One important aspect to be taken into account when acquiring a property under the Horizontal (or Condominium) Property Regime, is the state of any debts or charges that may exist over the property in relation to the expenses of the Association of Property Owners. In some cases, when acquiring this kind of property, purchasers encounter previous debts that they were unaware of and later face liability for settlement. The Spanish legal system, in particular the Housing Policy Act (LPH) provides measures to audit the non-existence of ordinary and extraordinary arrears (or overspend) corresponding to existing Property Owner Associations previous to purchase. An essential element of the CONVEYENCING legal service provided by MSG LEGAL is to verify that all ordinary and extraordinary expenses are settled previous to purchase, and that our clients have complete peace of mind in that respect.
Article 9.1.e of the Housing Policy Act (LPH) provides that the debtor of any expenses corresponding to the Property Owner Association shall be the owner of the property at the time the debt should have been settled. Nonetheless, and this is an extremely important point, the law also provides that the property itself is liable for settlement of existing debts, this is to say that although any existing debts are attributable to the previous owner, it must be taken into account that once the property is acquired, existing debts will then correspond to the property and consequently the property purchaser.
Therefore, the purchaser of a dwelling or premises under the Horizontal (or Condominium) Property Regime, shall be liable, on behalf of the previous owner, for settlement of any amounts due for sustaining the general costs of the Property Owner Association. This is restricted to the year in which the expenditure is attributable plus three previous calendar years. Compliance with this obligation is therefore bound to the dwelling or premises (a total of four years of expenditure).
Equally, the Housing Policy Act (LPH), Article 9.1.e requires that the Secretary and the President of the Association certify the existence of any debts to the new owner, the vendor should provide this certificate when signing the deeds. Its existence will be a prerequisite in order for the deeds to be officially recognised and recorded at the Land Registry. The only exception to this rule would be in the case that the property purchaser renounces the provision of the certificate when signing the deeds, an option which we evidently discourage in any event, given that there is no legal justification for not providing the certificate.
Another important aspect to be taken into account stipulated by the Housing Policy Act (LPH), in this case our client being the vendor of the property, is to delimit the liability of property for debts that could be generated by the Association of Property Owners via the requirement that the Secretary of the Association of Property Owners shall be notified of the change of ownership of the dwelling or premises by any means that permits acknowledgement of receipt. Taking into account that otherwise the vendor will continue to be liable for the settlement of debts jointly with the new owner following the change of ownership.
Expert Advice
Regarding the debt certificate issued by the Association of Property Owners, it is important to bear in mind that the law only requires that the certificate clarifies the state of debts, for this reason there are occasions when subsequent to acquisition, in this case our client being the property purchaser, faces claims for extraordinary expenses (overspend) already approved but not yet payable and therefore not legally considered as debts at the time the certificate is issued. At MSG LEGAL we have the knowledge to confront these situations, to detect if there are any ‘hidden’ extraordinary expenses and to demand that the Association of Property Owners certifies their existence previous to purchase. With our comprehensive Conveyencing service we also provide legal security and peace of mind to our clients.
