Bare ownership: who pays IBI, community fees and special assessments

Splitting of ownership: bare owner and usufructuary

Understanding the distribution of taxes and expenses requires first defining the legal nature of each figure. Full ownership of a property encompasses both legal title and the right of use. When a bare ownership sale takes place, these concepts are unbundled:

• The bare owner: Is the legal owner of the property. They hold the title to the property, but do not have the right to occupy or rent it out while the usufruct remains in force.
• The usufructuary: Is the person who retains the right to use and enjoy the property for life (or for the agreed term). They may reside in the property or even generate financial returns by letting it out and receiving the corresponding rent.

This distinction between legal title and material enjoyment is the criterion applied by law to assign the payment of taxes, municipal fees, utilities and repairs.

In bare ownership who pays IBI according to tax regulations

The Impuesto sobre Bienes Inmuebles (IBI) is a direct municipal tax levied on the holding of real rights over property. When assessing in bare ownership who pays IBI, the legal answer is straightforward: tax liability rests with the usufructuary.

Article 61 of the Recast Text of the Local Tax Regulatory Act (Royal Legislative Decree 2/2004) establishes the order of priority for taxable persons under this tax. The primary taxable person is the holder of the real right of usufruct. Therefore, the relevant town hall will issue the IBI demand in the name of the usufructuary for as long as they hold their right over the property.

Although parties in a private sale and purchase transaction can reach contractual agreements regarding tax payment, such agreements are only binding between buyer and seller. Before the municipal tax authorities, the direct legal obligor remains the usufructuary. If they fail to pay the tax bill, the local tax authority will claim the debt from the usufructuary before proceeding against the property.

Community of owners expenses: ordinary fees and special assessments

The allocation of community fees often generates uncertainty. To clarify obligations, the case law of Spanish courts and the Horizontal Property Act (LPH) distinguish according to the nature of the expense.

Ordinary community fees

Ordinary community fees are intended for the routine upkeep of the building's common services: hallway cleaning, lighting, concierge services, lift maintenance and minor day-to-day repairs. Since these are tied to the daily use of the property, payment of these ordinary expenses rests with the usufructuary.

However, vis-a-vis the owners' association, Article 9.1.e of the Horizontal Property Act stipulates that the ultimate party liable to the community is the property owner (the bare owner). For this reason, to prevent accidental non-payments that could lead to claims from the community, it is customary to state in the public deed that the usufructuary will pay ordinary fees directly to the community or reimburse the bare owner for that amount.

Special assessments

Community special assessments are extraordinary financial contributions that fall outside the community's annual budget. These assessments are typically earmarked for building conservation works, structural repairs, replacement of main downpipes, facade refurbishment, roof waterproofing, or accessibility upgrades (such as wheelchair lifts or ramps).

Because these interventions increase the value of the property and preserve its long-term asset structure, payment of special assessments corresponds to the bare owner. The usufructuary has no legal obligation to fund works that benefit the future preservation of real estate capital.

Maintenance and repairs: ordinary vs extraordinary

Articles 500 and 501 of the Civil Code regulate how repair and maintenance costs must be shared for a property subject to usufruct:

• Ordinary repairs (Article 500 of the Civil Code): Are those required due to wear and tear or minor damage resulting from the natural use of the property and necessary for its upkeep. They are entirely the responsibility of the usufructuary. Examples include repairing a leaking tap, replacing a household appliance, or painting interior walls worn by normal use.
• Extraordinary repairs (Article 501 of the Civil Code): Are those necessary for the stability, safety and essential preservation of the building structure. Their cost is borne by the bare owner. The usufructuary is obliged to notify the owner whenever they notice the need for works of this scale.

Refuse collection fee, utilities and home insurance

In addition to IBI and community fees, the coexistence of both legal rights affects other operational costs of the property:

• Refuse collection fee: Being a municipal fee linked to the provision of a public service derived from the use of the property and waste generation, its payment rests with the usufructuary.
• Individual utility supplies: Electricity, water, gas and telecommunications contracts should be in the name of the usufructuary, who is solely responsible for their consumption and billing.
• Home insurance: Recommended practice is to split the cover. The bare owner should take out and pay for building insurance (the structure of the property), protecting its capital value against serious incidents. Meanwhile, the usufructuary should insure the contents (their furniture and belongings) and maintain third-party liability cover arising from the use of the property.

Summary of expense allocation between usufructuary and bare owner

As a clear guide, standard payment allocations are structured as follows:

1. Impuesto sobre Bienes Inmuebles (IBI): Payable by the usufructuary.
2. Ordinary community fees: Payable by the usufructuary.
3. Extraordinary community special assessments: Payable by the bare owner.
4. Municipal refuse collection fee: Payable by the usufructuary.
5. Ordinary maintenance and repairs: Payable by the usufructuary.
6. Extraordinary structural repairs and works: Payable by the bare owner.
7. Utilities (water, electricity, gas): Payable by the usufructuary.
8. Building insurance: Recommended to be covered by the bare owner.
9. Contents and occupant's third-party liability insurance: Payable by the usufructuary.

Particularities of social housing (VPO) in Comunidad de Madrid

In the case of properties subject to official protection regimes (VPO) located in Comunidad de Madrid, the transfer of bare ownership requires prior verification of regional housing regulations. In this region, it is essential to check whether the property remains within its statutory protection period, the applicable maximum sales price caps, or the need to process voluntary disqualification (descalificación) with the regional housing authorities of Comunidad de Madrid prior to executing the public deed.

The importance of recording agreements in a public deed

The principle of party autonomy enshrined in Article 1255 of the Civil Code allows parties to agree on specific clauses to adapt the distribution of expenses to their individual needs. For example, it is possible to agree that the buyer assumes IBI or certain community fees as part of the transaction terms.

For these agreements to hold full legal validity and protect both parties, they must be unambiguously drafted in the public sale and purchase deed executed before a notary and registered in the Land Registry.

Having rigorous legal advice is essential in these transactions. The Sky Real Estate team, backed by the legal firm Sky Law, recognised at the European Legal Awards 2023-2025 and registered as a Real Estate Credit Intermediary under code ICI D-286 with Banco de España, guarantees the proper structuring of contracts to prevent future disputes between usufructuary and buyer.

If you wish to evaluate the options for transferring ownership of your property while retaining life occupancy with full legal peace of mind, you can consult our bare ownership sale service and request a personalised analysis for your home.