Condominium Law: Common Expenses, Retroactivity, and Obligation to Pay

The publication of a recent ruling on the retroactive application of the obligation to pay common expenses owed by a third party has once again brought the wording of the Horizontal Property Law (LPH) to the forefront. This legislation, which is essential for regulating homeowners’ associations, clearly establishes the financial obligations of a homebuyer with respect to prior debts owed to the association.

At Carlos Baño Abogados, we provide a clear and practical explanation of what this law entails, how it affects buyers, and what legal consequences arise from its application—especially in cases involving the transfer of a home with outstanding liens.

The Buyer's Liability Under the LPH

The liability of a homebuyer with respect to common expenses owed by previous owners has always been addressed by the Condominium Act. This law establishes that certain claims in favor of the homeowners’ association are given priority and that the homes may be subject to the payment of such debts.

What does "actual condition" mean?

A lien means that the property is objectively liable for the payment of a debt, regardless of who owns it. In other words, the debt is attached to the property, not to the person. Thus, when a homeowner sells their home without paying off debts owed to the homeowners’ association, the new buyer may be obligated to assume those debts.

Relationship to Other Expenses: Taxes and Utilities

Just as homes are subject to taxes and expenses such as basic utilities, they are also—by law—subject to common expenses arising from community living. The law places this category of debt on the same footing as other fundamental obligations, thereby giving it significant legal weight.

Duty to Disclose in a Sale

Currently, when formalizing a sale through a notarized deed, the law requires that the property’s outstanding debts to the homeowners’ association be expressly stated. This requirement may be waived if the parties so agree, but it is customary and recommended to request this information.

The Role of the Notary and the Administrator's Certificate

The regulation was enacted to address situations in which the buyer was unaware that the property had outstanding debts to the homeowners’ association, which led to disputes after the purchase. To prevent this, a requirement was introduced to submit a certificate from the property manager attesting to the property’s financial status with respect to common expenses.

This certificate must match the seller’s statement; unless expressly waived, its absence prevents the notary from authorizing the public deed.

Standard practice in advised transactions

In cases where we act as a law firm, we always require that this certificate be provided, as it offers legal certainty to the buyer. This ensures that any debts will be paid by the seller prior to the transfer or, failing that, that the buyer is assuming a known and negotiated liability.

Legal framework: Article 9.1.e) of the LPH

This is set forth in Article 9.1.e) of the Condominium Law:

“In the public deed by which the residence or premises is transferred, for any reason, the transferor must declare that they are current in the payment of the homeowners” association’s common expenses or specify any amounts owed. The transferor must provide, at this time, a certificate regarding the status of debts owed to the homeowners’ association that corresponds to their declaration; without this certificate, the execution of the public document may not be authorized, unless the transferor is expressly exempted from this obligation by the purchaser.”

Situation Prior to Law 8/2013

Prior to the reform introduced by Law 8/2013, the regulations already provided that the purchaser was liable with the property itself for certain debts arising from the obligation to contribute to the community’s general expenses.

Time limits

Liability was limited to:

• The portion of the annuity that had already accrued at the time of the acquisition.
• The immediately preceding calendar year.

These claims were considered preferential for the purposes of Article 1923 of the Civil Code, taking priority over other claims (except for wage claims). This legal framework formed the basis for many claims filed prior to the reform.

Acquirer's Liability

The law stipulated that even if the buyer had a title registered with the Property Registry, the property itself served as security for these debts. The apartment or commercial space was legally subject to enforcement, reinforcing the principle of real security against third parties.

Changes Following Law 8/2013

With the entry into force of Law 8/2013, Article 9.1.e) was amended to expand both the purchaser’s liability and the period of first refusal for the homeowners’ association.

New deadlines for affected parties

As of June 28, 2013, the priority of community credit and the acquirer’s strict liability have been extended to:

• The annuity in effect at the time of purchase.
• The previous three calendar years.

This change significantly increased the financial risk for buyers of condominium units, making it even more important to obtain a debt certificate before signing.

Difference between a lien and a real encumbrance

It is essential to distinguish between:

• Actual condition: The debt is attached to the property, with no time limit from the date of transfer. It does not expire on its own.
• Credit privilege: The community may have priority over other creditors, but this priority is subject to time limits and may expire if it is not registered with the Registry.

Key Date: The Broadcast

The key date for calculating the three annual installments is the date of transfer. Regardless of when the claim is filed, liability falls on the purchaser if the transaction was finalized after June 28, 2013.

Previous Mortgages and Liens

If there are prior mortgages or liens, they will be enforceable only to the extent that they do not impair the community’s preferential claim. Since the reform, this preference has been extended to a longer period, which strengthens the community’s position vis-à-vis third parties.

DGRN Policy

The General Directorate of Registries and Notaries has reiterated that failure to register the claim may cause the community to lose its priority in collection over other creditors. Therefore, registration is key to ensuring the collection of prior debts.

Controversy Resolved by the Supreme Court

In a ruling dated May 20, 2025, the Civil Chamber of the Supreme Court resolved an issue that had not previously been addressed in case law: the temporal applicability of the new Article 9.1.e) to acquisitions made after the reform.

Background of the Case

A homeowners' association demanded that the purchaser of a home pay the debt for the current fiscal year and the three preceding calendar years. The property had been purchased in October 2014.

The court of first instance ruled in favor of the community, but the Provincial Court partially upheld the buyer's appeal and excluded the debt corresponding to 2011 and certain special assessments.

Appeal to the Supreme Court

The community filed an appeal to the Supreme Court, arguing that the temporal application of the reform had been misinterpreted. The Supreme Court granted the appeal, finding that it warranted review, since there was no prior case law on the matter.

Supreme Court Rulings

The High Court ruled that the application of Article 9.1.e), as amended by Law 8/2013, is valid in cases of acquisitions made after its entry into force. Consequently, the buyer in 2014 was required to assume the debt for the current year and the three preceding years.

The court ruled out the possibility that this constituted prohibited retroactivity, applying the legal principle “tempus regit actum”, which states that every legal act is governed by the law in force at the time it is performed.

The Opinion of Carlos Baño Abogados

From Carlos Baño Law Firm We would like to point out that the 2013 reform significantly expanded the buyer's liability regarding community fees. Therefore, it is essential to proceed with caution and be well-informed before purchasing a home.

We recommend always requesting an up-to-date certificate from the property manager before signing the purchase agreement. This document provides information on the status of any outstanding debt and, if necessary, allows you to negotiate its settlement with the seller before the transaction is finalized.

At our office in real estate law, located in Alicante, we advise buyers, sellers, and homeowners' associations to ensure safe and smooth transactions.

You can find us at Google Maps or visit our website directly to request personalized advice.