When a bank takes over an apartment (for example: when a financial institution forecloses a mortgage), a common practice of banks is to simply stop paying the community fees and / or ignore the previous debt that has existed. In this article we explain what to do with the debt of a bank to the community of neighbors.
This produces a disadvantageous situation for the rest of the neighbors who must take care of 100% of the expenses, knowing that the part that corresponds “to the bank’s apartment” will not be paid.
What many ignore is that when this situation is prolonged in the time, if no measures are taken, the debt with the community of owners is expiring and the day that the bank manages to sell that property to a third party instead of paying all the pending amounts it only pays the debt of the last year.
But it should not be like that. The responsibility of the Bank towards the Community of owners for the non-payment of common expenses should be the same as any other owner and not be in a situation of non-payment until there is a change of ownership.
What does the law say about the responsibilities of the bank as owner towards the community of owners?
1.At the moment of the adjudication
If a bank has been awarded a property belonging to a Community of owners that has outstanding fees with the Community, the liability of the bank as the new owner against the Community for non-payment of the amounts owed extends to PAYMENT OF THE EXPENSES OF THE YEAR IN WHICH THE PROPERTY WAS ADJUDGED PLUS THREE YEARS PREVIOUSLY, article 9, 1 letter e) Horizontal Property Law.
This extension to the previous three years was introduced by the reform of the Horizontal Property Law in force since June 27, 2013.
2. From the adjudication of the property
The financial entity is obliged to pay the expenses to the Community. Some banks do not register the adjudication of the property in the Land Registry, but it is our opinion that this does not exempt from the responsibility towards the Community for the payment of such expenses.
3. When the bank transfers the ownership to a third party.
The financial institutions in many cases pretend that when the property is sold, the new owner will be the one to take care of the debts owed to the Community.
Article 9, 1 letter i) of the Horizontal Property Law establishes that whoever fails to comply with the obligation to communicate the change of ownership of the dwelling or premises will continue to be jointly and severally liable with the new owner for the debts to the Community accrued after the transfer. That is to say, that there also exists a responsibility of the Bank towards the Community of proprietors, if it does not communicate the change of ownership of the property to a third party.
Recommendations to demand the responsibility of the Bank against the Community.
Count on our team of expert lawyers who will accompany you throughout the process to ensure that the debt with the community of owners will not expire and maximize the chances of collection.
- Documenting the approval in the owners’ meeting of the debt in detail and proceeding to the previous extrajudicial claim.
- Preparing the express authorization that authorizes the president and lawyers to initiate the judicial claim process.
- Establish the most appropriate efficient means of communication. The banking entities often reject the burofaxes or hide behind different departments to avoid being notified.
- Define the most suitable judicial strategy (deciding, for example, if it is more convenient an ordinary process or an order for payment).
- Manage the registration of the debt in the registry and the possible seizure and (if it is part of the strategy) auction.
- Establish and carry out the necessary measures to avoid the prescription of the debt.
If there is a suspicion of the adjudication to a financial entity of a property, requesting a simple note in the Property Registry, can give us the necessary information to know if the property has changed ownership or is in the process of auction and then proceed.
If your community is in a similar situation, contact us to find out how our property management and legal firm can help you. In well managed situations in which a substantial debt has been accumulated, the same community can choose to initiate a judicial process with the aim not only to cancel that debt, but also to get that property through public auction and can become a source of income for the same.
Photo by Mateusz Suski on Unsplash
