Buying property on a Spanish community: crucial know-how

Wednesday, May 21, 2014

Buying property on a Spanish community: crucial know-how

It goes without saying that whenever you buy a property abroad you should know what you are getting yourself into by using a suitably qualified lawyer.

You ought to become aware not only of any issues affecting the property on the date on which you purchase it, but also of issues that are likely to arise in the future, such as a new motorway being built close to the development, or a leaky roof at the apartment block.

Such issues will cost you money, due to either a possible reduction in the value of your property, or an increase in the service charges that you will have to pay. Unless prompted to do so, you might not consider how important the relationships between the current property owners are, as well as the dynamics between the property owners and the people who are responsible for running the development. So, when buying a property on a development in Spain, consider:

• All Spanish property built as part of a development is subject to a regular service charge, managed by a community of property owners, or "Comunidad de Propietarios" in Spanish. Th e executive committee of the community will be made up from the owners themselves, so typically there will be a President, a Secretary, a Treasurer and one other.

• The executive committee will call an annual general meeting to consider matters relating to the development and may also call extraordinary general meetings throughout the year if necessary. At those meetings the annual accounts will be approved, as will the budget for the coming year, and any other pressing issues such as property owners who are not complying with community rules. While not strictly necessary, it is very important that you are represented at these meetings if you are to have any say in how the community is to be run and who is going to run it.

• The proportion of the annual budget corresponding to your property will have been determined when the properties were first registered as individual houses or apartments, just after they were built. Hence, if in relation to your apartment you are bound to pay 2 per cent of the total annual budget then you ought to be aware of how that budget is being calculated.

• Clearly, whatever your share of the budget, in real terms the total budget needs to be covered by all of the owners in the development. If a high proportion of the owners are not making payment of their service charge, then those funds will need to be raised from the others.

• While the executive committee of the community is responsible for community matters, it will oft en engage a professional property administrator to handle the matter on its behalf, called an "Administrador de Fincas" in Spanish. The administrator will undertake all necessary tasks, including management of maintenance, preparation of annual accounts, attendance at meetings of the owners, and anything else concerning the common parts of the development. Hence, it is essential that the administrator is doing his job effectively and that the executive committee of the community gets on with him.

In practical terms, prior to agreeing to purchase a Spanish property your lawyer should do the following in relation to the community:

• Contact the community to determine the level of service charge for the past three years;

• Determine whether the people from whom you are purchasing owe any service charges;

• Ensure that any outstanding service charge will be paid upon completion (either by the sellers paying that amount to the community or by you retaining an equal amount from the purchase monies);

• Ensure that there are no projects that are being contemplated by the community that are likely to incur a high cost, such as replacing the swimming pool or repairing balconies throughout the development;

• Determine whether there are a significant number of property owners who are currently defaulting on their service charge payments.

Finally, it is very important to bear in mind that if you do default on your service charge payments the community may claim them from you, even if they have to do so in the UK, without having to make a formal claim against you in Spain. The amount claimed may include interest and costs, so it mounts up quickly. That goes for you and for any other property owner, so if property owners do default in payment of their service charge it is the job of the administrator to pursue them for recovery of the debt. Their debt is costing you money.

Jonathan Eshkeri is a dual qualified solicitor and Spanish Abogado at E&G Solicitors.


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