L. appears, which is known that is totally identified with the interests of the owners of estate 235 and with the services company, without any intention of representing the interests of the owners. By using an imprecise procedure, a great number of owners gave this company the right to vote that was afterwards used, without consulting, for approving agreements totally against the interests of most of the owners.

d)       Also in a misleading way, the call of the General Assembly of Owners of December 2003 was written not showing that the real objective was an extraordinary increasement of the maintenance fee, given that the pure analyse of the budget of Palm Oasis Mantenimiento S.L. (which has no significance for the owners due that the price of the service was fixed before) could not left without effect thousands of contracts signed by the company with all the owners.

e)        Following with mentioned before, if already the intention was to ignore the contract signed between the owners and Palm Oasis Mantenimiento S.L., how is it possible that a recently constitued Owners Community decide to increase a fee that theorically does not exist nor could exit before constituing the Community, even none of the owners of public title deed.

From all above and what it is said in other parts of this report, it is clear that, among the duplication of the Administrator’s bill, the innecessary expenses and the unfulfilment of Palm Oasis Mantenimiento S.L., the maintenance fee has been increased more that correct. In our opinion, in December 2001 this fee should had been increased a maximum of a 20% more or less, resting included the increasement accumulated for the prices change, with an additional margin.

Due to these reasons it is necessary to deeply study from the legal point of view all what happened, given that it can be pressumed that the exaggerated increasement of the maintenance fee could be null within own right.

III.- Comments about management and other aspects of the resort

In the resort there are many different companies that act together and that in many of their actings works the same personnel. Among we know are the following:

- Palm Oasis Mantenimiento, S.L., which gives the maintenance service

- Palm Oasis Maspalomas S.L., which is the company that appears in the contrats as seller

- Palm Oasis Marketing S.L., which we supposed was the responsible for the sales

- Tasolan S.L., owner of estate 235 and of a part of the appartments

- Mind S.A., which pays the restaurants’ personnel

We do not know if there are or were other companies, given that we have deduced their existence from the existing documents we have and from the simple question “who pays you?”.

An example of this net of companies is what happened to Mr. San José, which in the moment of paying his fee through his credit card received the receipt from the company Mind S.A. It is very worrying.

In the resort there is no own way for contacting with the direction of any of the Owners Communities existing. All indicates that for contacting any of the companies mentioned before or any of the Owners Communities there is only one way in the resort: through Mr. Ramón Alzola Tristán. This produces such a centralisation that avoid that anyone can say something without the instructions of Mr. Alzola.

The audit, which report was presented in the Owners Assembly of November 2003, was aimed to verify the accounts and not, logically, to judge about the effectiveness of the resorts management. The audit verify the book-keeping of company Palm Oasis Mantenimiento S.L., book-keeping which is leaded by the rules of the company. Therefore, by reading its text, it can be observed that it describes the registered facts ocurred without big problems, what can be considered as correct but it never can made the owners understand that all runs well because the audit does not made any important remarks.

The misuse of the resources, of the personnel, the installations and the management made think that i does not exist, at least, one effective organization of the resort, and can bring to doubts about if the financial resources coming from the payment of maintenance fees of the owners are not being well used for the purposes foreseen.

Let us see only a few examples:

1. Estate 235, private and independent, has not its own water consuming mesurements, nor those for electricity and telephone.

2. Neither the different companies of the resort.

3. Several services (cleanness, maintenance, laundry, a.s.o.), paid through the maintenance fees of the owners, benefit private estate 235 and alos the shop established in the resort (restaurants, mini-shop, supermarket). There are no contracts about the supplying of these services (at least, the audit does not mention them and in the conversations it is not possible to explain its existence).

4. The same occurs with the personnel mentioned in the audit and that are paid through the maintenance fees:
1. Both computer engineers work also for the rest of the companies and business. It can not be explained why they need two engineers for only a few computers in maintenance. It is very surprising that with two persons the resort never has published a page in Internet for the relation between the owners and the resort.
2. The personnel of human resources works also for the rest of the companies and business (we could noticed it by asking several employees).
3. We verify personally that there is only one book-keeping department, paid by the owners, and also working for “everyone”.
4. The same occurs with the purchasing department. We suppose that the main part of the purchases would be for the shops, given that the situation of the appartments does not show that the purchases are for them.
5. The security personnel watches also estate 235, the shops and the offices of the resort’s entrance. We have seen how the security guard watches the supermarket when the employee is absent.
6. The warehouse personnel has much work with the products purchased for the shops (restaurants, supermarket, pub-bar, a.s.o.).
7. The reception personnel works very close with the restaurant.

5. It is significative that the phone net, the phone switchboard, the computer net, the electricity, the water and all the nets, are the same as for estate 235, the timeshare ownership (the appartments) and the companies there. We suppose that at least the nets for estate 235 should be, on the project, independent because before the building the promoters had the caution of creating estate 235 with all the specifications and details that guaranteed its private character. This situation creates justified suspicions.

There is no explanation about the fact that Palm Oasis Mantenimiento S.L. has to give services to estate 235 nor to the rest of the companies, because this is not foreseen in the title deed of constitution of the timeshare ownership. Even more the writing means that those services belong to the Owners Community, not private, as it is natural.

