Unpaid Community fees

Hugh, as a follow up to Maria's suggestion for Administrators to be more proactive, would you know if the College of Administrators have any plans to establish a better standardised approach for all communities and commission a system to make information more readily available (and transparent) in the form of a secure online system (password protected) which would provide access to debt data for each property on any given development.

Would it be worth investing in some web development to create this facility for all communities to use, so that up to date debt data can be made available to make the Banks accountable at point of transfer, or likewise for those purchasers willing to negotiate this debt against price of property? The question then arises, who would be legally  responsible for each community to ensure this data was up to date, secure and reliable?

Just a thought.

Other than writing to the Bank of Spain as my note below, pointing out the massive amounts of debts owed by banks to Communities, NO I have no knowledge of an organised approach.

i suspect given the social level of Administrators compared to Banks and Lawyers this would be unlikely as they would carry little sway.

The College and many of its members have also been operating the traditional way, going back to when Communitys really were a block of flats with a Concierge service and even the HPA and statutes and bye laws are not effectively fit for purpose these days.

As Maria suggested, this amount of debt was unexpected and not accounted for and Spain as whole is very slow to progress certain traditions and methods of operation and does tend to ignore EU pressure on property Law.

Even the accounting system software used by the majority of Administrators is not in line with modern European business practices.

It was and possibly still is a slightly closed profession taken on as a subsidiary by many lawyers to expend ways to charge the new market of foreign investors.

Oncecagain though your suggestions are both sound and sensible, don't hold yr breath though.

Due to competition elements Im unsure how much communication between Administrators takes place.

Maria's comment:  The debt was not expected. I believe this is probably true although naive. The Spanish promoters/banks thought that the richer UK and other foreign national would flock to buy their place in the sun, which they did, emphasise on wealthy. However many were not so weathly and were somewhat lured by the notion and their greed that they could buy several properties on 100%+ mortgages off plan and either sell them at vast profit or rent them out to all the thousands of holiday makers and golfers. As anyone who still owns a place in Spain knows, this was the start of the endless buiding, where apartments and villas are crammed so close to each other that you can see and hear what their neighbours are eating and discussing. Why people ever bought such places of which thousands did, I will never understand. No -one I know would have bought a property in the UK of such design in current times, we all like some space and privacy. Then we had the crash caused by exactly this type of behaviour, with the average person/s, who thought they could become property speculators. Many owed so much money that Community fees were the last thing they worried about. The Community's suffered with the few trying to run what is in fact similar to a small business with overheads, paying for administrators, pool maintainance, Insurance etc. Now the Banks are allowed to not registered their repossessed property, or pay the fees which they should do. The laws of Horizontal property ownership  are Spanish laws, which the Banks and many owners fail to adhere to. These laws which refer to "Commuities" were as some have said were brought in to regulate the large blocks of flats in the large Spanish cities, which probably worked, but for individual property owners that are bound together because they have a shared pool really was never thought through. Whether it will ever be sorted out, I doubt it.

Pasha01, please don't overlook within this sorry saga of Bank repossessed properties, the many thousands of innocent offplan purchasers (not speculators) who have been caught up in the BG scandal, where Banks also failed to recognise the law (ley 57/68 ) , following all manner of collusion between negligent Banks, developers who led false marketing campaigns, ( marketing literature deemed part of the contract),  town halls who failed to adhere to land laws, and non-independant lawyers who failed to act with due diligence and protect clients best interests with regard to provision of legal licences and Bank Guarantees, These innocent purchasers now find themselves through no fault of their own having to defend their inalienable rights against Banks who acted with gross negligence and continue to use all manner of manipulative ploys to deny their legal responsibilities and/ or delay enforcement of law, return of monies, etc.

Nor overlook the many owners ( not speculators) who have been compromised by properties subsequently deemed "illegal builds", unable to legally occupy or rent their properties ( if they so desired) within a conveyancing system that for many years failed to ensure legal licences were in place, that failed to protect the reliability of land registry data, etc, etc .

But given all factors relating to this toxic mix, it's now essential that all those compromised by debt issues, for whatever reason, put divisive arguments aside and look for workable and practical solutions to make Banks accountable within realistic timeframes.

IMHO, in terms of communities, the bottom line is to rebuild trust and a sense of common purpose, and identify to all communities that it's in everyone's interest that horizontal laws ARE adequately adhered to (and respected as a means to ensure peaceful coexistence with common purpose and equal benefit), that mandatory failsafe mechanisms need to be put in place to counter compromising loopholes so as to mitigate the prevalence of litigation but adequately address community debt, and ensure Presidents/Administrators are working in the best interests of community owners.

