Community of Property Owners Fee: What it is and when it is paid

The owner’s fee in a Community is one of the recurring expenses that must be taken into account when buying a property, garage or premises. This may be payable monthly, quarterly or yearly. All the properties and premises in a Community have a pre-determined fee that must be paid. The amount will vary depending on the characteristics of the common elements that have to be maintained. In this article we tell you everything you need to know about the owner’s fee.

 What the owner’s fee consists of

By owner’s fee, we mean the numerical expression or percentage value that corresponds to each property, garage or commercial premises that forms part of a property as part of a commonhold property system. This fee or percentage appears in the Foundational Title pursuant to Article 5 of the Horizontal Property Act.

It is used to determine the share of the Communities of Property Owners’ benefits and charges corresponding to each property, commercial premises or garage.

Who has to pay the community expenses?

The property owner is responsible for paying the community expenses, even if they do not live in the building or the development. Moreover, even if the rental contract states that the tenant must pay the owner’s fee, it is the owner who is solely responsible and liable to the community in the event of non-payment. Therefore, if the tenant does not meet this obligation, the community may claim payment from the owner of the property, who in turn, can claim it, where appropriate, from the tenant if this has been agreed.

How is the owner’s fee set? 

Article 9.1 of the LPH establishes that the owner is obliged to contribute to the general costs of the community in order to maintain the building and its services properly and cover the expenses and responsibilities that cannot be charged individually,

To set the fee the ownership coefficient is calculated; this is the percentage that determines the owner’s share of the common installations and areas of the property. The coefficient is calculated with reference to the total percentage of the building. To do this, the net floor area of the flat or premises, its location, and the expected use of certain common elements are used as a basis. All this data is shown in the deeds of each property.

The owner of the building may have established further criteria in the Statutes in relation to the distribution of the costs, for example, that the owners of ground floor flats are exempt from paying for the lift (but this is not always the case).

Other factors must also be taken into account when calculating the participation fee:

  • Expenses that are not shared equally among the owners. The Community statutes establish the rules relating to which properties will pay for certain costs. For example, usually some properties do not have to pay costs for maintenance of the gardens, swimming pool or stairs, as they do not use those elements. This is the case for commercial venues that open onto the street and not into the Community.
  • Exemption of residents who voted against improvements. Provided their exemption complies with the legally established requirements.
  • Different coefficients according to the expense. Some communities want the co-efficient to be used for part of the expenses and other expenses to be shared equally.

As you can see, the charges paid by an owner in a community are not only set by the ownership coefficient; other factors also have to be taken into account, and your Mediterráneo Property Administrator can help you with the legal details.

What is the owner’s fee used for?

  • To represent each owner’s share in the total value of the building.
  • To establish the coefficient corresponding to the owner’s vote, in the resolutions discussed in the general meetings.
  • To determine the contribution of each owner to the general costs of maintaining the building. 

Types of Community expenses

In every Community of Property Owners there are two types of expenses, ordinary expenses, which reflect the basic needs of the building to keep it in good condition and extraordinary expenses, those that are not initially provided for in the annual budget.

Ordinary expenses

These are to keep the building in good condition: They are the costs of maintaining the normal services such as cleaning, bank charges, garage, pool garden, or maintenance costs of plumbing, roofing, boilers, expected repairs for these elements, etc.

Common fees

As property owner in a community, you have to contribute to maintaining the services and community assets in perfect condition, even if you don’t use all the installations or don’t live there. All the expenses for the common areas, municipal charges (waste collection) and general expenses (garage, pool, gardening, concierge, etc.) will be paid based on each owner’s share, applying the resolutions adopted, the law and the statutes.

Reserve funds

These must not be less than 10% of the latest ordinary budget and are to cover works or pay for contributions that are needed due to an unexpected event, or even community insurance cover.

Necessary works

The Horizontal Property Act (LPH) establishes a fundamental difference between works considered to be necessary in a community of property owners and those classified as ‘improvement works’. Necessary works are those that are considered essential for the habitability and safety of the building, maintenance and conservation of the structure, and to comply with the laws and regulations. In this case, all the owners are obliged to pay the fee established by the community to cover the costs involved.

Extraordinary expenses

These are expenses that are not covered in the community’s ordinary annual budget. To agree on this type of expense, an extraordinary meeting is normally convened to decide on the type of payment, increasing each owner’s contribution through extraordinary payments or whatever system is agreed.

Do I have to pay charges for a service I don’t use?

Yes, the Horizontal Property Act states that: “not using a service that generates a cost does not exempt owners from the corresponding obligation”. Therefore, all the owners have to contribute to expenses that are generated, according to their ownership share.

Who determines the ownership shares?

The ownership shares are determined by the developer when it establishes the Horizontal Division Deed. Although they can also be determined by a resolution passed by all the owners and by a legal decision, although these circumstances are less common.

Can the ownership shares be changed? 

Yes, if the residents want to, it is possible to change the way of allocating the property costs at an Owners’ Meeting. In order for it to be valid, it must be included on the agenda, be voted for unanimously by the owners and recorded in the Property Register by a Public Deed. Here is more information on this topic.

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