Recovery of Community Debts

 Happy New year to all;

The community problem of owner's debts reflects in the administration of the community as the administrator should have had a time line policy on action to collect fees at the AGM or a EGM of the community. The members would from the advice of the administrator empower him/her to take legal action against all those who had not paid once a debt became aged of the agreed time limit ( normally 6 months ). This authority from a formal meeting is required by the Spanish courts to commence any action. 

In terms of options these must be considered by a study of the debtor.

If resident in Northern Europe the European law can be used to good effect ( Denmark not included) at low cost ( around 200€ per demand) in their home country. The need for a study is required to establish what the asset value of the debtor is in both his own country if non- resident & in Spain.If the property in Spain is belonging to a Spanish resident ( Nationality has no baring) then the legal action in the courts will cost around 1500€ per case.This will only be stage one as you state embargo proceedings to the property are required which is a second stage with a similar fee involved.The legal costs of both can be claimed additionally but again often in another action but of less legal cost.

If the embargo is against a mortgaged property then it is not as effective unless there is substantial equity as the first charge holder is in control of the sale & has first call on all funds.I have recently been involved in a case where a 20,000€ community debt against a property free of charge was refused a sale order by the judge as the value ratio was 10:1 of the debt.Hence before expensive legal costs are incurred by the community it must establish if it has a chance to recover the debt.Embargos are a good option on the basis of a sit & wait policy but with property values having plummetted it may be a long time before sales start to move at higher prices when the embargo could be disharged by payment.There are other embargos available to debtor's bank accounts , cars & earnings which can prove a shorter period of recovery time.Again these options should have been made available to the members in their meetings.

It does lead one to conclude the Spanish system does favour the debtor but no action will inevitably lead to no result.

Finally  the time of the court proceedings depends on the type of action ( defended or undefended). Each court differs but most defended cases are heard within a 1 year to 18months time frame.Undefended are as quick as 6 months.

I hope this helps.

F.Parkinson  Administradore

I can sympathise with Mike and I find it terribly frustrating that there seems little we can do to resolve the situation

We are a small community of 31 apartments and because of some owners who have simply refused to pay we are now being forced to pay additional fees otherwise the lift maintenance and pool maintenance will cease to start with and then God knows what after that.
One Spanish owner has never paid since he moved in 7 years ago (when the apartments were built) and still blatantly comes in with loads of his family and uses the pool even though he doesn't live here now and rents out the apartment to another Spansih family.

Proceedings have been taken against him in the courts and as far as I can see has been going on for 3 years even though it seems from the law it should be a quick process. I am told that it is a quick process but the courts are then so busy that you have to wait years for a ruling. Then the apartment can be sold and the debts cleared (well 2 years worth anyway).

Other owners (who have mortgages) have handed their keys back to the bank who have done nothing to accept ownership so once again community fees are being unpaid and indeed were unpaid before the particular owners defaulted.

It's a bit of a mess and some of the owners who do pay are seeking some sort of retaliatory action against the ones who still use the communal areas but the law will not allow it as I have told them but they are inclined to change locks etc so they will not be able to use the pool or the roof terrace. Also one of them is saying that he will just stop paying as well as nothing seems to happen to those who don't.

I simply wondered if anyone else has had similar experiences (particularly in Almeria) and if they found some way to sort it. But the truth is that we will all to have to pay more now anyway as there is nothing left in the bank and creditors to pay.

Perhaps a Spanish debt collector would be an option.

Difficult situation you face Mike with your problems of debtors impairing the the community of owners being able to continue the supply of services you are duty bound to your owners.

My first advice to communities is to try to understand the financial running of a commuity is a mirror image of running a business.The members must understand that if their fees are not paid this will only lead to the other paying members having to increase their share of the running costs which in turn will increase the debtor's indebtness.In treating the financial running like a business the board with the administrator must pay attention to the outstanding debtors of the community and seek by way of individual study of each a method of collection.Communication with the debtor is primary as from here a negotiated payment structure can be achieved.In the case where communication fails then the study needs to move on to how can the debt be most effectively collected.This point of the study needs to consider the residence of the debtor & the costs implications.If the debtor is a UK resident ( and most north European countries( Denmark excluded)) then a quick & effective method of collection can be made via the county courts using European law by a specialist lawyer or debt collector.The costs are not expensive & can be recovered with the debt in a 10 week programme.If the member is Spanish resident then the system is less effective in time and more costly in the courts ( average 1500€) and whilst some lawyers will take the case on a 10% deposit of costs the community must pay the account at sentance point in the future whether the debt is recovered or not.Hence these costs must be shown in the liabilities section of the community accounts.I use Spanish debt collectors first who have been effective in some cases without up front fees & only have a right to  the debt collection for 3 months.If  they areunsucessful the study can decide if to proceed with legal action depending on the debt size to the cost ratio risk but with more historical knowledge.

The most important factor is for the administrator to be on top of the debtor before the outstanding balance becomes a a problem to the commuity's finances.

I hope this helps.

F.Parkinson .  Administradore

Our community "enjoys" communial supply of hot water and air con/heating. One service uses gas oil and the other electricity. We also have a number of serious long term debtors (the majority UK based) Recently due to lack poor cash flow and the cost of repairs to the system, the community has been forced to "ration" both services on the basis of those owners who are paying their fees and those who are seriously behind and are indeed currently in the courts.