BUT equally this will only work if community owners (Spanish and non Spanish alike) support those with good intent working on their behalf to reform the system, and be willing to acknowledge how existing failures affect the WHOLE community, hopefully without this becoming a divisive issue.  

BUT equally this will only work if community owners (Spanish and non Spanish alike) support those with good intent working on their behalf to reform the system, and be willing to acknowledge how existing failures affect the WHOLE community, hopefully without this becoming a divisive issue.

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Once again, couldn't agree more with all your observations and comments.

My only concern is where are the reformists with the will to change and improve?

From personal experience many owners of holiday homes are really  not interested in what goes on and fail to attend AGMs or get involved, as long as things work when they visit.

My personal findings are very much that local Spanish Administrators, Presidents and companies view ideas and possible changes coming from the Invaders as a threat to their traditional way of doing things, so immediately divisive.

Perhaps more European companies need to get involved with Administration and Law to oversee the necessary changes.

Not being funny as I bought in a mixed ownership resort but integration and cooperation are not always easy and it would seem the Brit only enclaves appear to organise and run their affairs more efficiently as they understand the need for closer Community cooperation.

This is going to be a hard question to ask but are Spanish residents in the main paying their community charges? Do they see the need for accountability by the Banks as an equal threat to themselves? Perhaps they don't prioritorise the need for community provision to the same standard as foreign nationals given differences in earning capacity, or is this irrelevant?

. I'm trying to comprehend why they see the need for greater efficiency and reform and Bank accountability in this scenario as a threat instead of a benefit to all on communities?  And who knows, maybe the Banks are exploiting this psychology... 

Hi

There are lots of unpaid fees on our community, one property was repossed a few years ago by the bank, no fees have been paid since the repossesion, the owner never paid them either, ( the gentleman was Morrocan )

Many of the Spanish residents also fail to pay, some owe in excess of 2000 Euro's !!!!!

The company who built these apartments still own a few of the properties, plus lots of garages & storage units, they never pay any fees & owe thousands of Euro's !!!  the properties were built some 10 years ago now so you can imagine the state of affairs, the British, Dutch & some of the Spanish pay on a regular basis.

It drives everyone crazy at times, community meetings are held, the subject is brought up on every occasion, the administrator says action will be taken against the offenders, but as you all know nothing ever happens !!!

Steve3236

Your Community needs to force your Administrator to commence Monitorio process against Spanish debtors or find a new one who will.

You can try debt collection agencies in UK such as Brooke Bates or others, but you need positive action.

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Rstio of local and foreign non payers is not dissimilar but the locals tend to regard debt more as a way of life and many do respond once legal process commences but others ignore all and hide behind bankrupt companies or whatever they can. They all know the courts are incredibly slow and action cannot be commenced until after approval at an AGM.

We have a number of cases still ongoing against a few but many have no assets anywhere else.

Frankly, anything that is suggested or put forward by Foreign Invaders in their country is seen as a threat to their way of life, so they become unsupportive of change.

Surprisingly banks are still held in high esteem by some and many won't trust them at all but they all feel that the banks will eventually have to pay so why get excited, manana, mi amigo.

They believe Laws exist to make it right in the end but they cannot see the problems the recession meant for Communities.

So no the mentality of understanding the need for efficient change does not really exist in Communities where many owners are only really concerned with self interest.

Many don't see the hard work put in by Committees, Boards or even Administrators until a crack appears in their apartment or a dog craps on their terrace.

Thanks for your honest replies.

Sadly the inevitable consequence to this could be self defeating as more and more potential purchasers become aware of this vulnerable scenario and decide against purchase on communities in general, let alone those that have onerous debts.

How bad does this have to get before reality dawns that this will become a downward spiral so long as mandatory controls are not put in place ? But the tragic outcome to this  is that  in the meantime it's so unfair on those who work so hard and with good intent to the benefit of all.  

Mutual trust and rebuilding a more communal spirit appears to lie at the heart of this  but also it's essential for ALL owners (all nationalities) to recognise the threat from Banks who are doing great harm to so many communities and the real estate industry in Spain with their underhand and manipulative ploys.

If ever there was a case for these realities to be exposed en masse to the European Commission who talk of protection of rights and adherence to the rule of law, it's now.

Apologies for the rant.

Community's need to find a President who has experience in business dealings. The President is higher than any Administrator and needs to be strong but needs the support of the owners. I'm lucky that since taking the role I've been able to turn our Community round, it hasn't always been easy. My first priorty was to get in as much money owed as possible, from this many improvements have been made. However trying to get people from many different view points to agree is difficult. I listen and then explain why we can or can't do things, many are not aware that it is not always posible to do things as if it is only you.I stick to the facts and now have the trust and respect of my Community, they don't have to be my friends or like me. Rules is rules on a Communty it really is that simple, Like it or lump it. The Community employs an Administrator who works to the President and the laws, if they don't work for your Community's interest get another, they all want our business. It will take years to turn round the Spanish economy, as for the corruption that will take even longer, even as I type yet more Spanish politcians have been arrested at the highest level, how Spaniards vote for these people is crazy. Don't let owners build up huge debts, set a limit and then go after them, once word get out that the community will take the measures to recover debts, you'd be surprised how others don't want to end up in court, whether it's in Spain or other European countries.

