Sunday, April 18

‘The community’: what homeowners in Spain should know about homeowners associations


The issue of Community is thorny in Spain itself because everyone always has a strange and wonderful story about someone with whom they live in a community setting.

And it’s not just for people who live in apartments, you will often find that there are community costs with the houses that we will look at as well.

If you live in a community and you don’t have a story like this, the neighbors think you are the story, “the English-speaking stranger who lives on the fourth floor and nobody knows what they’re doing.” There was even a movie made by Alex de la Iglesia starring Carmen Maura about these weird things and the events in them.

Indeed, the vast majority of properties in Spain are sold in freehold, which means that you are the absolute owner, but obviously if you have an apartment in a building, you only have a percentage of the freehold that is decided on a basis percentage. What percentage of the total property does your apartment represent? It depends on the percentage of the size of the entire building that your apartment comprises.

All construction fees for each month are estimated so that the community has a slight surplus. Let’s say that the costs of construction, electricity, elevator, insurance, cleaning, etc … amount to € 900 per month and there are 30 floors in the building.

The community will charge around € 1200 per month and will divide it between the building doors and make sure they have a small surplus (this becomes important later on). So if we assume that all the apartments are the same size and the same percentage of the whole building, each door will pay € 40 per month. Usually this money will be debited directly from your bank account every three months, which means a quarterly payment of € 40.

Surplus

The extra money each month goes to the bank like a float for when problems arise with the building that need attention. For example, every ten years or so, the community may decide that the facade looks a bit dirty and needs a good paint and they use the surplus to avoid having to ask each owner for an extra amount.

He pours

The spill (cast) is the most hated in the Spanish community environment along with “the boy who loves flamenco loudly on the second floor”.

Sometimes the costs increase because a major repair is necessary to the building and it is not something covered in the insurance policy that the owners take out to take care of the civil liability and accidents in the common areas. This is called “spill”. In these cases, the community has a meeting of all and decides the action to take. Usually there is an agreement on the necessary steps and the community will obtain three estimates for the work to be done before handing it over to the brother-in-law of the current head of the community.

When you are buying a property, your attorney should verify how much the monthly community fee is and if there is a current “spill” or any future work for which you will be responsible when purchasing the property.

So far so good! It sounds easy right?

How much is the community worth?

How long is a piece of cord? Community costs have many variables. We have seen community expenses from 6 euros per month, or even zero in some cases, up to 600 euros per month in a peripheral case. Obviously, these numbers can affect your decision to buy a property or not. We will start with the basic costs and then see how the costs increase according to certain facilities and situations in the buildings.

A basic community cost of about € 10 per month will be found in the following situation, in a flat without an elevator, where neighbors are expected to take turns cleaning their part of the stairwell every two weeks and where Pepe from number 6 does all the paperwork because you are retired and you have time to do it and you don’t mind doing it.

Pepe, in this case, is the most powerful man in the building that you don’t want to fight with and everyone secretly hates despite the fact that he solves all the annoyances that arise with the building.

You take your money to Pepe’s door every month and he gives you a handwritten receipt on yellowed paper from a ledger that he has used for years. Let him know that if he is even two days late with payment, everyone in the building will know by “whispering” and within three days a note will be placed on the staircase that “The English-speaking person at door 7 has not paid his fee community this month, becoming a leper in the community for the rest of the time.

Photo: Andrés Corredor / Pixabay

What influences the costs of the community?

Pay higher community costs in the following situations.

There is no Pepe. In theory, you become the Head of the Community by default once every ten years in a building with ten apartments. If you are unlucky, the community will have another treasurer job than it does every ten years. If the community agrees that Pepe can do it and Pepe agrees, then you have the above situation. If there is no Pepe and the people do not feel like doing the work, then the community by majority vote can decide to hire a “manager” to do the community work. The manager, often called Pepe, will take care of any issues that arise from the building and make sure everyone pays daily, however this comes at a cost and can increase the community fee by 10-15 euros per month.

