Community charges - who pays the short fall

I have a nice apartment on a community in Duquesawhich I use as a Holiday home,unfortunately I only get there a couple of weeks each year. 

Since construction the development has reamined partially sold and the developer has failed to pay any community charges into the pot.  Some of the apartments which look OK from the outside are just empty shells and need kitchens and bathrooms before they would become saleable, so in this climate there is little hope of increasing the complex% occupancy.

Some of the units have been re-possesed by the Banks following folk defaulting on their mortgages, but the Banks we are told do not become liable to community charges until they come into possession of the deeds for the property, which can take 3 years.  Others are obviously investment properies which have failed to sell on and have been abandoned by the invester alondg with their charges. In the present climate there is little chance of them being sold to committed buyers.

My worry is that the communities det is creeping up, with little prospect of the rise being halted by repayment of out stand debts.  We have been advised that we are already paying high community fees and I am concerned for those resident who are living on a pension.

I feel that at the end of the day we should take steps to stop our community becoming insolvement.  My own feelings are that each current member paying fee's should consider putting a little more into the pot each year to sustain the current level of debt or even start to reduce it.  However there is the potential for significant cash injections from the Banks when they have taken over the deeds of the properties in default.

Suing seem to be the only legal way forward but it seems endless and unproductive.

Any thoughts or experiences please

The situation is very unfortunate and unfortunately very common.

I dont think there is any easy way to resolve this, increasing the community fees for the paying owners may help the debt but i doubt everyone will be happy to pay for the debt that does not belong to them.

I for one would not be happy. Once the bank take posession of the properties dont think they will be very fast at paying the debts.

I wish you luck,

Joan

Thanks for your input Joan

I noticed from past posting that some folk are talking about reducing costs to properties in the community by taking action such as turning off the water supply.

It would seem that this may be illegal, however there have been occasions where water leaks in properties above occupied apartments have caused significant damage.  

I wonder if the mitigation of the potential hazard might be a way of shuuting off the water.

Phil 

Bigphil - costs can be pruned and sometimes tough decisions do need to be made. Obviously there are some services that you cannot do without and other you can't.

If you have 50% to 60% paying you will be fine.

But you do need a good adminstator to guide you through these difficult times.

Hi Bigphil - we have a lot of debt on our community for the same reasons you have outlined.  However, the banks are liable for the debt when they repossess and some of them have recently paid all their debts to us.  We are now owed only 58,000€ - it was over 100,000€ until fairly recently!  Your administrators should be chasing the banks to make payment and the banks should also be looking after the empty units to ensure they don't deteriorate - some do this and some don't.  You will also find that some of the banks are now beginning to get their act together to sell their repossessed stock, although others just seem to be ignoring the whole thing!

The next thing we are doing is to employ a UK debt collection agency to chase up the UK debtors - their fee is payable by the debtor, not the community so we feel it is worth a try.

To clare T and Faro

Thank you both for the valuable advice.  It good to hear that the banks are begining to act on their responsibilities. Hopefully things will begin to turn round and put the communities finances back onto an even keel.

regards

Phil

We as a community switched off the Water supplies it didnt cure the problem but got rid off the people who had no intention of paying and were just taking the P---

I would suggest imposing fines for late payment

Most of the Costa Del Sol communities have this problem but it is mostly on the post Crunch COMPLETIONS IE POST 2007/2008

Duquesa is a prime example to much construction took place and over supply helped to make things worse

My advice call a meeting and find out what support you have for an uplift in fees prioritise the services of the development look to ways of saving monies ie if all able bodied disable the lifts etc

rod - you are on the right track but the lifts no way!

People on ground floor vote YES but what about the people in the penthouse? are you going to help carry all their shopping and bags up 3 flights of stairs?

But these are the difficult decisions that have to be made.

First of all start re-negotiating contracts and cutback to basics.

You may find developer or his family have certain contracts so fire them for a start. They usually have landscaping and muili-service type contracts.

But you need to prepare on budget based on anticipated income and that might mean you need to cut your cloth to fit etc. You cannot spend more than you have coming in!!!!

Hi I am the president of a largish urbanisation on the costa calida ( 850 villas)...a team took over beginning of this year from the usual Adminstrator ruled organisation and we inherited over €160,000 of unpaid debt...we curtailed services to a minumum, renegotiated rubbish collection and gardening contracts, restricted expenditure to an absolute minimum.... there were complaints but we advised well our intentions and we are being applauded roundly as we reach our goal.

