Gecko Towers
If you buy a property in the Marbella region that is located on an Urbanisation – generally understood to be a development or group of developments of Town Houses (Adosados) or Apartments/Flats (Apartamentos/Pisos) – it is entirely usual that your property will comprise part of a Community of Owners.
Constituted by the operation of Spanish law, there are strict rules that govern the operations of such a Community. By virtue of your ownership of a property there, you too will usually become a voting member of such a Community of Owners.
An overall comment is that living in a Community is not for everyone. If home, wherever home is, is in the middle of a field surrounded by rolling hills, wide vistas and few neighbours, then the chances are that living close to others is not going to be a win for you. If being in sole control of your home environment is high on your priority list this is also going to be a negative. My worry is that as a family we are reasonably “vocal” and we’d probably annoy any close living neighbour. It deserves some thought but you will know how you feel about the idea of living in close proximity to others.
The concept of collective living as a Community of Owners is set out, in a series of Spanish laws described as the “Horizontal Law of Property.” It is a complex area of law, so as this is not legal advice, I will try to generically identify its impact on you, as the new owner.
Your property will have an allocated “Cuota” (“Quota”) attached to it. This represents a percentage or a fraction equating to your property’s share in the total Community of Owners. I understand that the “Cuota” is determined when the Community is originally set up and, generally, there is nothing a new owner can do to influence the ‘Cuota’ that has been allocated to your property.
The ‘Cuota’ of your property is used to calculate – eg. 5% (Cuota) of 100% (total annual costs budget) – your annual share of Community Fees that are payable by you by virtue of your ownership of the property.
Please note: this has nothing to do with the Spanish version of Local Authority ‘Rates’ called “IBI”, Refuse collection costs, colloquially called “Basura” or other applicable property taxes.
Your Community Fees will be your property’s share of the total annual budget for the operation of the Community of Owners. The Community Fees that you, and all the other owners will pay, typically go towards maintenance of the Community’s assets such as gardens, security, repairs such as painting and redecorating communal areas, swimming pool, spa and gym management and the administration of your Community.
You will be expected to pay, generally, in monthly or quarterly payments, the total of your share of Community Fees due on your property. It is insufficient to argue that you don’t use the pools, the padel tennis courts or that repairs were undertaken on a block where your property is not situated.
I understand that by Law – and this may have been adversely affected by the Pandemic – a Community of Owners is obliged to hold, at least an Annual General Meeting (AGM) – called a “Junta General”– at least annually.
The AGM is held to appoint the President of the Community (a very important role within the Community – with some legal responsibilities) and other officers of the Community, such as the Administrator. The member’s votes and proxy votes (from absentee members) are counted in a formally convened and regulated meeting. At the AGM the business of the Community will be discussed and a budget for the next year will usually be set, this invariably locks the total of the Community Fees for the coming twelve months.
There may be exceptional circumstances where additional sums are required from you by way of further Community Fees. This will follow a vote by the Community required to attend to a particular but exceptional item of expenditure, often capital in nature, such as a new roof, the addition of lifts or to remedy some defects in the building(s).
For such a purpose, during the year and with proper notice a Community may hold an Extraordinary General Meeting (EGM) to allow the Community to consider such no-recurring expenditure. An EGM will decide to call for a temporary increase in the annual Community Fees to cover such expense and, usually, the owner’s liability for such additional expense will be referable to their “Cuota”.
As with regular Community Fees these additional payments will need to be paid in good time if the functioning of the Community is to run smoothly. It is not unusual – though not automatic – for a member to obtain a small discount for prompt payment and this can be attractive to both the owner and Community when there is a need to gather in funds quickly.
Community Fee debt has, in recent years, for some Communities become a problem. It requires some investigation if you are interested in buying a property located in such a Community. Communities have grown increasingly sophisticated in their collection of unpaid Community Fees and previous lapses in administration are now comparatively rare. It is usual for a Community Fee debtor not to be able to vote or give their proxy at the AGM or an EGM.
As a the final resort, action may be taken against an owner with unpaid community fees. Such action may – in the most dilatory cases – include the threatened loss of ownership of the debtors property by a form of embargo executed in name of the Community. This means that either the Community can compel the sale of the property to settle long outstanding fees or the Community may block the sale of a property with outstanding fees until they are paid in full. An incoming purchaser needs to be clear on their obligations towards a previous owner’s unpaid fees. Your Abogado will give this area particular attention and advise you accordingly.
More “amicable” solutions may enable a Community through its Rules (‘Normas’), to remove or withhold a service – such as community TV, WiFi or gym access – offered by the Community until the unpaid fees are paid. This becomes more complicated to enforce where a property has been rented on a long term basis to a third party tenant, for instance.
When a property is sold it is important that the incoming purchaser – often via their Abogado – obtains from the Community’s Administrator a certificate confirming that any and all outstanding Community Fees have been paid up to date. If they remain unpaid post purchase, I am told that by the operation of Law, they will become the responsibility of the new owner as the liability for such fees remains with the property and not the former owner.
Where there is a Community Fee debt it will often feature as an element of a so-called “retention” that is a sum retained by the incoming acquirer which he/she agrees to pay to the Community of Owners on behalf of the former owner and it will be deducted from the agreed price of the property being purchased.
Further, your Abogado should investigate whether there are other issues outstanding against the property’s seller such as breaches of the Community’s rules (Normas) relating to the installation of “glass curtains” or other minor planning breaches. Any failure to check and deal with these matters prior to purchase does, I am advised, risks the incoming buyer being responsible to the Community in the stead of the seller.
An element upon which a recent purchaser has sought advice is in relation to the granting of short term tenancy’s to use their property for Air BnB type users. Some Communities have a blanket ban on all third party use of your property by anyone other than you and your immediate family and family. Meaning you will not be able to obtain the required Tourism License from your local municipality to make it more generally available for rental. This becomes even more complicated if you are a new purchaser and the person you bought from had a Tourism License.
Other Communities allow third party rental but add a premium of some percent – often between 10% to 25% – to the Community Fees you are liable to pay to reflect the additional work the Communities staff are put to as a result of your rental to third parties. Finally, other Communities proscribe a limited by reference to weeks/months where rentals may/may not take place. Any additional Community Fees paid are separate from any income tax burden that you will be obliged to pay stemming from your rental activity.
If your “Business Plan” for your new property is to achieve substantial rental income to assist with the on-going costs of your Marbella property it really does make sense to get your Abogado to carefully check to see whether your right to rentals are at all limited, otherwise than by the need to obtain a Tourism License and to complete a tax return declaring your income.
Many find great community spirit from their fellow owners who may have shared interests such as golf club members or similar. Many who have held properties on a Community for many years, but tend to use them for holidays, will tell stories of a series of families who visit at the same time annually and whose children have grown up together, often in a multi-lingual environment, with a host of special memories. Just one of the real benefits of communal living
Should you be interested in discussing the process involved in buying a property in the Marbella region, we would be delighted to assist you. Please contact me to discuss your precise requirements.
Please note that our posts are for general interest. There is no substitute for proper advice tailored to your specific circumstances as provided by a qualified Abogado who is experienced in the application of the Spanish Law.
Nothing contained in this article should be seen or taken as the writer or the publisher providing legal, tax or financial advice. All details have been reasonably fact-checked and all efforts have been taken to ensure that facts are accurate as at the date of publication.
My details: Mark FR Wilkins, during usual business hours on +34 600 343 917 or e-mail me at mark@therightsgroup.com
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