Community fees rise as recession bites and some owners stop paying

Maintenance of pools and other communal facilities are paid out of community fees.
Maintenance of pools and other communal facilities are paid out of community fees.

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.

Developers stuck in the community of owners

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.

Holiday-home owners not paying their community fees in Spain

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.

SPI Member Comments

Thoughts on “Community fees rise as recession bites and some owners stop paying

  • UK Ops Director says:

    The most important thing is to take proactive action against debtors whilst they owe a small amount of arrears. It makes collection easier and viable. Allowing years of arrears to mount up just makes the situation worse. We take immediate prelagal preemptive action to recover the debt in the UK and there is no escape.

  • And what about those who stop paying fees due to their community allowing other properties to be built up against theirs, blocking their windows, destroying property, changing locks on gated areas and not allowing them in etc???

  • Steven Harris says:

    What about excessive community charge fees? One place is trying to charge me 21 Euros a month, and it is a dirty apartment that never gets cleaned. No elevator either. Surely there must be some kind of fair process about these charges.

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