Community fees rise as recession bites and some owners stop paying

Posted on February 19, 2010 by Mark
Filed Under Marbella | Leave a Comment

Very nice, but who's paying for it now?

There’s a lot to be said for living in a ‘community of owners’, or what the Americans would call a condo. Communal costs are shared so you get to enjoy facilities like gardens, pools, and tennis courts for a fraction of the cost. But at times like this, when the economic going gets tough, some owners stop paying their community fees, causing problems for everyone else.

In many cases the biggest offenders are the original developers still stuck with unsold units. In Marbella alone, developers are in arrears to the tune of 10 million Euros in, according to the Malaga association of real estate administrators. The outstanding debt gets bigger with each passing day.

Of course the developers never meant to be a part of the community of owners. They planned to sell and be off, but it didn’t work out that way. Many were caught out by Spain’s property crash, which hit Marbella earlier than the rest of the country.

To make matters worse, many of them are also in bankruptcy proceedings, so they can’t be forced to pay the community fees they owe. Claims against them just have to join the queue with all their other ordinary creditors, which could take years to resolve.

Developers are not the only problem. In Marbella, where an estimated 2 out of 10 owners (including developers) are in arrears, 50% of them are foreign owners, mainly British. Foreigners tend to own holiday homes, which they bought when times were good. In the thick of an economic crisis, with a weak pound, many have decided to sell, and the first thing they do is stop paying the community fee.

Foreign owners not paying their community fees can’t escape their debts forever. For a start they can’t sell up if they owe the community money, so they will have to settle up if they ever want to sell.

In the meantime, owners who are up to date with their bills face higher fees to cover the shortfall from those not paying, though many communities are also cutting maintenance costs to the bone. On some urbanisations community fees are reported to have doubled thanks to non-payments.

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