Most Spaniards live in apartment buildings, which are legally called buildings divided into horizontal property, and which are characterized by the coexistence, together with the individual ownership of each apartment, of the co-ownership of a series of elements, which are used by all the owners, and which are called common elements, because they are necessary for everyone.
For example, if there were no entrance or common stairs or elevator, it would be impossible for the owner of the fourth floor to access his home and enjoy the exclusive ownership he has over it.
The common elements of the building generate maintenance costs, which must be paid by the different owners of the building according to their share in the community of owners. This share is normally included in the deed of each flat after the description of the boundaries of the property.
When we have to get paid, we are all very willing to mobilize, but on the other hand we are lazy when we have to pay, and even more so when the benefit we receive from the payment is not of a direct nature.
For this reason, late payment in property owners' associations is quite common, although it is also a rather unpleasant issue. To alleviate or reduce late payment, there are some remedies provided for by law, such as:
a) the obligation to contribute to the reserve fund;
b) the obligation to record in the deeds of sale of flats the amounts owed by the sellers;
c) the allocation of the sold apartments to the payment of the expenses of the community of owners;
d) and the suspension of the voting rights of delinquent owners.
We are not going to refer to the second and third sections in particular, as they are the ones with the greatest notarial significance, making special reference to Catalan law, as is usual in this blog.
a) The obligation to contribute to the reserve fund.
The regulations are very similar both in the Horizontal Property Law and in the Civil Code of Catalonia,
Article 9 of the Horizontal Property Law: The obligations of each owner are:f) Contribute, in accordance with their respective participation quota, to the provision of the reserve fund that will exist in the community of owners to meet the conservation and repair works of the property and, where appropriate, for rehabilitation works.
The reserve fund, which is owned for all purposes by the community, will be endowed with an amount that in no case may be less than 5 percent of its last ordinary budget.
Using the reserve fund, the community may subscribe to an insurance contract to cover damages caused to the property or conclude a permanent maintenance contract for the property and its general facilities.
Article 553-6 Civil Code of Catalonia. The community budget must include an amount no less than 5 % of the common expenses for the creation of a reserve fund. Ownership of the reserve fund belongs to all the owners and the fund is assigned to the community without any owner having the right to claim its return at the time of the alienation of the private element. The reserve fund must be recorded in separate accounts and must be deposited in a special bank account in the name of the community. The administrators can only use it, with the authorization of the presidency, to cover unforeseen community expenses of an urgent nature or, with the authorization of the board of owners, to deal with extraordinary works of conservation, repair, rehabilitation, installation of new common services and security, as well as those that are required in accordance with special regulations. The reserve fund surpluses of each year are accumulated in the fund of the following year.
The purpose of the reserve fund is to ensure that no contribution has to be requested from the owners to meet the unforeseen expenses, (with the precision established by each regulation), so that there are always funds to draw on for the essentials.
b) The obligation to record in the transfer instruments the amounts owed to the community of owners.
This matter is covered in article 553-5.2 CCCat and in article 9.1.e) of the Horizontal Property Law, which do not have major differences, after the reform of the CCCat by law 5/2015 of May 13.
Article 553-5.2 CCCat.- The transferors of a private element must declare that they are up to date with the payments that correspond to them or, if applicable, they must specify those that are pending and must provide a certificate regarding the status of their debts with the community, issued by the person acting as secretary, which must also include the common, ordinary and extraordinary expenses, and the contributions to the reserve fund approved but pending maturity. Without this declaration and this contribution, the public deed cannot be granted, unless the parties expressly renounce them. The certificate referred to in section 2 does not require the approval of the presidency if the administration of the community is carried out by a professional acting as secretary.
Article 9.1 e) LPH.- In the public instrument by which the property or premises are transferred, for any reason, the transferor must declare that he is up to date with the payment of the general expenses of the community of owners or state those that he owes. The transferor must provide at this time a certificate on the status of debts with the community that coincides with his declaration, without which the granting of the public document cannot be authorized, unless he is expressly exonerated from this obligation by the purchaser. The certificate will be issued within a maximum period of seven calendar days from its request by the person exercising the functions of secretary, with the approval of the president, who will be responsible, in the event of fault or negligence, for the accuracy of the data recorded therein and for the damages caused by the delay in its issuance.
In which instruments should it be recorded?
In all types of public instruments, that is, in notarial, judicial and administrative documents. What happens is that since judicial and/or administrative documents contain forced transfers, it is difficult to fulfill this obligation, issues that end up being carried out by the purchaser himself, either by notarial act or sometimes with an application with a legitimate signature.
Therefore, the regulations, despite their generality, are primarily designed for public deeds.
Private documents are also exempt, although it is also advisable to state this in these cases, or at least determine the obligation to be up to date at the time of signing the deed.
In what kind of acts should it be recorded?
In any act of transmission, whether onerous, such as sale, exchange, payment in kind, contribution of real estate to companies, or free of charge, such as donations.
