Community Debtors

[Parilla]

Can anybody tell me please, if when a Community goes to court against an owner for outstanding fees, the Community has any preferential standing over the owner's other creditors. Does the Community rank ahead of say a bank or utility companies etc etc from any funds the debtor may have available. Also, in the event that the property is repossessed by the bank is there any order of creditor preference.

Thanks,
Parilla

[julian]

I think it goes in order of the embargoes in the property register, if the bank embargoes it before the community then the bank will get the their amount first, then the community after if anything is left over.

[fljordan]

The second paragraph of section 9 (e) of the Horizontal property Act establishes
“The amount payable to the community stemmed from the duty to contribute towards the maintenance and general expenses of the community corresponding to the fees assessed for the period to date of the current and previous year shall be deemed preferential under the terms of section 1923 of the Civil Code, and they come, as regards settlement, before those stated in subsections 3, 4 and 5 of said section, subject to the guarantees in favour of salaries and wages established in the Workers’ Act

The third paragraph of the aforementioned section provides
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.
These two paragraphs deal with two different issues; the second provides rules in order to rank community credits which are placed after subsections 1 and 2 of section 1923 of the Civil Code. These two subsections refer to salaries and wages owed by the debtor if he or she is for example an entrepreneur.
Therefore, community debts are preferential over any other credits even a bank mortgage, but only for the period to date of the current and previous year. For example if we suit today the preferential credit will be only for 11 months of 2009 and 12 months of 2008.
If the debtor goes to administration because it is a developer or a company the community loses 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

The third paragraph set forth a statutory lien to any acquirer of a property even a bank which repossesses a property. The prospective owner will be liable for the outstanding fees of the property for the period to date of the year when the transfer of ownership took place and for the immediately precedent year.

[Parilla]

Thanks very much for your help, that clarifies the situation for me.
Parilla

[costapacket]

So we have a debtor in our community who hasn't paid community fees for 6 years and every year at our AGM we vote to let the Administrators take legal action against the current debtors and he still hasn't paid. What are the chances of us getting the 6 years of community fees back through the spanish courts? If he sells his apartment then we will only get 2 years fees?

[Jool]

If a property sale goes through normally the Notary should ask for a document from the Community stating that ALL community fees are up to date and there are no debts outstanding, I think the above applies in the case of a re-possession only ??

[fljordan]

Costapacket

Perhaps you vote to let the Administrators take legal action against debtors but the administrator has not start proceedings yet. Have you seen any lawsuit ?

Section 21 (2) of the HPA regarding action for arrears recovery provides:

Use the order of payment procedure shall require prior certification of the Owners’ Committee decision approving the debt settlement due to the commonhold, issued by its secretary and with the approval of the president, providing said decision has been notified to the owners concerned in the form set out in section 9.
Do you know something about this certification ?

Regarding this certification of the Owners’ Committee decision approving the debt settlement due to the commonhold, it is not enough to express only the amount of the debt but that certification shall comprise a clear itemisation of it, otherwise the court will reject the application

[costapacket]

Thanks for the replies. According to our Minutes the Administrators have taken the debt to the courts. So am I right in thinking that if the property is repossessed then we will get 2 years money but if a debtor sold to a private individual then the new owner has to repay the debt. Thanks.

[Red Dragon]

Hello - we also have community fee debtors. What is our recourse with regard to retrieving payments apart from taking them to court. Can we seize their property and sell it to pay off the debt? Can we cut off their utlitities to stop them using/renting it out? Can we apply punitive interest penalties that make it more attractive to pay? How many years can we go back?
Any help or guidance much appreciated!!
Thanks

[DavidSearl]

FROM DAVID SEARL

FOR RED DRAGON, JIM ALLEN, ET AL

I am supposing that you all have read fljordan's citation of relevant law here, but you are still hoping for an easier way.

1. Can we seize their property? - No, you cannot.

2. Can we cut off their utilities? - No, you cannot.

3. Can we apply punitive interest penalties? - No, you cannot.

4. How many years can we go back? - - Four years.

I urge you to read through fljordan's cogent posts again and start immediately to implement the court procedures for debt collection.

Even if you use the "Proceso Monitorio" I would urge you to use a skilled Spanish lawyer to make sure your paperwork is in order. The courts are over-worked and it takes months to get a hearing. Eventually it does function.

Good luck with it, David Searl