We shall be clear of debt by the end of March, we have a  team of owner debt collectors supplemented by a UK debt collection agency utilising the European Order of Payment law... debtors of private owners excluding the developers land and property and land owners owners ( usually Spanish) we have reduced debt considerably and increased equally considerably the number of owners paying by DD.... private owners debt is now less than 10%.

We sacked the administrator and do all of our own accounts, hiring and firing of service providers, collection of Comm Fees and payment of suppliers...all of which is audited and scrutinised by a seperate group of owners. I must add that the owners now get a statement of account every three months and the number of Comm Fee queries has tailed of to virtually zero which is marvellous after the dogs dinner inherited from the previous Administrator.

We have made great progress, we have persuaded owners of the benfits of accepting that payment is the only way and during the next year will make improvements to our urbanisation through investment in the infrastucture for the benefit of all owners.

I would be happy to talk to any President or committee if you feel it would be helpful, just drop me a mail.

Regards

fighter2 - good work!

Did you find for some items of expenditure you were able to significantly reduce cost without reducing service. On gardening/landscaping you can generally prune by up to 40% and no noticable deterioration in gardens!

Although I am not sure I agree with no administrator. I am sure you can find one that will work with you. Unless some of your team are Spanish and are also abogados/administrators?

Hi Faro,

We pruned, excuse the pun, Gardening by 30%  and Rubbish Collection by 50%, it was very clear that the administrator had his hands in the till re service charges but almost unprovable.

Private security was stopped and I must say without any consequence to the incidence of robbery, until the very recent Xmas period we had no incidents for 12 months.

The problem with administrators is that they do not have the resources, nor do they care enough, to run an urbanisation of 850 villas where permanent residence is around 25%... we have got much better value from the Abogado and an expenditure of a translator who whilst not an owner has become part of our team.

We are doing another year and then we shall see but there will be continuity ( very important) which is possible when there is such a large team of owners working for the cause.

Needless to say we are very proud of what we have achieved and have shown the community that there is a future when 15 months ago there was just despair and frustration at how to extricate ourselves from the doo doo.

Regards

well done fighter2, in this day of most complexes having debtors it is so good to hear that this can be turned round. we are a very small complex (40 apartments/town houses) inextricably linked to another phase who have 22 apartments/town houses and our phase pays 2/3rds of all electricity and water bills, we too are negotiating with our maintenance contractor, who employs our partime gardener) to reduce costs, but one area we are not too sure on, is swimming pool maintenance costs, as I say at the moment our phase is paying 2/3rds of electricity and water plus we have worked out, €420 per month labour charges for pool maintenance (this is our 2/3rds charge) it is a lovely pool, not heated, does anyone know if this amount is about right? we are in the process of doing our budget in readiness for our AGM in a couple of weeks, so any help on this would be much appreciated.

Many thanks,

Mo

I would suggest getting in some quotes.

On our community the gardener also maintains the pool. He is autonomo (spanish) and he proposed various changes to maintenance in general becuase he saw how expensive it was using other firms for petty jobs. He does a lot of routine repairs/bits of re-painting etc. He used his initiave because he wanted a bit more money for himself.

On some communities you have so many people doing diferent little jobs when one person could do all these jobs.

But your problem could be if these people are employed then they may say sorry I am a gardener and that is all I do - not my job to clean a pool.

Maybe consider getting rid of your maintenance company and finding one good all-rounder on a simple autonomo contract.

Communities should never directly employ staff - no Spanish employment rights!

Faro many thanks for your reply it confirms so much of what I have been thinking of doing. Feeling awful about it as the contractor has been here since the complex was built (10 years) but over the last few years has become so lax that nothing is being done, he is supposed to be a plumber but even gets another plumber in, and charges us, for jobs he could do. (pool showers and toilet) Ok so need to toughen up then and go kick some ass.

Our previous gardener used to turn on the sprinkler system and sit in his van reading a paper and drinking coffee and part of the problem was whose job it was to manage him - President or Administrator? He got the chop in the end!

This happened under our old system of electing the President by picking names from a hat so the elected President really had no interest and was no more than a name for a year.