Haven`t got time for a long winded reply, but i have been following this topic with interest.

Just to add, i agree with everything Pasha said - strong President - good administrators for keeping the books up to date and doing the legal stuff (as President i do everything else). In the 5 years of being President we have gone from insolvent to "cash rich" and upgraded a lot of our community gardens, sewage, swimming pools (2)  and adhered to all new legislation regarding disability access and health & safety legislation around our community, a lot of hard graft - believe me!!

In that time i advocated a change of administrators, interviewed Three, narrowed it down to one, second interview with one of our owners (an accountant) and had him installed at our AGM (100% support for the change).

For those that were refrering to an "on-line" system, well our administrator has one. He wrote and built the software himself and installed it across his Three companies, I view all our debtors, finanacial stuff ,budgets etc on-line from home, i only need to see our administrator in person when i need advice or just for a catch up, he has Eight staff that deal with the "day to day" stuff and for dealing with owners enquiries, all their "input" on their computers (financial and otherwise) is backed up overnight, so i am kept upto date when i view the accounts, debtors budget lines etc. 

Owners only see their personal account showing community fees etc and any debt they have with the community - so no excuses if they fall in arears with their (monthly) community fees, statements are sent monthly showing all your payments and fees due - all online in your own language.

Previously we were a mostly English community, now we are mixed nationalities with more Eastern European influences - and all that brings with it!!  it does get wearing!! having said that we now have very few debtors.

This message was last edited by CostaBlade on 31/01/2016.

This message was last edited by CostaBlade on 31/01/2016.

Quite inspirational Costablade and although you're not looking for plaudits your hard work and productive solutions are to be admired and hopefully educative. But you can't help but recognise the tremendous effort and resilience required by all Presidents to re-establish trust, recoup debts and upgrade communities for all those who have been deprived of funds.

Just wondering if any of your successes to recoup debts have been against the Banks (Bank repossessions) and/or if you have come across new owners  who have been misled and denied debt certificates prior to purchase? Also do you consider that mandatory provision of debt certificate with mandatory requirement to pay debt an essential legal prerequisite that Notaries should demand at point of sale/transfer?

Also may I ask if there could be some way for those struggling with the administration and effective management of debt, for them to use /subscribe to your online system to act as a standardised approach for Presidents of other communities to improve transparency and day to day running? Or is this only an administrative tool to be used solely by your Administrators?

This message was last edited by ads on 31/01/2016.

CostaBlade

May I ask if your new Administrator is a Spanish company as they sound very tuned in.

Alsondo you have many  Spanish owners who supported  the change  of Administrator?

I do agree, strong management and efficient systems do help.

Hugh.

Most of the debt recovered (i would estimate 80%) came from banks, one bank (i won`t name them) owed us in excess of 30,000 euro.

We started to collect this when we changed administrators, we were able to improve our urbinisation with this money, often correcting defaults by the original developers

There is no doubt the online statements and an introduction of a discount system for paying community fees on time, for those that default they don`t get the discount and this is legally collectable through the courts should we have to take that route, also the banks have to pay the full amount in their "Three years plus current year" debt to the community when they repossess a property (assuming there is "Three years plus current year owing), all this helped to bring down our "debt list" some owners don`t seem to know they are in debt !! the online statement clearly shows their position with the community and of course they don`t want to lose their "discount" so it encourages them to bring their accounts up to date.

Our adminstrators are a Spanish company (multi lingual) and the online system is owned by them so i doubt they would share it, but it shouldn`t be to difficult for the "Colledge of administrators" to set one up and offer it to communitites via their administrators, frankly it is the One big factor for never parting company with our administrators, he has just shy of 200 communities on his books!! but he makes it clear at the outset "he does the books, legal stuff, and offers advice - but the President runs the community" which is exactly how i wanted it - if i was going to get to grips with our finances (or lack of them) i needed and wanted to be hands on, one owner thinks i have to much power (I am the President and it comes with the job) but i answer to our owners and most of them recognise the work i put in (the "One owner" has a very short memory regarding our past history, another owner reminded them of this - in no uncertain terms!! (which was nice for me).

There is no doubt we owe a lot to our administrators in collecting money that our previous administrators didn`t.

That and the fact that i am a "strong President"

Both these qualities are mandatory in my view when running a community.

