On buying property in an urbanisation, or block of flats, you automatically become a member of what is known as a “Community of Owners”, CO for short. The CO is composed of all the owners of property within the same development or building. This is a revamped article from my original article dating back to June 2.009.
By Raymundo Larraín Nesbitt
Lawyer – Abogado
8th of July 2012
Original article from 26th June 2.009
Community of Owners is an article which gist is to provide some guidance on what becoming an owner in a community entails, with particular focus in Andalusia.
I strongly recommend reading the law itself as I have considerably abridged the sections pursuant to it, on reviewing them, giving only a brief overview of what they entail.
This is a link to the Commonhold Act in English as amended by Law 8/99 & others, courtesy of Castillo Traductores.
There is a legal framework acting nationwide as the backbone to all communities in Spain, set out by the Commonhold Act 49/60 (aka Ley de Propiedad Horizontal, Horizontal Property Act, or else Commonhold Act) and by the Spanish Civil Code (arts 396 et seq).
The Law on Horizontal Property was amended most significantly by Law 8/99, amongst others, to update it to social reality.
In addition to the above general laws, the day-to-day running of each community is really determined by the Communities’ Bylaws (Statutes) which are drafted at the time of lodging the Master Deed (aka Escritura de División Horizontal or Horizontal Deed). Unanimity is required to amend either the Master Deed or the Community Statutes (arts 5 and 17). So in practice it’s quite a feat to change either of them.
That’s why a community may, at its own discretion, approve its own Community Rules (in Spanish Normas de Regimen Interno or Normas de Funcionamiento de la Comunidad de Propietarios), which are not to be confused with the above Community Statutes. These Community Rules need only a simple majority vote to be approved and amended so as to waive the unanimity rule. They allow for great flexibility and will rule, for example, on communal services such as garbage collection or the use of communal facilities such as the swimming pool or lifts. They cannot rule on matters reserved only to Bylaws.
Normally, on buying off-plan, there will be a clause by which the purchaser allows the developer to draft and lodge the Master Deed as well as the Community Statutes at the Land registry. Owners may later on amend these, complying with the strict majorities that are required by the Commonhold Act (unanimity).
This means that every development may enact their particular laws governing it but always subject to, and, in compliance with the general legal framework that must be respected at all times. Bylaws will rule for example the Community’s governing bodies such as the need or not of the role of a vice-president or how must the owners be notified in advance of an owner’s assembly.
Bylaws stem from Spain’s Commonhold Act and adapt it to the requirements of each particular CO. That’s why each CO has its own unique Bylaws, tailored to suit their individual needs.
Naturally, in this article I can only offer a general overview of the shared legal framework and concepts which underpin all communities without focusing on particular Bylaws, which are unique to each CO.
On drawing up the Master Deed before a Notary, every property within the community is assigned a quota or percentage thereof. This quota is composed both of privative and communal elements which are assigned to each property. Store rooms and garages are included as well for this purpose.
A quota is important mainly for two reasons:
1. The expenses of the community will be allocated in proportion to your quota. So the larger the quota, the more you will have to contribute. These can be paid monthly, bi-monthly or even quarterly depending on the Community Rules.
2. Secondly, on voting at owners’ assemblies, the quotas need to be tallied for majority vote purposes. So, each owner does not equate to one vote. There may be a single owner, such as a developer, holding a significant communal quota which translates into great voting power. The resolutions reached bind all units within, regardless of whether they cast an opposing vote as majority rules apply (read below).
Section 9 rules them in detail. The main duty will be, of course, to contribute to the maintenance and financial upkeep of the CO.
Failure to pay the community fees will result in the CO placing a lien against your property and possibly auctioning it off. This legal procedure in Spain works surprisingly efficiently. You have been warned!
This important article mentions as well the endowment of the communities mandatory reserve fund, in accordance to each owner’s commonhold quota. The purpose of this fund is to create a financial pool for the maintenance and repair of the building i.e. façade’s flaked painting or lift repair work. This reserve fund shall be endowed with an amount not lower than five percent of its last ordinary budget. Its funds will be used as well to pay for the building’s insurance cover.
On buying a resale in a community, the new owner will be held liable for the prior owner’s communities’ debts for the current year of transfer of ownership as well as the natural year immediately precedent (art 9 e). The property itself will be burdened with a lien for unpaid communal debts.
Which is why under law, the signing of the deed of transfer of ownership requires a Communities’ certificate stating that communal fees are up-to-date for that unit, signed by the communities’ administrator. The purchaser can however waive this requirement voluntarily – not advisable.
