community insurance info

Hi

We have found out that our administrator has not paid the community insurance. We all pay our fees but 50% is owned by the developer who has not paid his fees.

It is the developer's administrator. They say they are in debt, so they can't pay, but they take their fees.

Can I take out an insurance to protect myself in case someone has an accident in the communnal areas? I would've thought that the insurance would be paid before the gardens, pool and cleaner. Is there a law about this? What advice would you give?

Dear Sir or Madam,

This is sadly becoming all too common post credit crunch.

Developers have to pay, by law, the Community fees just like everyone else:

Comunidad de Propietarios: Avoid Problems with Your Neighbours in Spain - 26th June 2009

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Majority and Unanimity Votes

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You may find that in new unsold off plan developments, a developer may hold the majority vote as he still holds a large stock of unsold units. Conversely, it can be its lender, if they have taken over the developer’s units. Either way, they are both obliged to contribute to the communities’ upkeep, paying their communal fees in proportion to their communal quotas, like everyone else.

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You can read a very interesting article written by Mark Stucklin on this matter:

Community fees rise as recession bites and some owners stop paying -19th February 2010

In my next article, "avoiding off-plan pitfalls", I write on this issue in more detail.

Spain's Horizontal Property Law stipulates that 5% of the annual budget in a Community of Owners must be allocated to the mandatoty Community Insurance fund. You can read further in my article:

Comunidad de Propietarios: Avoid Problems with Your Neighbours in Spain - 26th June 2009

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Owners’ Duties

Section 9 rules them in detail. The main duty will be, of course, to contribute to the maintenance and financial upkeep of the Community of Owners.

Failure to pay the community fees will result in the Community of Owners placing a lien against your property and possibly auctioning it off. This legal procedure in Spain works surprisingly efficiently. You have been warned!

This important article mentions as well the endowment of the Communities mandatory reserve fund, in accordance to each owner’s commonhold quota. The purpose of this fund is to create a financial pool for the maintenance and repair of the building i.e. façade’s flaked painting or lift repair work. This reserve fund shall be endowed with an amount not lower than five percent of its last ordinary budget. Its funds will be used as well to pay for the building’s insurance cover.

Art 9.f)

f) to contribute, according to their respective assessment quota, to the endowment of the reserve fund that shall exist in the property owners’ community for the maintenance and repair of the building.

The reserve fund, which shall belong to the community to all effects, shall be endowed with an amount not lower than five percent of its last ordinary budget.

This fund may be used by the community to subscribe an insurance policy covering damages in the building or, alternatively, to subscribe a contract for permanent maintenance of the building and its general installations;

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It's important to clarify, as many people make the wrong assumption, that the Communitie's Insurance policy does not cover the personal content (belongings) inside the property of common holders. You are free to hire your own insurance policy to insure your own home.


Yours faithfully,
Raymundo LarraÃ*n Nesbitt