Case-Law Overall Ruling - Local Accomodation

Last March 22, the Supreme Court of Justice issued a decision standardizing jurisprudence that has put some uncertainty in the Portuguese economy, which in recent years has experienced great growth thanks to visits from abroad. In this specific decision, the STJ clarifies that it is forbidden to establish local lodging in an autonomous fraction that, according to the horizontal property title, is intended for habitation.

WHAT IS A CASE-LAW OVERALL RULING?

A Uniform Court Ruling is a decision handed down by the Supreme Court of Justice (STJ) which is intended, for the sake of legal security, to put an end to a divergence or contradiction between rulings handed down by this Court or by the Courts of Appeal, in the field of the same legislation and on the same question of law.

According to article 152, paragraph 3, of the Code of Civil Procedure (CPC), judgments are decisions of the collegial courts. Judgments on the uniformity of jurisprudence are voted before the judges of the STJ and aim to ensure the certainty of the law and the principle of equality, preventing judicial decisions involving the same law and the same point of law from getting different answers from the collegiate courts.

In Portugal, it is not a common law country, and does not have a binding effect, except for exceptional cases, such as this one, in which they are obliged to follow the Supreme Court rulling.

WHAT IS A HORIZONTAL PROPERTY DEED:

The constitutive title of horizontal property is a document, made by public deed, soon after the building is built, in which it is certified that the building meets all requirements established by law required to integrate the legal regime of horizontal property, and defines what is the purpose of the building or parts of the building. More specifically, whether it is for residential or commercial use, or both.

As a rule, the constitutive title can only be changed by unanimous vote.

WHAT CHANGES?

As with all regulations, it is necessary to consider its purpose. The legal regime of local accommodation is a regime intended for the cohabitation of several people in the same building, which presupposes that the same dwelling is peaceful. It is necessary to know whether the concept of dwelling is compatible with the activity of short-term rentals.

This change would mean that residential buildings can no longer have local accommodation apartments, and if you own an apartment in a residential building, you can no longer rent it out to tourists. The decisions made by the Courts of Appeals are due to the fact that there have been several complaints about noise after hours, neglect of the common parts of the building or access of strangers to garages in residential buildings.

However, it is necessary to underline that this judgment was rendered without taking into account the new amendment of Law no. 62/2018, of August 22, in which the possibility of submitting a statement to the Mayor of the municipality where the LA is located was admitted, with a view to the possible cancellation of the license that enables the exercise of this activity.

We are facing two somewhat different legal solutions: previously, if there were problems, they complained, now it is enough that the constitutive title is residential - which happens in most buildings.

WHAT HAPPENS THEN TO THOSE WHO HAVE AN AL LICENSE?

While it is true that the Supreme Court has made such a decision, it is not actually the law. The decision has been sent to the government which will deliberate on it and decide whether the law has to be changed, or a new law has to be implemented.

What is known is that at the time of filing the application for local lodging registration, it may be necessary to show the deliberation that makes it possible to have an establishment, in order to put some peace before the parties. At this point it is urgent that the legislator intervenes, in order to clarify its intention, so as to establish legal security and protect all the interests at stake, even if this may be contrary to the understanding of the Counseling Judges.

Could it be that in those cases where there was already a license, but the deed of incorporation stated that the property was only for residential use, the owner of the property would be prevented from carrying out his business?

At this moment, nothing is clear, and therefore, it is necessary that the legislator, for reasons of legal security and protection of the legitimate expectations of the owners of short-term rentals, impose itself on this matter.