One long term renter who rents from a serious debtor has contacted the community via his solicitor and advised he will commence legal action as his human rights are being denied through a lack of basic services.

At present we seem to be in a no win situation. Tacking the correct route via the courts to recover the overdue community fees appears to be a waste of time and while this lengthy process continues the debts continue to rise. We cannot withold services that are not being paid for to those apartments whose owners refuse to pay their fees. While the community heads towards a serious financial situation, the owners who really suffer are those who are paying their fees, but who find their quality of life in the community being seriously reduced due to the actions of the debtors.

Our current lawyer seems to lack any alternative suggestions other than to continue through the courts.

We seem to be at a dead end, any suggestions from owners who have experienced these type of issues and who have found a way out of the maze would be very welcome.

 The Spanish LPH community law provides for the collection of a community debt against a new property owner for the current year they purchase & the previous year before they purchased.The debt to the original owner is joint and several with the new owner for the previous year & up to the date of sale ( hence either party is liable in the periods I quote). The debts if with a existing owner are collectable within the 4 year time bar but would normaly be charged to the property deed on completion of legal proceedings by embargo prior to time bar & hence the debt is secured then on the property until paid.

F.Paarkinson Jacksons Administradores SL

 Hi is it true that you can only recover community debt up to a few year and not all years that are owed?irene

Hi All,

This thread appeared to have gone off kilter, as the original posting was 'is there a quicker way'. As the economy in Spain gets worse even the 'fast track' is becoming bogged down and we are beginning to see the inevitable slow down. More businesses go under, more people fail to pay their bills and Courts are working at maximum as the case time lengthens. As well as taking an inordinate time the fees are growing ever bigger. This makes the debt ever harder to collect as it grows out of proportion to the fees owed.

There is, however, a faster, cheaper option. It takes weeks not years. It is quick, effective and efficient. It is available right now. Anyone who is interested PM me and I will put you in the picture, or give google a try.

EH       europeancommunityfees

Thank you for the response and your support Mr Parkinson. It is greatly appreciated.

At present we are going through the process to become members of CIVEA, (Civil Enforcement Association) and the CSA (Credit Services Association).

These organisations have strict codes of practice and standards to adhere to. We work with over 300 clients and have from the outset ensured we work to our own strict guidelines but we feel it is important for us to be part of organisations that can regulate our work and aid the continual development of the people we employ.

We have looked into similar bodies that operate in Spain, and have come into contact with FENCA and the ECA (European Collectors Association) and we will be exploring membership with those bodies. We would be grateful, if anyone could recommend any other professional bodies that operate in Europe.

Hope this helps.

Stephen

 Thank you Stephen for a very honest & transparent answer to the posts raised on here about your company.

As a administrator of predominently English speaking led communities I have used your company along with other debt collection agents. I have found your company reliable & professional to use.

I would  also point out that to know that you are a qualified solicitor regulated by compliance to the Law Society rules of conduct gives me confidence that I have a properly legal qualified person to act. You must then perform within a strict set of compliance rules with regard to handling client monies & service procedures including making sure clients know what they are to be charged for at the instruction point of each case.

With out condoning your historical matter but speaking as the former senior partner in a firm of property consultants & chartered surveyors regulated by 2 professional bodies. I had to have case management systems employed in my practice to monitor my junior partners performances & work loads with all client cases. It is unfortunate that your previous senior partner did not employ the same diligence for the clients of his practice & well being of his junior partners.

Finally I would be interested to receive any information on the professional bodies of debt collectors both UK and Spain to establish what qualifications they need to operate & what recourse there is on client monies & disciplinary matters with regard to codes of conduct.

F.Parkinson Jacksons Administradores SL

Hello everyone, 

Perhaps Justin can clarify as I have no idea and was just wondering if there was some cause for concern with this individual, especially as the EOS article brought attention to this company.

 ads, the page you refer to has diappeared. was it this chap? 

http://www.lawgazette.co.uk/in-practice/sdt-decisions/stephen-paul-kettlewell

Just wondered if this might be some cause for concern or not?

When the list of debtors was handed over there were no up front fees. Any fees were to be charged to the debtor and collected by the recovery agents.

Over the past year their business has expanded rapidly ( presumably ) and they can not afford not to charge fees so are charging 50€ initially per debtor ( which will/may be recovered from the debtor ( if they pay ) but the Community must pay this upfront and the cost of any fees from the Court plus interest.

That is all very well had it been agreed at the outset but to spend this kind of money necessitates agreement from the Community of Owners. It was agreed by the Owners to use this debt collector but at that time there were no up front fees so the Community had not agreed them..

 I assume Kettleworth were challenged about these invoices!

It would be interesting to know their reason for them, before we sign up with them.

Over a year after placing debtors with the company mentioned below we have had nothing except invoices from them for monies not agreed prior to them taking on the debts.

 Thanks for your input guys, good to hear Kettleworths are having success outside Spain.

PS Google Kettleworth Solutions for web page

Still not sure if there is an alternative or quicker approach for chasing Spanish debts as previously mentioned we have been advised our local courts are taking 3 years, not very helpful as any new buyer or return to bank are only liable for 2 years debts, which potentially means a lot of write offs in some communities.

You mention Steve Kettleworth on this thread.

Could you please display his contact details in order that I may alert our community President that this may be someone who can actually recover some, if not all, of our outstanding community fees debts?

Thank You.