Can a homeowners' association prohibit tourist apartments without unanimity? The ruling of the Supreme Court

Due to the proliferation of apartments intended for tourist rentals, the need has arisen—typically due to disturbances caused to neighbors by users of this type of accommodation—to regulate the conditions under which this activity can be carried out, especially in buildings shared with residential properties. Recently, the trend has been to establish limitations on this type of rental. As this is a controversial issue in communities of property owners, more cases are now reaching the courts to be resolved.

While it is true that there have been numerous rulings regarding the legitimacy of prohibiting tourist-use apartments in community statutes, this latest ruling is novel as it addresses the decision to prohibit this activity through a resolution of the owners' meeting.

New perspective, the Supreme Court extends the prohibition of tourist rentals to owners' meeting agreements

Some communities of property owners have explicitly prohibited the use of apartments for tourist rentals in their statutes. However, the cases that had previously reached the Supreme Court were related to the prohibition of tourist apartments in communities whose statutes prohibited the conduct of economic activities, without specifically mentioning the prohibition of tourist use.

In this regard, the Supreme Court has considered that the rental of homes for tourist purposes is an economic activity, as it involves a use distinct from that of housing and includes a commercial, professional, or business component. Consequently, communities that have a provision in their statutes prohibiting economic activities in the buildings' homes are understood by the Supreme Court to include the prohibition of tourist rental within that restriction. Therefore, to ban tourist rentals, it would be sufficient for the community statutes to include the prohibition of economic activities in the properties.

October 2024 ruling and its impact on agreements regarding tourist rentals

On October 3, 2024, the Supreme Court issued a new ruling on this matter. However, this time, the case does not concern the statutory prohibition on conducting economic activities in properties designated for residential use. Instead, it goes a step further, analyzing the validity of prohibiting such an activity through a decision made by the Owners' Meeting with a three-fifths majority, rather than unanimity.

This represents a first and groundbreaking ruling by the Court regarding the interpretation and application of Article 17.12 of the Horizontal Property Law (hereinafter, LPH). This provision was introduced in 2019 through Royal Decree-Law 7/2019, of March 1, on urgent housing and rental measures. The provision states that “the agreement to limit or condition the exercise of the activity” of renting for tourist use requires the favorable vote of three-fifths of the owners.

In the case at hand, a community of property owners in the city of Madrid adopted a decision to prohibit the activity of tourist rentals in the building by a majority of more than three-fifths of the owners, but without achieving unanimity. The affected owner filed a lawsuit seeking the annulment of the decision made by the Owners' Meeting, as it had not been adopted unanimously by the owners.

Interpretation of the Supreme Court: Does "Limit" include the ability to prohibit tourist rentals?

The controversy brought before the Supreme Court centers primarily on the interpretation of Article 17.12 of the Horizontal Property Law (LPH), specifically regarding whether the term “limit” as referenced in this provision includes the power to prohibit the activity altogether.

The Supreme Court ruled that in interpreting legal norms, one must go beyond a simple literal interpretation of the legal provision. It must consider the intent of the norm itself, as well as other interpretative criteria contained in the Civil Code. In this sense, the Court concluded that “the legal possibility granted to property communities to limit tourist rental activity in the building could also imply its complete prohibition, which would be the maximum limit.”

Furthermore, the Court reasoned that the purpose of this provision is to grant property owners the authority to protect themselves from potential disturbances caused by tourist rentals in the building. Therefore, if unanimity were required, it could lead to a situation where such powers could never be exercised, making it impossible to prohibit such activity.

Thus, the Supreme Court endorses the prohibition of tourist rental activity when the decision is made by a three-fifths majority of the owners.

Application in Catalonia and the Legal Context

It is important to note that this ruling concerns the interpretation of a provision in the Horizontal Property Law (LPH), but this regulation is not applicable in Catalonia. In Catalonia, the regulations related to horizontal property are contained in Law 5/2006, of May 10, from the fifth book of the Civil Code of Catalonia, related to real rights. Therefore, we will need to wait for rulings on similar cases that arise in property communities in Catalonia. While this ruling is highly revealing regarding the Supreme Court's stance on these matters, it is likely that the same criteria will be applied. However, in Catalonia, the required qualified majority is four-fifths, which is also the majority needed for amending community bylaws, and thus, for the statutory prohibition of tourist rental activity.

What should property owners consider before renting for tourism?

From this ruling and previous judgments related to the prohibition of tourist rental activities in properties, we can deduce that the Supreme Court will support situations where property communities impose a veto on dedicating flats to tourist use. Therefore, before considering such an activity, it is crucial to not only review the community bylaws but also the decisions made by the community of property owners. Consequently, it is essential to seek proper legal advice before starting any such activity to avoid legal conflicts.