What does the Horizontal Property Act say about selling with debts?

The regulation governing these situations in Spain is the Horizontal Property Act (LPH). In Article 9.1.e), the law clearly sets out the owner's obligations regarding common expenses and the consequences of non-compliance when transferring ownership.

The key concept applied in these cases is the real encumbrance of the property (afección real). This means that the property itself serves as security for the payment of community debts. This real encumbrance does not extend liability indefinitely, but covers the following periods:

• The overdue portion of the current calendar year in which the transfer takes place.
• The three calendar years immediately prior.

If the seller does not clear the outstanding balances prior to signing or if no solution is agreed in the title deed, the buyer becomes liable, via the property itself, for the debts accumulated during that period. For this reason, a buyer will rarely agree to purchase the property without the debt being properly documented, settled, or deducted from the final price.

The Community Debt Certificate: a mandatory document

Article 9.1.e) of the LPH imposes the obligation to provide a certificate of status of community debts at the time of executing the public deed of sale. This document must be issued by the secretary of the community with the approval of the president, or by the chartered property manager managing the building.

The certificate explicitly states whether the flat is up to date with payments or whether there are outstanding bills, detailing the exact amount owed as of the date of issue.

Is it possible to execute the deed without this certificate?

The law provides for a single exception: the buyer may expressly waive the seller's obligation to present this certificate. However, in notary practice, this exemption usually occurs only in very specific cases, such as sales between family members, transactions between investors, or transfers where the buyer assumes the risk after having previously verified the condition and status of the property.

Without the buyer's express waiver, the notary will not authorise the signing of the deed of sale.

Options for selling a flat with community fees debt

There are several legal and financial ways to structure the transaction when there are unpaid fees with the owners' association. The choice of option will depend on the seller's liquidity and the agreements reached with the buyer.

1. Settlement prior to signing before the notary

This is the simplest and cleanest alternative. The seller clears the full amount of debt owed to the community before attending the notary's office. Once the amount has been paid, the property manager issues a certificate confirming that the home is free of community charges. In this way, the sale proceeds as a conventional transaction.

2. Price discount and retention from the sale price

If the seller lacks the upfront liquidity to clear the outstanding balance, the most common solution is to agree on a discount off the agreed price for the property. On the day the public deed is signed:

1. The deed reflects the existence of the debt reported in the certificate.
2. The buyer retains the exact sum owed to the community from the total purchase price.
3. By means of a banker's draft or bank transfer, the buyer or the notary's office channels that amount directly to the community's account to settle the debt.
4. The remaining balance of the price is handed over to the seller.

This option provides absolute legal certainty to the buyer, as it guarantees that the retained funds are used immediately to clear the outstanding balance.

3. Express assumption of debt by the buyer

In this scenario, the buyer agrees to acquire the property knowing about the existing debts and formally committing to take responsibility for them after the sale. This option is frequently used in transactions involving properties in need of refurbishment or when the sale price has been negotiated downwards to offset the encumbrance. To be fully valid, the assumption of debt must be explicitly stated in the deed.

Difference between unpaid ordinary fees and special levies

When **selling a flat with community debt**, it is paramount to distinguish the type of outstanding obligation, as the applicable legal framework varies:

• Ordinary fees: Regular expenses for routine building maintenance (cleaning, electricity, lift, insurance). These are always the responsibility of the owner of the flat during the period in which the bills were incurred.
• Special levies (derramas): Expenses approved by the owners' association for works or improvements (façade restoration, roof repair, lift installation). The general rule establishes that special levies are payable by whoever is the owner at the time the instalments set for their collection fall due.

If the owners' association approved a special levy payable in instalments prior to the sale, instalments due before signing are the responsibility of the seller, whereas instalments falling due after the transfer will be the responsibility of the new buyer, unless agreed otherwise between the parties.

What happens if the community has initiated legal proceedings?

When accumulated debts persist over time, it is common for the owners' association to have initiated court claims via order for payment proceedings (proceso monitorio). In more advanced cases, the association may have obtained a preventive entry of attachment on the property in the Land Registry.

If the property has a registered attachment entry due to community debts, the encumbrance is public and appears on the property's Land Registry extract (nota simple). To sell the property under these conditions, it will be necessary to cancel the registry charge by paying not only the principal debt, but also the court costs and interest accrued during the legal proceedings.

Official Protection Housing (VPO) in the Comunidad de Madrid

In the specific case of properties subject to public protection schemes in the Comunidad de Madrid, the existence of community debts adds an additional layer of analysis. To sell a VPO in this autonomous community, it is essential to comply with the administrative requirements set by the competent Department (Consejería), such as adhering to the maximum sale prices fixed per usable square metre and requesting the corresponding sale authorisation or processing the de-classification (descalificación) of the property if legally applicable.

The amount owed to the community cannot be formally added to the sale price to exceed the legal limits set for protected housing in the Comunidad de Madrid. Therefore, retention of funds at the time of payment formalised before a notary constitutes the ideal mechanism to settle unpaid fees without breaching the legal maximum price requirements demanded by regional regulations.

Legal advice for property transfers with encumbrances

Managing complex property sales requires prior legal analysis to structure deposit agreements, negotiate with property managers, and coordinate the notary signing securely. Having professional guidance prevents contractual mistakes that could lead to subsequent litigation.

At Sky Real Estate, we have the backing of our specialized legal division, Sky Law, whose professionals have been recognised at the European Legal Awards (2023-2025) for their track record in property law. Furthermore, we operate as a Real Estate Credit Intermediary (Intermediario de Crédito Inmobiliario) registered with Banco de España under code ICI D-286, enabling us to provide comprehensive solutions for complex situations such as sales with outstanding mortgages, court attachments, or community debts.

If you need to sell a property that has financial encumbrances or unpaid bills and want to explore options to complete the transaction with full legal guarantees, you can consult the details of our specialized service for selling a home with debt or a mortgage.