What are the obligations of a property owner in Spain?

When it comes to buying or selling a property in Spain, most foreign buyers and sellers employ the services of a local real estate agent, that will tell you what the obligations of a property owner. The choice of agent(s) will have a significant influence on the success of your purchase or sale. Dealing with the wrong people can be costly and it is vitally important to rely on experts in the real estate market who are not looking out for their own interests but for those of you, the prospective buyer.

It is highly recommended that you purchase home insurance to safeguard your investment. You, as the owner of a property where you intend to reside, rent or spend long periods of time, must, above all, be able to maintain the asset with the peace of mind that, in the event of any unforeseen situation, a home insurance policy will be able to cover most of the unforeseen events that may occur.  In addition, as time goes by, it is likely that your home will face at least some of the dangers covered by home insurance.

When you have adjoining neighbors and/or live on the floor below, you should consider taking out homeowners insurance, as you may affect them by causing significant damage for which you are directly responsible, such as having a water leak and causing dampness in other neighbors.

Tenants are not obliged to take out home insurance. However, it is recommended that they take out a home insurance policy that covers the contents of the home to insure their belongings and that, on the other hand, includes civil liability coverage in case it causes damage to third parties.

Community of owners

Refers to a group of owners who, in addition to having sole ownership of a dwelling or premises, are co-owners of a set of elements that are shared by all members.

Each apartment or premises is assigned a participation quota based on the overall value of the building, which is used to calculate what proportion of the community expenses each owner is responsible for. When a person buys, inherits or otherwise acquires an apartment in Horizontal Property, he does so with respect to both objects, i.e., not only the apartment but also, and collectively, a certain share of the common elements.

In the meantime, a document that identifies the building in general and each apartment or premises in particular, identifying the extension, the plan and the annexes, is the title deed of the Community of Owners.

The participation quota of each floor or premises is determined in the title deed of the Community of Owners, depending on the useful surface area of each floor or premises in relation to the total of the building, its interior or exterior location and the use that the owner in question is presumed to make of the common elements.

In general, it comprises the bylaws of the Community of Owners, which regulate the use of the building, its floors and premises, facilities and services, expenses, administration, conservation and maintenance, among other things. The laws can only be modified if all the co-owners agree.

In addition to legislation, a group of owners can establish rules governing coexistence and the correct use of shared services and property, called “rules of internal regime”, which are mandatory for all co-owners.

Garbage collection in Spain

Although in Spain at the national level there is no garbage tax, this does not mean that residents do not contribute to the garbage collection service. Town councils in Spain have the authority to control how and how much they charge their residents for this service, and although the imposition of a fee is the most common method, it is not the only one.

Most cities charge a separate fee for the garbage collection service, but there is no agreement on the amount or the factors taken into account in calculating it.

There are two types of garbage fees:

Fixed rate

All inhabitants of Girona, Pontevedra, Murcia and Melilla pay a fixed rate, regardless of the size of their case or the type of waste management to which they have access. This fixed fee is usually paid once a year for a set payment period and is revised significantly each year as allowed by the local government.

Girona, Pontevedra and Palma de Mallorca have some of the most expensive fixed fees, with prices exceeding €120. Melilla, on the other hand, charges its residents less than €50.

Variable rate

Many cities have garbage fees that vary depending on a number of factors that are taken into account when determining how much each resident pays. As indicated by the municipalities, some streets pay more than others, depending on factors such as the type of home, the population of the region, or the number of containers required. The number of people living in a house is assessed based on water consumption, and the amount of the garbage rate is assigned to that house accordingly.

More obligations of a property owner

In addition, if you own a home, business or garage, you should know that you are liable for a number of taxes. One of them is the Real Estate Tax.

The Real Estate Tax is a direct call tax levied on the owners of rights to real estate in the municipality that collects it. Municipalities are responsible for this cost, which is included in the municipal rates.

In other words, when you buy a property, whether it is an apartment, a house, commercial premises or a garage, you must register with the Dirección General del Catastro and pay the Impuesto sobre Bienes Inmuebles annually.

In general, the cadastral value of a property is determined by a set of declarations of values:

  • The geographical position of the property.
  • The current market value of the land or property.
  • The urban characteristics of the land.
  • The cost of the construction materials.
  • The age of the structure.

This value is updated annually, and can be paid to the town hall in a single payment or in 4 installments per year. There is also the possibility of paying this tax by direct debit, and in this way, not worrying about the possible non-payment of the same, which would generate interest and therefore, a higher cost.

At Orience, we not only advise our clients on the costs associated with the acquisition of a property, but we also manage on their behalf the payment and fulfillment of all obligations so that they do not incur in non-payments and can not worry about the management of their property.