Community fees & Receivership.

[shortfuse]

I live on an urbanisation which has been completed.
This year the developer has applied for bankrupcy protection.
The developer still owns ten properties on the urbanisation which they have not managed to sell yet.
They have not paid the urbanisation/community fees relating to these houses for the last two years.
Should the community report these debts to the receiver in question to get some compensation in due course or just wait until the properties have been sold? The receiver would, I assume, have to clear the outstanding community fees before the house was sold or the new purchasers would have to clear the debt.

[Paula]

I'll be interested in the answer to this, as I thought that if you do not put some form of charge on to the properties through the courts for this debt, that you will not recover any of it if they are repossesed.

[katy]

The bank who has foreclosed on the property has to take over the responsibility. We bought two off a bank and they paid the fees up to date.

[Paula]

Do you know that the community had logged the debt thru the courts before the foreclosure Katy?

[fljordan]

Last paragraph of section 9 (1) (e) establishes:
Any person acquiring a house or premises with commonhold land, even when the title is entered in the Land Registry, shall be liable, with the acquired property as guarantee of any outstanding amounts payable owed by previous owners. This liability includes general expenses up to the limit of the fees assessed for the period to date of the year when the transfer of ownership took place and for the immediately precedent year. The flat or premises shall be legally encumbered for the fulfilment of this obligation.

Thus, banks or any other creditors repossessing the properties would have to clear the debt only for this period; the liability is limited for them.

On the other hand, the community must report every unpaid fee to the receivership to obtain repayment of the debt.

After the enactment of the new Bankruptcy Act 22/2003 communities of property owners have lost the condition of preferential creditors becoming unsecured creditors which usually obtain a ‘pari passu’ distribution out of the assets of the insolvent company on a liquidation in accordance with the size of their debt after the secured creditors have enforced their security and the preferential creditors have exhausted their claims

If your community would have taken legal action against the developer during these two years in order to recover the outstanding fees and the developer would not have cleared the debt, the community would be now the owner of these 10 properties.
As the last paragraph of the section aforementioned provides, the property is legally encumbered for community fees during the aforesaid legal period

[shortfuse]

Thank you for the informative reply, fljordan.