Antonio Flores’ Blog

Some days ago, a worried property owner wrote to us with a query relating to his “Community of Owners”, along with a photo of a resolution recently adopted by the President of the said community, in the municipality of Benahavis.

The text read as follows:

1. The President is then allowed to set fines between €30 and €600, depending on the important and seriousness of the matter, when breaching the above articles, regardless if any damage made has been restored: these amounts will be deposited into the Community’s bank account.

2. Penalties must be notified in writing to the owners committing the infraction, describing the specific infraction and penalty imposed, which will be charged directly to the owner.

3. The HOA (Homes Owners Association) reserves its right to take legal action against owners in violation.

After rubbing my eyes in disbelief, I hastily checked up our main source of legislative updates (www.vlex.es) in case I had missed this implausible new legal change that would give nasty and corrupt Presidents and Administrators jurisdiction to suppress dissidence within the community of owners; there was none of it, thankfully.

So, it the above prerogative lawful? Absolutely not. The Juridical Regime of the Public Administration Act 30/1992 grants the State the monopoly of imposing pecuniary penalties or similar fines, without exception, following a due adversarial administrative procedure. This is not to say that a Community of owners may not, following the appropriate procedure to adopt community resolutions, agree on a fixed surcharge for late payment of fees or even impede non-payers the use of communal elements (pools for instance). But never the prerogative to -arbitrarily- sanction specific conducts by its members.

A congress held in 2010 by an association of community administrators to debate Horizonal Property Law matters resolved that “it is not possible to fine owners for breaching internal regulations, even if this resolution is written into the Statutes or voted by a majority”.

Presidents and Administrators who despite the above insist on coercing owners into paying fines could face criminal action.

Antonio Flores Property Benahavis Country Club, Benahavis Hills, Community of Owners President, community of owners spain

PROPERTY owners are filing increasing numbers of complaints about presidents of the comunidad de propietarios (community of owners) in their buildings.

Abuses of power, passiveness, overstepping legal boundaries, refusal to call annual general meetings and to sanction budgets, unauthorised maintenance and using community funds without approval are common grievances.

Considering that this is technically a non-remunerated post, this may sound like unnecessary aggravation for the presidents. However, could it be that some community presidents are being paid salaries or taking backhanders, and as result, acting like a toxic workplace bosses?

We shall leave the second scenario for now – as it is difficult to prove – and address the main question: are presidents of communities of owners entitled to remuneration?

The Horizontal Property Act is mute on this point as it neither endorses or bans it. Caselaw on the contrary is more specific, giving the following clues:

The Appeal Courts of Malaga, the Balearics and Tenerife have declared that presidents cannot have a fixed remuneration although

they may be compensated for the costs and trouble inherent to carrying out the job of President.

The Appeal Court in Las Palmas holds a contradictory case where statutes specifically state: “

the President of a specific Community will not generate remuneration,

adding however

this prohibition is not incompatible with covering representation expenses, more or less modest, against submission of receipts or invoices for the most relevant expenses.

The appeal court in Granada is more restrictive and states:

while prima facie the job of President is pro bono, such a mandate is not incompatible with receiving consideration by the community.

In this case, an AGM resolution where the president was exonerated of paying his monthly fee was deemed void because it

altered the coefficients of ownership within the community of owners … and a professionally remunerated administrator can do this job.

On the contrary, the Appeal Court in Barcelona is adamant about the validity of the prohibition since the Catalan Civil Code specifically envisages the unpaid nature of this job.

Regarding the required quorum in an AGM (or EGM), most courts consider that a resolution to grant a regular remuneration requires unanimous consent, if it goes against the statutes or articles (because they stipulate that it is an unpaid job), whereas a resolution to simply cover representation expenses can be decided by a majority of votes, irrespective of what the statutes or articles state.

Antonio Flores Property agm, Annual General Meeting, Community of Owners, community of owners spain, Horizontal Property Act, President Community of Owners, Presidente Comunidad Propietarios, Spain condominiums

Some days back, an interesting legal matter was raised by a customer who had received, in his Liverpool home letterbox, a letter from UK-based solicitors demanding payment of unpaid “Community Fees”, on behalf of the administrators of a Fuengirola Urbanization.

On reading the content of it, it was clear that the 2^nd class-delivered letter raised an important legal question: Can a Spanish Community of Owners legally pursue such debts through any EU-Court?

One of such law firms seemed to have to answer to this:

[…] Where defaulting owners are resident in the UK or Ireland, we avoid the delays and difficulties described above by recovering the debt directly in an owner’s country of residence.  This we do by relying on the European rules permitting debt to be recovered throughout the European Union, no matter where that debt was generated within the European Union.

European rules referred to by the debt-recover firm are none other than the REGULATION (EC) 1896/2006 CREATING A EUROPEAN ORDER FOR PAYMENT PROCEDURE, and the lawyers would have invoked article 2, which says:

[…] This Regulation shall apply to civil and commercial matters in cross-border cases, whatever the nature of the court or tribunal. It shall not extend to…claim arising from non-contractual obligations, unless…they relate to liquidated debts arising from joint ownership of property.

A simple answer to a fairly simple question then? So we thought until Spanish Judges got involved to upset the EU consensus in a recent seminar held on the matter. Out of the 8 participating magistrates, only one accepted that both the Spanish and EU debt recovery procedures can coexist and therefore, be alternatively used by Communities of Owners. The dissenting judges argued that, although the EU Regulation specifically deals with this, Spanish laws and tribunals should take precedence inasmuch as:

i)                    The debt is classified as “ob rem” i.e. attached to a property, thus necessarily connecting the matter to the local Court where the dwelling is located in.

ii)                   According to art. 9 of the Horizontal Property Act, all owners are obliged to designate a Spanish address for notifications, thus impeding the application of foreign Courts and laws.

The matter is of great interest as once again, the Spanish judiciary clash with EU pragmatic law makers always keen to harmonize diverse legal systems. But then, can Spain be allowed to cherry pick the scope of application of EU laws when it has adhered to them, formally, as opposed to countries –such as Denmark- who have opted out?

And will English Courts (or for that matter, any other Court in the EU) not just consider, but even get to know that a group of Spanish Magistrates have ever expressed an opinion different from the official position? No chance.

Antonio Flores Legal Practise AGM Community of owners, agm spain, community of owners spain, Comunidad de propietarios, Debt Community of Owners Spain

We have been recently approached by a client asking whether sticking ones name on a list of debtors for Community fees is a legal thing to be done by the President or the administrators office.

In the particular case the President considered that these debtors have to be named and shamed as if we were in the time of the Spanish Inquisition as in his opinion this was the only way to make owners pay.

In a case identical to the one above, the Data Protection Agency contended that the information of debtors published on a notice board allowed the public (neighbours but also outsiders) to know information on the personal financial situation of the claimant which should have been kept secret by the administration office so that only the co-owners of the complex could access such information. The Community of Owners was consequently fined with 601 Euros and will presumably demand this money from the President.

In our case we have urged our client to send a clear warning to the “President” advising him that he is in breach of the Data Protection Act and that a similar illegality was fined with € 601 by the Data Protection Agency although the fine could be stretched to a maximum of €60,101, which is what the Act stipulates.

Antonio Flores Property agm, agm spain, community of owners spain