It is also surprising that the representative of the Administrator (that means, Administrator = Palm Oasis Mantenimiento S.L.), Mr. Alzola, is also at the same time, secretary of the Management Assembly of the Owners Community of Horizontal Property of the resort, given that Palm Oasis Mantenimiento S.L. should not act in this Community. Neither could he be the secretary of the other Timeshare Ownership Community, as representative of the administrator, given that the condition is to be owner. And in the same sense it could be said that it is not very aesthetic that Mr. Hernández Reja is the Vicepresident of the Managing Assembly if he is the representative of Olmos y Cedros S.L., doubtful company because of its unfortunate acting in favour of the acting companies, without counting with the familiar relations that join him with the promoters and the owners of more than the third part of the resort: estate 235.

The same way we think that the calculation made to define the property fees should be reviewed, because it is surprising that a group of locals and parking zone could represent more than a 30% of the resort.

The resort direction, in its hostel part, is given to a person from who we do not know if he has the necessary formation for it and if he has the demmanded formation by the touristic authorities for this work. In fact a great number of the owner consider him as incapable for this function.

Regarding the delayed maintenance fees and the debtors, it can be said, following with what we have talked with many owners, that a great quantity of these debt fees correspond to owners which have not used their weeks due to different reasons or they have lost their illusion towards the resort and do not pay or simply owners which do not agree with the decissions of the Assemblies. We do not deny the existence of debtors, but all what is said is not the reason for the increasement of the maintenance fee (as it is said by different managers of Palm Oasis).

When we compare those owners that are paying their maintenance fees from the beginning although their properties were not finished until several years after (following with the payment obligation independently of being the appartment finished or not) and the payment obligation of Palm Oasis Maspalomas S.L., we will come to the conclussion that the only, real and great debtor is in fact Palm Oasis Maspalomas S.L. or the promoter. If they had paid since 1996 all the maintenance fees of all the appartments (built or not), the Owners Community would have a reliable situation and enough resources for facing the whole running of the resort.

From the numbers of the contracts we can see that they are now about 20.000. This shows that many persons have not purchased during this time. The question is: where is the money they have paid? And, specially, where is the corresponding part of this money paid for the maintenance? During these months we have talked with owners that paid important amounts and that have left the contract without having enjoyed not a week.

The Owners Communities constitued have not their own bank accounts. All the money paid goes directly to the account of Palm Oasis Mantenimiento S.L. The businessmen related to the hostelries we would be delighted of receiving during the first 30 days of the year at least the 50% of the yearly amount. This occurs mainly with Palm Oasis Mantenimiento S.L. The money paid in advance are not used for obtaining benefits, to the contrary, the company needs credits for running. Something is wrong with the management. We have demmanded that the amount of 60,- euro paid for the internal interchanges (payment which we do not agree with) are entered in a bank account of the Owners Community and were not used for any other reason.

During the days before the return of Mr. San José, he could know from some English owners that Palm Oasis were being offered by a travel agency or touroperator. Although this could not be verified, it is necessary to take care that the management of Palm Oasis has begun with this activity (not counting that it could be against the law) without informing to the recent Owners Assembly and thinking that the current tourism do not care about the installations as the owners, so the additional damage produced by this activity finally will be paid by the owners, through another increasement of the maintenance fee or with partitions. The question is: where do the incomes from this activity go?

At last, if a fast calculation is done about what a 3-stars hotel (that is the category in which the resort Palm Oasis is inscribed, being a deceit the 5-stars category given by Interval Internacional) gets, we could verify that any of those resorts, with less money (because the touroperators are not very generous by paying) that it is got with the maintenance fees, gives a better service than Palm Oasis, many times even with half board or full board included.

IV.- CONCLUSSIONS

It is difficult with such little information and with such a complicated situation of the resort to come to practic conclussions that can be used effectively for making the situation better. We have noticed that the critics of the Committee, myself and the owners made to the management of Palm Oasis are seen with many doubts and thinking of desestimated them in advance. Instead of understanding the real sense of our remarks, they think that we want to assume the management of the resort. The same occurs with the web page: instead of taking note of the aspects that actually do not run well for an immediate acting, they only think in legal aspects that could ease a legal claim against its authors. It has been offered to the management of Palm Oasis to write down the answers to each aspect of the web page with the compromise of editing them on the first page, but it seems they do no want to do it.

Nevertheless, we venture to say the following, as conclussions:

1. It is necessary to find a solution for the existence of estate 235, so it would be convenient to made the authorities of Canarias being part before this could come to a legal deal. The wisest way would be to change the title deed of horizontal property to declare the necessary locals for the running of the resort as not private. Maybe it has no sense the existence of two Owners Communities in a same resort.

2. The maintenance fee should not be increased until a serious study indicates what should be the definitive amount.

3. The company Palm Oasis Maspalomas S.L. or its promoter should pay the maintenance fees of all the corresponding appartments from year 1996 until today, as it is been demmanded from the owners. With this the poor situation of the installations could be changed by renewing the furniture and equipments.

4. The actings and expenses of the different companies should be separated from the resort in order to avoid the actual confussions.

5. All the aspects and actings against the law produced in the resort should be studied carefully, including those of the composition and running of the Owners Community and of Palm Oasis Mantenimiento S.L. including its obligations, that have been minimized in the regulating rules title deed.

6. The measures that have irritated the owners should be declared as uneffective, for example the payment for the internal interchanges, the payment for the parking, a.s.o.

7. It is necessary to dismiss the actual Management Assembly because its acting has not been correct. The Owners Community should count with its own management and bank accounts.