We now have a system of what I call self election (same President for 3 years) but at least those with an interest do the job and It is a thankless task. I have had a few words with the President but only if he starts making life difficult for children who want to play ball or splash in the pool etc.... please let's not start on that one!

I never really understand why people have difficultly being elected President - you only have to go to the meeting and put yourself forward and before you know it the jobs yours. I certainly have no wish to ever take on the role/responsibility.

But your community needs to agree what it wants from all parties and if the incumbents don't want to change then fire them!

The more layers you have the greater the likelihood of mark-ups and commissions on routine jobs which is the practice of many of these multi-servicio companies.

don't get me started, my husband has been President since last February with me as his secretary, so many hours spent chasing debtors doing 1/4erly newsletters (first time ever anyone has had these) listening to all who have something to say, mainly complaints but these are from the core of owners who are down here quite a bit and who do pay their community fees. Rip offs we have been finding quite a bit of these. I know this is Spain and it is usual practise to do a mark up, but some mark up's are enormous.

 Horrendous reading folks but glad to see there are some of you with solutions.

It seems to me that once our properties are past the first hurdle of dubious developers, the next three main problems are:-

1- Unscrupulous Administrators..... (usually provided by the dubious developer in the first instance.)

2- Ineffectual Presidents.... (often thrown into the job without any previous experience or preconceived notion of responsibilities.)          

3- Apathetic Owners.... (who couldn't care less, just so long as their property still stands and the sun shines.)      

A caring, open and transparent administration, a dynamic President and responsible owners can make living is Spain a delight.     If we are very lucky we can get the mix on the favourable side but as we all know, we are not all so lucky.                                   

There are now a very few  Administration Companies that put ALL documents on line. That means that any Financial Statement, Document, Transaction, Contract or Invoice is available to ALL registered owners at ALL times from ANYWHERE.                               Now that's what I call open and transparent administration. I just hope the common sense spreads rapidly.

No more waiting for the AGM, to be enlightened on financial issues, or worse, fudged over at the AGM, then waiting for the minutes to read what the administrators thought was happening, so that it can be brought up at the following AGM. That's two years to resolve a perceived financial problem. This is always assuming that the President is sitting on his laurels, oblivious to the problem.

Perhaps an EOS repository for listing both good and bad administrators might not be a bad thing.                                                     What say you Justin?

Cheers

Leo

Thanks Leo you make a lot of sense, we have had six years of moans and groans, with good Presidents but they were never here. This last year has been an eye opener, we go back to England for 2 weeks every 3 months so are here most of the time, we and all of the fee paying owners realise that you do need a resident President to be pro active and turn around a failing community.

Up until last February (AGM) the owners wanted to get rid of our Administrator, but we decided to see just what he is like, and he is FANTASTIC, nothing is too much trouble, he has helped us to reduce supply costs (he was never asked to do this before) and infact didn't want us to go home from Christmas, those owners who do come here a lot have actually told us that they have never seen so much of him as this last year, He even brought me some light reading a few weeks before the AGM, the whole financial invoices for our Community for the last year, and together with the other VP we scrutinised these and had many questions for him.

We still have a long way to go, but we have just taken one of the town houses who never paid any Community Fees since 2007, to court auction and we won. Now for the next one. We have bought scaffolding, ladder etc. and are going to paint our 4 blocks for the first time in 10 years. We have a schedule for this year, and hopefully by the end of next year we will have a complex that looks good.

I must say a huge thanks to this forum and Maria the lawyer who have been so helpful in answering any question I have put on here, with you and google we can overcome anything..I love Spain, high costs and all.

Mo

Oops !! my apologies.. I pressed the wrong key..

Cheers

Leo

EOS PLEASE DELETE!!!

This message was last edited by Leoleon on 14/02/2011.

 This has been an interesting and helpful read as our community is in exactly the same situation. We have been trying to manage for the past 5 years with a hugh shortfall of maintenance fees owed to us by the banco popular, to day the debt is in excess of 120,000 euros. They also embargoed a number of apartments in our complex and have refused point blank to pay the fees they owe, we have tried everything to get them to pay without success. As for the none paying English and Irish owners I would like to know who you have managed to pursue these? What I really fail to understand is the banks thinking. If they paid up we could complete some key improvements which would make it easier for them to sell their apartments. But it is Spain after all we shouldn't expect to much!!!