It is also very important to find out – prior to buying a property in an urbanisation – what your quote translates to in terms of monthly contribution. Some of those private gated communities that lure you with their breath-taking views, lush tropical gardens and dream-like infinity pools command steep monthly fees. You have been warned!
Art 13 establishes the governing bodies are the Owners’ General Assembly (whether annual or extraordinary), the president (vice-presidents are optional), the secretary and the administrator.
Presidents and vice-presidents must be appointed from among unit owners only. The roles of secretary and administrator can be held by unit owners as well as by outsiders providing the latter hold the necessary professional qualifications and are legally licensed to perform such roles.
The Statutes will be the ones which detail exactly what roles exist in each Community of Owners.
At least once a year an AGM will be called to approve the budget and accounts. An EGM may additionally be called at anytime, needing 25% of the unit owners’ quotas.
The notification must be given with a minimum of 3 days’ notice. This creates practical problems to non-residents owning second homes in Spain. Therefore, communities with a high number of non-resident owners may include in their Bylaws more realistic notices of, say, 14 days and to be notified by e-mail in addition to placing it on the Community’s Notice Board. There’s freedom and flexibility to rule on this as each community deems fit in accordance to their own needs and circumstances. Logic should prevail.
Section 17 deals with when unanimity votes are required. Basically, unanimity is necessary for modifying the rules contained, either in the Master Deed or in the Community’s Bylaws.
A majority vote (three fifths of the owners’ assessed quotas) is required for things such as the lift service, janitors, security services or any other common service or facility. This type of majority vote will be the one used to decide on the Community Rules. Proxy votes are also allowed. Only owners who are up-to-date with their community fees may vote at owners’ assemblies.
You may find that in new unsold off plan developments, a developer may hold the majority vote as he still holds a large stock of unsold units. Conversely, it can be its lender, if they have taken over the developer’s units. Either way, they are both obliged to contribute to the communities’ upkeep, paying their communal fees in proportion to their communal quotas, like everyone else.
Section 19 deals with the recording of the resolutions reached. They will be recorded in a book of minutes, validated and stamped by the Land Registrar.
A copy of the meeting’s minutes will be sent to each owner with the adopted resolutions following the AGM or EGM.
The secretary will act as the custodian of the general meetings minutes book.
Section 18 rules on how assembly resolutions can be challenged at court. I’ve written a specific article on the matter due to its complexity: Community of Owners in Spain: Challenging Assembly Resolutions – 21st October 2011.
This can be done on three accounts:
a) When such resolutions are contrary to Law or the Community Statutes;
b) On them being seriously detrimental to the interests of the community and benefit one or several unit owners.
c) When they are seriously detrimental to some unit owner who has no legal obligation to sustain such detriment or when they have been adopted in abuse of power.
There are four deadlines depending on the matter. The most important deadline is the 3-month-rule. Or else a year if a resolution is against the Law or the Community Statutes. I would always advise challenging a resolution before the three-month deadline is up as a judge may not agree with you that the adopted resolution is against the law or community statutes, in which case you wouldn’t have a year to challenge it, only the said three months.
Only owners who are up-to-date with their community fees may challenge community resolutions before a court. Alternatively they can lodge the owed amounts before the law court prior to litigating. You can only challenge assembly resolutions at court.
Following arts 7 & 9 of Decree 218/2005, off-plan vendors of property located within the autonomous region of Andalucía must hand over the DIA (Documento Informativo Abreviado) to purchasers. The DIA is the Spanish equivalent of the UK’s HPI, Home Purchase Information, or Seller’s pack. Both the Community’s Statutes and Community Rules must be included in the DIA pack.
The bottom line is that Community Statutes, or Bylaws, are the ones that really rule on the everyday life of each community and are unique. No two communities hold the same statutes. There is a general legal backbone common to all communities in Spain which are the Commonhold Act and the Spanish Civil Code.
It is always highly advisable that, prior to purchasing property on a development, you always request a copy of the Community Statutes, known in Spanish as Estatutos de la Comunidad de Propietarios, as well as the Community Rules, if existent. You may avoid unpleasant surprises, such as communities that ban pets or even piano players!
Communities of Owners should be run – in theory – like small tidy democracies.
Well, that’s the theory anyhow. In practice, they resemble more dictatorships with full blown egos as many owners can vouch for. I would advise you bring your tin hat to owners’ assemblies and prepare for some serious and protracted trench warfare, whereby each owner will hold his own ground, yielding occasionally to fleeting interests.
Maybe it’s a good idea to bring along a Spanish lawyer as added reinforcements!
Good luck; trust me, you’ll need it.
Larraín Nesbitt Lawyers, small on fees, big on service.
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2.009 and 2.012 © Raymundo Larraín Nesbitt. All rights reserved.