One other point - our administrator has a brother, an accountant, also a sister that is a lawer so a nice business model!! but i would also say it works for our community so it dosn`t bother me that he could be accused of  nepotism.

Regarding "proof of settlement of debt to the community" I have only been asked Once to sign such a declaration, this after the sale of around 20 repossessed properties on our urbanisation. Maybe lawers contact the administrator and take their word that all the debt has been settled and the slate is clean, i dont know, but if i was buying a repossessed property, i would be asking for such a document.

So the moral of the story to community debt and keeping communities upgraded and worthy of purchase is to get yourselves a strong President (not averse to major workloads but strongly supported by the community!) and effective Administrators (with proven track record and good transparent and efficient online systems) with legal backup to make debtors accountable....... and all should be well.....

What a great EOS thread this has been with posters willing to share experiences and vulnerabilities and proof that a successful conclusion can be achieved when you find trustworthy proactive individuals willing to competently and firmly oversee the community with trustworthy administrative and legal backups to swiftly and efficiently deal with debtors. Trustworthy being the operative word here.

Good luck all, and Happy New Year !!!!! 

I am so glad I asked the question in the first place as the replies have been very helpful. The comments from Pasha01 and Costablade confirm my original thoughts that you have to be proactive and especially as ours is a small community and makes very little profit for the administrator and I intend to work the same way as I do in my community at home whre our managing agent/administrator basically just collects the money and pays the bills.

Some of our properties are owned by companies which have gone bankrupt but still have not been repossessed, how does chasing the debt with solicitors work in this case? Also in the UK we use a solicitor who does not charge us but bills all his fees direct to the person who he is recovering the debt from, do any solicitors in Spain do it this way as we are just getting into the black do not want to wipe put the surplus paying for litigation which may not pay back.

Ant

Antonio 1, I've glad my posts have been helpful. Any UK owners I would advise using a debt collection firm, we use eurofees, there are others of course. There are several options, The no win no fee option, paying the firm out of the settlement money and fees/interest agreed by the court. Pay a fee at the start and then if you win pay a smaller fee at the end of the court case. As far as I'm aware Spain doesn't have no win no fee type of organisations. You use an Abogado and go through the Spanish very slow court system. Do remember some people have just gone back to the UK or other home countries and they have nothing , they have litte money and you can't get blood out of a stone. Try to find out  their UK address and write to them. It's useless trying to recover a debt from someone who has lost everything. As much as I don't like to give up, sometimes you have to. With regard to chasing Banks, you will need the services of your Administrator or an Abogado for which you Community will have to pay for. As said the Nota Simples are not always in the current owners name particularly if it is now Bank owned. I consider this to be unlawful, however as we know Banks can do as they please. Don't ever remove a debtor from your list of debtors, until the property changes hands at the notary as you might have a chance of recouping some money. Anything is better than nothing.
 If your Community is now in the black, use your money wisely, put in energy bulbs for any Community lighting, use light saver devices or timers. If you have a pool discuss with your pool man/women if you can run the pump for less time during the off season, grass watering the same, it's not as hot over the winter months and Spain does get some rain. Our water bills have been reduced by 500€ over the 2 winter quarters and so another saving.  See if you can get some owners to help with any community painting, cleaning that needs to be done, it's in everyones interest to keep costs down. Community insurance, shop around for a cheaper policy, when I took over I changed providers, upgraded our cover and saved 400€, it can be done. Good luck for the future

Pasha, a good post (above) with a lot sound advice.

I have never understood why people purchased property they couldn`t afford, even in the boom years, surely these people should have had an exit plan - having said that we have had the worst recession our generation has seen, will we learn the lessons - time will tell but i fear not.

Probably should have moved this thread to the Running a Community Forum, but just by way of an update on the excessive slowness of banks and obviously the system to settle unpaid Communty Fees once repossession process has started, here are a few recent comments from our Administrator when asked why 3 properties  debts were still outstanding.

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Regarding these three cases, the bank have confirmed that the repossession process is in place; they even provided us with the reference number but no official documentation is still available in order to change ownership, so it is complicated to decide which category we may use; maybe for next month we can create a new category “repossessed but not officially finished” or something similar.

Until we are provided by the bank with the documentation stating the “allocation date” (fecha de adjudicacion), we cannot be sure about the debt they are liable for neither can we change the  ownership. But one thing we know for certain is that the process of repossession is sure.

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Time consuming for Communities when it should be straight forward.

But one thing we know for certain is that the process of repossession is sure.

I think your administrator missed a word of the end of that sentence, SLOW

Costablade, the repossessed properties in our community were bought by developers, minimum initial outlay hoping to make a quick buck by selling on but the recession put paid to that.