In fact, the exceptions are transfers by inheritance, where the transferor (the deceased person) will hardly be able to state anything, without prejudice to the fact that the debt must be taken into account in the valuation of the inheritance; and the very frequent dissolutions of community property today, with the award of the property to one of the co-owners, who as he was already the owner, there is no need for his protection.
What objects does this refer to?
The horizontal property law speaks of housing or premises, but this does not mean that the declaration should be excluded in the sale of parking spaces or storage rooms. For this reason, we can consider the Catalan legislation, which speaks of private elements, to be more technical.
What is the scope of the obligation?
The transferor must declare that he is up to date with the payment of the community of owners' expenses or declare those that are pending.
This declaration must be accompanied or endorsed by the administrator and/or president of the community of owners, and the details thereof shall be regulated in a similar manner in both legislations.
Currently, through notarial information systems, there are agreements with various associations of property managers, to be able to obtain these certificates directly from the notary's office.
Can the deed be granted if there are outstanding debts from the community of owners?
The normal thing will be to discount these outstanding debts from the sale price and for the buyer to settle them..
Can the deed be granted without the administrator's certificate?
Yes, but the purchaser will have to renounce it, which is more common than you might imagine, especially when there are no registered property managers.
On the other hand, even when the deed had been made without recording the waiver of the administrator's certification, the DGRyN has declared that such deeds are registrable, arguing that the requirement established by law does not affect the validity of the sale.
c) The allocation of the sold apartments to the payment of the expenses of the community of owners.
The person obliged to pay the community of owners' fees is the owner of the property at the time the fees are incurred, even if he acquired it in a private document, or even if his deed has not been registered in the Property Registry.; and ceases to be bound from the moment in which the flat or premises are transferred.
Conflictive cases occur frequently in this area. Thus, in the case of flats in a situation of usufruct or right of habitation and bare ownership, the obligation to pay corresponds to the bare owner, at least this is the criterion of repeated sentences. Similarly, cases of rights of use of housing, awarded to the non-owner spouse in divorce proceedings, must be resolved.
In any case, the purchaser in the Horizontal Property Law (article 9.1 i)) and the transferor in the Civil Code of Catalonia (Article 553-37 CCCat) must communicate their acquisition and/or transfer to the secretary of the administration and set an address for notifications..
As long as they do not communicate this, they will be jointly liable for any debts with the community that arise from the transfer, without prejudice to later claims among themselves as to who should pay the expenses, but without these disputes affecting the community.
The statute of limitations on debts by reason of the community of owners in the case of the law of Catalonia is 10 years old, ex 121-10 CCCat, or at least it is a reasonable interpretation, since it is not specifically addressed, the residual rule applies. In the field of common law, I believe that as a consequence of the reform of the Civil Code by Law 42/2015, of October 5, The term will be five years, there being no room for the above discussion as to whether the 5-year period applicable to actions to demand compliance with other payments that must be made over years or in shorter periods or to personal actions without a 15-year period applies. As a consequence of this reform, the two periods are equal.
Article 1964 2. Personal actions that do not have a special term expire five years after the fulfillment of the obligation can be demanded.
As a guarantee that the expenses will be able to be collected by the community of owners, there is what is called a real charge of the flat or element transferred to the payment of them, which in the Civil Code of Catalonia covers the overdue part. of the current year and the four previous years, while in the horizontal property law it extends only to the three previous
The condition acts as a tacit mortgage,
d) the suspension of the voting rights of delinquent owners
Article 553-24 CCCat
Owners who do not have outstanding debts with the community when the meeting meets have the right to vote at the meeting. Owners who have outstanding debts with the community have the right to vote if they prove that they have judicially or notarized the amount or that they have challenged them judicially.
Article 15 LPH
Owners who, at the time of the meeting, are not up to date with the payment of all debts due to the community and have not challenged them in court or made a judicial or notarial deposit of the amount owed, may participate in its deliberations, although they will not have the right to vote. The minutes of the meeting will reflect the owners deprived of the right to vote, whose person and share of participation in the community will not be computed for the purposes of reaching the majorities required by this Law.
e) The procedure for claiming debts
Despite the obligations of the owners to pay the community fees, the fact that they do not do so is very common. Especially at this time, the biggest defaulters are the banks, which only pay when they sell the apartments, which in economic terms means that they finance themselves in the short term, at the expense of the other co-owners.
In the event of non-payment, the collection of these debts can be demanded by the community of owners according to the following scheme, which is regulated in article 21 LPH
1.- Meeting Agreement approving the liquidation of the debt with the community of owners and the exercise of judicial actions.
2.- Notification of the amount owed to the delinquent owner.
3.- Submission of a claim, through the monitoring procedure, with documentation proving compliance with the requirements indicated above.
A lawyer or attorney is not required, although they may be highly recommended.
Catalan legislation does not address the procedure, as it is a procedural matter, but the same rules apply.