Tips on how to avoid debts when transferring a property

15 March, 2024
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Real Estate
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Neus Vallara


One of the risks to avoid in the transfer of a property are debts that, according to the law, have a real affectation on the property. These debts include those related to the Homeowners’ Association, property tax, and urban development costs. The real affectation can lead to liability for the buyer, either directly or indirectly. In this article we provide advice to help you avoid any liability.

1. Never waive the certificate of debts status with the Homeowners’ Association.

At the time of the transfer, the seller is obligated to provide the buyer with a certificate verifying the debt status with the Homeowners’ Association. Without this certificate, the Notary cannot authorize the deed of sale. However, the law allows the buyer to exempt the seller from the delivery of the certificate, which we never recommend because it means forfeiting the certification confirming the seller’s statement regarding the debt status.

It is important to note that, according to the law, the new buyer is directly responsible, even with the property itself, for the debts from the current year and the three immediately preceding years (four in the Civil Code of Catalonia). Therefore, it is always necessary to ensure that the property is up to date with payments to the Homeowners’ Association or to be aware of any existing debt, as it can also be crucial for negotiating the terms of the transfer.

2. Demand that the certificate of debt from the Homeowners’ Association be issued by the Secretary with the approval of the President.

The competent body within the community to issue certificates is the Secretary. In the case of the debt certificate from the Homeowners’ Association, the law requires that this certificate also bears the approval of the President. Therefore, always verify that the certificate carries the President’s approval, as a certificate lacking this approval does not meet the legal requirements. Consequently, it could be considered that the buyer has waived its delivery by the seller. In fact, some notaries consider this when they find that the certificate does not meet these requirements. It is important to note that both the Secretary and the President are responsible, in case of fault or negligence, for the accuracy of the information provided, as well as for any damages caused by delays in issuing the certificate. To avoid waiving these guarantees, demand that the certificate with the corresponding legal requirements is issued.

Only in the Civil Code of Catalonia it is provided that if the management of the community is entrusted to a professional who also holds the position of Secretary, the certificate may be issued solely by the Secretary without the approval of the president.

3. Demand that the property tax debt certificate be issued concerning the cadastral reference of the property and not only regarding its current owner.

In the event of the transfer of a property, the assets become subject to the payment of the entire tax fee under a regime of subsidiary liability. Additionally, the debt of the current year and the immediately preceding year to the one being claimed are considered a tacit legal mortgage. This means that the property’s debts are carried over with the property itself, and the tax authority has the means to claim them from the new owner, either directly or indirectly.

The notary can make the notarial inquiry about the property’s tax (IBI) debt as long as the Town Hall or the corresponding Tax Management Organization is affiliated with the notarial inquiry system. In case of non-affiliation, it is advisable for the seller to provide a certificate confirming that there are no property tax debts regarding the property, which must be identified by its cadastral reference. Certificates confirming that the current owner has no debts for this concept do not provide sufficient information, as they only inform about the debt status of the current owner and not of previous owners. Therefore, always ensure that the information about the property tax debt is regarding the property itself and not only for the current owner.

4. Do not accept that the seller only proves the payment of the property tax (IBI) for the last fiscal year.

Believe it or not, we have often seen in property transfer deeds that the seller declares to be up to date with the payment of property tax (IBI) and proves it by providing only the payment receipt for the last bill. But what about the debt from previous years? Just because a property owner proves they have paid the latest bill does not mean they have paid the previous ones or that there are no outstanding debts from previous owners of the property. Therefore, demand that the seller provides documentation proving the absence of debts regarding the property.

5. In the case of land that is part of a Compensation Board or similar entity, demand that the debt certificate states that there are no outstanding fees related to the property and that there are no pending expenses to be invoiced.

There are urban management entities that cover the expenses of the urbanization process but do not invoice their members until some time has passed. Therefore, it could happen that you acquire a property, and the certificate from the entity indicates that the transferor is up to date with the corresponding urbanization fees. However, after some time, the entity may invoice the expenses that were pending. Ensure the entity’s account status by requesting that the certificate confirms there are no pending expenses to be invoiced, thus avoiding future surprises.

As you can see, there are ways to avoid these contingencies. If you have any doubts or need more information, you can contact the real estate law department of MES ADVOCATS at the following link.

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