What happens if I buy a property with debts from the previous owner?

Community of owners' debts

The Horizontal Property Act regulates the effects of unpaid fees on transfers. In practice, the buyer requests a debt certificate from the property administrator and the seller settles any outstanding amounts prior to completing the title deed. Do not assume that "as a new buyer" you will never be liable for previous periods without checking the law and the specific certificate.

IBI and local taxes

The recast text of the Local Tax Authorities Act provides for mechanisms of real property encumbrance in cases of tax debts on properties, which must be analysed on a case-by-case basis. For this reason, certificates confirming up-to-date payments are requested, or part of the purchase price is withheld until they are cleared.

Mortgages, seizures and registered encumbrances

The land registry extract shows mortgages, court seizures and registry entries. A mortgage debt does not disappear when ownership changes: it must be cancelled or subrogated as part of the transaction. If there is a seizure due to the seller's debts, the completion of the deed may be blocked until it is lifted or an agreement is reached with creditors regarding the application of the purchase funds.

For onerous charges, the guide selling a repossessed property explains the rationale from the seller's perspective, helping you understand what questions to ask when buying.

Non-property personal debts

Consumer loans, credit card debt or personal fines belonging to the seller should not become your obligation simply by buying the property, unless there are unfair clauses or fraudulent dealings. Even so, if funds are diverted to pay creditors without transparency, the operational risk falls on you.

Due diligence before signing a deposit contract

• Recent land registry excerpt.
• Community debt certificate.
• Municipal tax certificate, if applicable in your local town hall.
• Deposit contract with a suspensive condition regarding charges if recommended by your solicitor.

The guide documentation for selling a property lists many documents that the seller should provide and that you can demand as a buyer.

New build and developer

If the developer is in insolvency proceedings or has licence-related debts, the analysis changes: bank guarantees, insurance, and off-plan purchase contracts come into play. Do not extrapolate this answer regarding private resales to new developments without legal review.

Withholding funds at the notary

In complex transactions, it can be agreed to withhold part of the purchase price until encumbrances are cancelled or certificates are obtained. This must be drafted precisely so as not to unduly block an honest seller.

Community fee non-payment insurance

Some communities of owners have fee default insurance; ask whether this affects certificates or claim deadlines. It does not replace your legal checks.

Buying at auction or through foreclosure

In judicial auctions, the rules regarding debts and possession are different. This answer focuses on voluntary private sales between parties.

Personal shopper and buying solicitor

Detecting hidden debts before signing a deposit contract is one of the main tasks of the PSI and the buyer's solicitor: cross-referencing certificates, meeting minutes and the land registry extract. If something does not add up, do not sign out of emotional rush.

Seller's municipal capital gains tax and IBI

Municipal tax debts of the transferor may appear on certificates. Do not confuse the seller's obligations with your own budget for Property Transfer Tax (ITP) as a buyer.

Price negotiation due to encumbrances

If you discover pending special assessments, you can negotiate an equivalent discount or demand prior payment. Document the agreement in a private contract.

Reviewing the deposit contract

Include a suspensive condition regarding land registry encumbrances and a clear community certificate. If the seller fails to comply within the deadline, you recover your deposit according to the type of deposit contract agreed upon.

First-time buyer

The temptation to rush out of fear of losing the property often leads to signing without proper certificates. Resist until you have a complete dossier or advice from a PSI.

Home insurance and debts

Insurance does not cover default on community fees by the seller, but it is advisable to take it out upon registration to avoid coverage gaps between signing and moving in.

Updating certificates

Certificates have an expiry date. If the deposit period lasts several weeks, refresh the community certificate and the land registry extract prior to signing the deed, in case new charges have been registered.

Next step

If anything in the certificates does not add up, delay signing the deposit agreement until it is clarified. A personal shopper or buying solicitor reviews consistency between price, charges and timeline.

At Sky Real Estate, we assist purchases with coordinated due diligence. Discover our property personal shopper (PSI) service.

Guidance content only. Verify Art. 9 of the Horizontal Property Act, Art. 64 of the Local Tax Authorities Act and the land registry extract with an adviser.