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The elevator

The biggest cost in most buildings is the cost of running the elevator. It causes an increase in the cost of cause electricity in the common areas and also requires a great maintenance contract so that people are not stuck in the elevator for days and days if it breaks down … and believe me it will. Mr. Schindler will do periodic checks on the elevator that also costs. Expect a building with an elevator to have a minimum community fee of 30 euros a month, even if they have a Pepe who takes care of the accounts.

If there is no elevator and the community by majority vote decides to put one up, the community costs could increase enormously. Not for the monthly base cost but for the cost of installation. Again, the community will get three binding quotes valid for a couple of years. Let’s say that the installation of an elevator costs € 60k. If there are twenty apartments, normally each apartment would have to pay € 3000, even those on the ground floor. This is not expected next month. The community will set up a “Spill” quarterly where each door will pay perhaps € 300 extra per quarter. Once the amount reached is enough to pay the installer the first part of the money, the work is likely to begin. Sometimes the installer will be able to finance the rest through a bank loan with the guarantee of the contract with the community.

If you don’t want an elevator and you don’t want to pay, but most do, then too bad, you’ll stand still. However, it will have a key system and you won’t be able to use it until you make your purchase, which generally costs more than originally deciding to pay.

In some buildings, the upper floors pay a higher amount for the installation of an elevator as they get an additional benefit. An apartment on the fifth floor receives far more benefits (and greater value) from an elevator than an apartment on the first floor. The ideal investment property is a fifth floor with no elevator where you are going to install one, you will almost instantly have a 50% increase in value! However, they are difficult to find.

The goalkeeper

Because it is almost always a man! Sometimes you walk into a building and someone is sitting there, monitoring everyone going in and out of the building. The concierge is becoming less common over the years, but they can still be seen especially in some of Valencia’s more opulent buildings and those with many offices. If your building has a doorman, keep in mind that the doorman must be paid, and this comfortable job often pays very well. It used to be lower paid as the doorman lived for free on the rooftop “Doorman’s Floor” and worked for less as they had free accommodation. These days, most janitors don’t live in the buildings they “guard”.

Photo: Ra_fus / Flickr

And what do they protect the building from? Street vendors, deliveries (which they will usually sign and receive), cluttered hallways and stairs, and helping older residents with litter and other issues. The doorman is the first to know if someone has a problem, be it medical or in your marriage, and is always the person you want to be friendly with if you visit that building frequently.

The installations

If you have a community pool, gym, paddle or tennis court, garages to keep clean, gardens, and more, then you can expect to pay more. These things need cleaning, maintenance and general care. However, this is usually not too much, as ten-story apartment blocks do not usually have all these facilities. The cost is usually divided among many apartments, often hundreds, which means that the actual price increase is usually not excessive.

Insurance

As the building ages, more things are likely to go wrong and the community needs to be insured in case things go wrong, such as a concrete slab falling over and killing someone underneath. Older buildings cost more in insurance and buildings that are not cared for by the community also have this problem of higher costs over time. However, Spanish buildings are quite solid and generally there are not many problems with them so insurance costs can remain the same for years as no claims are made.

You will still need individual property insurance for things that go wrong in your own apartment and accidents that may occur along with contents insurance, but again, this is quite cheap in Spain.

Houses

Not in all cases but sometimes you have community expenses in the houses you buy. This can be for something as simple as the farm having a party committee in the local park each year and it will be voluntary (but expected). But if your home has a shared swimming pool, gardens or sports facilities or the farm has security or social clubs and community bar, then there will be a cost.

Who runs the community?

It does, at least in part. The community is run by those who want to be involved in running the community, maintaining the building, and keeping up with everyone’s gossip. But as we all know, the real answer is that Pepe does.

Stock photo: DIANA Neighbors Association

Comparative costs

We get clients from the United States laughing at the ridiculously low costs of community fees in Spain compared to Homeowners Association costs and condo fees there. We have British clients with no concept of these fees, but the rest of Europe seems to understand and agree with the system here. Comparatively, Spain is very cheap for community expenses and people are used to living in the community, so they generally have a relaxed attitude towards the community. If you want to see what happens when things fall apart, then Watch the movie.

Graham Hunt is a real estate expert with years of experience in the Valencia property market. You can read more of his articles on his website. Property in Valencia.




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