Sometimes a property has been financially abandoned

When buying a property in Spain, most people concentrate on the purchase price, the condition of the house and the location.

But what about the bills that haven't been paid?

At Casas Connect, we've come across properties where the previous owner has allowed significant debts to accumulate. Sometimes it's because of a personal situation. Other times, it's a holiday home that hasn't been used for years and has gradually been forgotten about.

We sometimes describe these properties as being financially abandoned.

And something we've noticed over the years is that when there is a substantial unpaid electricity or water bill, it's worth investigating everything else very carefully. There may also be outstanding council tax, community fees and other debts.

This is why checking the paperwork and obtaining up-to-date debt information is such an important part of the buying process.

1. Unpaid electricity and water bills

One of the first things we check is whether the electricity and water accounts are up to date.

If there are outstanding bills, we establish how much is owed and whether the supply is still active.

Where the supply remains active, a change of account holder is generally possible without the new owner having to pay the previous account holder's personal electricity debt. However, this needs to be distinguished from a property where the supply has been disconnected or the meter removed.

We've encountered properties where the outstanding debts were so substantial that the utility companies had removed the electricity and water meters.

In these situations, simply paying the old bills isn't necessarily enough.

We may need to:

• Contact the relevant supply companies.
• Provide the required property and ownership documentation.
• Arrange payment of outstanding debts.
• Pay additional reconnection or meter reinstallation charges.
• Coordinate the work required to restore the supplies.

This can become a lengthy process, depending on the companies involved, and it can mean additional costs for the seller.

Who should pay for reconnection?

At Casas Connect, we like to include a clear condition in the contrato de arras (reservation or deposit agreement).

We aim to establish that the seller is responsible for handing over the property free of outstanding debts and with the utilities connected.

That means any costs associated with reconnecting supplies or reinstalling meters should be the seller's responsibility, as agreed between the parties.

Where supplies have been removed, our preference is to have everything reconnected before completion, even if this means moving the completion date slightly.

However, every transaction is different. If the buyer is fully informed, understands the work still required and agrees to proceed, it may be possible to arrange a suitable financial retention and continue the work after completion.

The important thing is that the buyer understands exactly what they are agreeing to.

2. Outstanding IBI / SUMA (Council Tax)

IBI, commonly known as SUMA in many parts of the Costa Blanca, is the annual property tax paid to the local authority.

This is one of the debts we pay particular attention to because unpaid IBI can affect the property itself.

Under Spanish tax legislation, a property can remain legally attached to unpaid IBI liabilities following a change of ownership. This is why it is important to investigate outstanding amounts rather than simply relying on the seller's confirmation that everything has been paid.

With the seller's signed authorisation, we can request a breakdown directly from SUMA, showing:

• Which years remain unpaid.
• The original amounts due.
• Any accumulated interest or surcharges.
• The total outstanding balance.

We've dealt with a property where approximately four years of IBI had accumulated. By that stage, the additional interest had made the debt considerably higher.

Although an embargo had not yet been registered, the amount was significant and we wanted to avoid any potential complications.

In that case, we required the outstanding debt to be paid in full before completion.

For smaller amounts, depending on the circumstances and the agreement between the parties, it may be possible to retain the necessary funds from the seller's proceeds at completion.

For larger debts, particularly where enforcement action may be approaching, we prefer to have them cleared beforehand.

3. Outstanding community fees

If the property forms part of a community of owners, we also contact the community administrator as part of our checks.

We explain that the property is being sold and request information about:

• The community fees and payment frequency.
• Whether the seller is up to date.
• Any outstanding balances.
• Any other relevant amounts due.

We also request the community debt certificate required for the notary.

This is particularly important because community debts can affect the buyer.

Under Article 9.1(e) of Spain's Horizontal Property Law, the buyer can be held liable against the property for certain unpaid community charges relating to the current calendar year of purchase and the three preceding calendar years.

This means that even though the debt belongs to the previous owner, the property itself can be affected.

For this reason, we don't recommend simply taking the seller's word that the community fees are paid. We obtain confirmation directly from the community administrator.

4. What about mortgages, embargoes and other registered charges?

As part of our wider conveyancing checks, we also review the property's Nota Simple from the Land Registry.

This helps us establish:

• Who legally owns the property.
• The registered description of the property.
• Whether there are registered mortgages.
• Whether there are embargoes or other registered charges.
• Whether there are relevant registered tax-related charges.

These checks are separate from requesting up-to-date utility, SUMA and community debt information.

A Nota Simple is an important starting point, but it does not replace direct confirmation from the relevant authorities, utility companies and community administrators.

If an embargo or other registered charge is identified, it must be investigated and dealt with appropriately. We would not simply assume that it will disappear when the property changes hands.

5. What happens if the debts are discovered before completion?

It depends on the type and amount of debt.

At Casas Connect, we look at each situation individually.

For smaller outstanding amounts, we may agree a retention from the seller's proceeds at completion. This means the necessary funds are held back to settle the agreed costs.

For larger debts, particularly outstanding IBI or matters involving potential enforcement, we prefer the seller to clear the debt before signing.

Where electricity or water meters have been removed, we generally recommend arranging reconnection before completion, even if this means a short delay.

Ultimately, the buyer needs to know what is outstanding, what needs to be done, who is responsible for the costs and whether completion can safely proceed.

6. Don't wait until completion to discover a problem

One of the most important things we can recommend to anyone buying or selling property in Spain is to start checking the paperwork early.

A property may look perfectly maintained, but that doesn't necessarily mean all its bills have been paid.

Likewise, a seller may genuinely believe everything is up to date, particularly if the property has been empty or used only occasionally.

At Casas Connect, we don't just wait until the notary appointment to discover these issues. We investigate them as part of the sales and conveyancing process, giving us time to identify problems and agree how they should be resolved.

The aim is simple: to make sure the buyer knows exactly what they are purchasing and that the seller understands what needs to be settled before handing over the keys.

Frequently Asked Questions

Can I become responsible for the previous owner's unpaid community fees in Spain?

Yes. Under Spanish Horizontal Property Law, the buyer can be held liable against the property for unpaid community charges corresponding to the current calendar year of purchase and the three preceding calendar years.

Can I inherit unpaid IBI or SUMA when buying a property?

Unpaid IBI can affect the property following a change of ownership under Spanish tax legislation. Always request an up-to-date debt breakdown and establish whether there are outstanding amounts before completion.

Do I have to pay the previous owner's electricity debt?

Generally, no, where the electricity supply remains active and you are simply changing the account holder. The previous account holder's personal debt does not automatically transfer to you. If the supply has been disconnected, the situation may be different and should be checked with the supplier.

What happens if the electricity or water meter has been removed?

You may need to contact the relevant supply company, provide documentation, arrange any outstanding payments and pay the applicable reconnection or meter installation charges. The process and costs depend on the supplier and circumstances.

Can the seller's debts be deducted from the sale proceeds?

Yes, where the parties agree and the arrangement is properly documented. A financial retention can be used to cover certain outstanding debts or costs, although larger debts or registered charges may need to be cleared before completion.

Should I check community fees before buying a property in Spain?

Absolutely. Request a current community debt certificate from the community administrator. This helps establish whether there are outstanding fees and protects the buyer against potential liabilities.

Buying or selling on the Costa Blanca?

At Casas Connect, we believe that a successful property sale is about much more than finding a buyer and agreeing a price.

It's about checking the details, identifying potential problems early and making sure everyone understands what needs to happen before completion.

Whether you're buying or selling in Algorfa, La Finca Golf or elsewhere on the Costa Blanca, our team can help guide you through the process.

Casas Connect – Connecting People & Property, Perfectly.

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