Mortgages, debts and embargoes that come with a property

Terms used

• Nota simple — The nota simple is a short extract from the property registry showing the owner and any mortgages, embargoes or other charges.
• IBI — The IBI is the yearly property tax paid to the town hall.
• Embargo — An embargo is a court-ordered attachment on a property to secure an unpaid debt, registered against it.
• Derrama — A derrama is a special levy the community of owners charges for works or extra costs.

Key rules

• Embargo or mortgage: Do not buy with an embargo or mortgage still on the property unless it is cleared at completion or enough of the price is held back to cover it.
• Community fees: As new owner of a flat, you are liable with the property for community fees due in the current year and the previous three years, even if the seller agreed to pay them.
• IBI: The town hall can claim unpaid IBI from you for the year of the sale and the previous three years.
• Paying the seller: Paying the seller does not clear a creditor, so pay the bank or creditor directly at the notary.

Debts follow the property, not the seller

Some debts stay attached to the property after you buy it. You find them before you sign, using the nota simple and certificates, and you clear them through the deed at the notary. Do not buy with an embargo or mortgage still on the property unless it is cleared at completion or enough of the price is held back to cover it.

How to find the debts

• Nota simple. This is a short extract from the property registry. It lists the owner and any mortgage or embargo registered on the property. Get it early and read it again just before completion.
• Certificate from the community. For a flat, the seller must give you a certificate that fees are paid. You can waive it, but that is rarely wise.
• IBI receipts or a town hall certificate. Ask for the last four years of receipts, or a certificate of no debt from the town hall.
• Questions about special levies. Ask the community about approved derramas and pending works.

The documents and checklist below list exactly what to request.

Mortgages

A mortgage on the seller's property is normally paid off from the sale price. The usual steps are:

1. The seller gets a certificate of outstanding debt from their bank.
2. At the notary, you bring a bank cheque or transfer in the bank's name for that amount. The rest of the price goes to the seller.
3. The bank signs a deed of cancellation of mortgage, at the notary or later. It is then presented to the property registry, which deletes the charge.

The debt must be paid at completion. The cancellation paperwork itself can follow the sale deed. Cancellation has notary, registry and gestor costs, and the amounts depend on the bank. The bank pays the tax on the cancellation itself.

You can also take over the seller's mortgage instead of cancelling it. That needs the bank's agreement, so ask the bank early.

Embargoes

An embargo is a court-ordered attachment on the property for an unpaid debt. It stays registered after you buy. The creditor can still enforce it against you as the new owner, and you could lose the property at auction. Charges registered earlier rank ahead of later ones.

Require that it is cleared before or at completion. This means paying the debt, then cancelling the entry either by court order or with the creditor's consent. You can pay the creditor directly at the notary out of the price. Paying the seller alone does not clear it.

Unpaid IBI

IBI is tied to the property. The town hall can claim unpaid IBI from you for the year of the sale and the previous three years. Agree with the seller in the contract how the current year's bill is split by time of ownership. In the Basque Country and Navarre the rules have their own version of this, so ask there.

Community fees and special levies

For a flat, you are liable with the property for community fees due in the current year and the previous three years, even if the seller agreed to pay them. The seller stays personally liable too, but the community can come after the flat.

For a derrama, the owner when each instalment falls due normally pays it. You and the seller can agree something different in the contract, for example that the seller pays every derrama approved before completion. That agreement binds only the two of you, not the community. Have a lawyer check the wording.

A template below helps you request the no-debt certificate from the community administrator.

Choosing between options

Who pays a special levy (derrama) approved before you buy?

• Leave the default: Choose this if the contract says nothing. The owner when each payment falls due pays it, whatever the approval date.

• Make the seller pay in the contract: Choose this if a levy was approved before completion and you want the seller to pay it, even for instalments that fall due after you own the flat.

If a levy was approved before completion, write who pays it into the purchase contract. This binds only you and the seller, not the community, which can still claim from the owner of the unit.

Documents you need

• Certificate of outstanding debt (certificado de deuda pendiente), issued by the seller's bank, when the property has a mortgage. It gives the amount to pay the bank at completion.

• Deed of cancellation of mortgage (escritura de cancelación de hipoteca), signed by the bank at the notary or later. It is presented to the property registry to delete the charge.

• Certificate of no debt from the community of owners (certificado de estar al corriente de pago), issued by the community's secretary with the president's approval. The seller must give it to you at the sale unless you waive it.

• IBI receipts (the yearly property tax) for the last four years, or a certificate of no debt from the town hall.

Checklist

• Read the nota simple and list every mortgage or embargo on it, then agree with the seller how each will be cleared in the deed.

• Ask the seller to get a certificate of outstanding debt (certificado de deuda pendiente) from their bank.

• Bring a bank cheque, or arrange a transfer, to the notary in the bank's name for the outstanding amount, with the remainder going to the seller.

• Make sure the bank signs the deed of cancellation of mortgage and that it is presented to the property registry.

• Ask the community's secretary for the certificate of no debt, approved by the president, unless you waive it.

• Ask the community about approved special levies (derramas) and pending works, and agree in the contract who pays them.

What to watch out for

• An embargo stays on the property after you buy: An embargo (a court attachment) or anotación preventiva stays registered and binds you as the new owner. The creditor can still enforce against the property and you could lose it in an auction. Charges registered earlier rank ahead of later ones. Require the charge to be cancelled before or at completion, by paying the debt. Cancellation comes by court order (mandamiento de cancelación) or the creditor's consent.

• Paying the seller does not clear the creditor: If you pay the whole price to the seller, the creditor is still unpaid and the charge remains on the property. Pay the creditor directly at the notary, from the price, and give the seller the remainder.

Request to the community administrator for a no-debt certificate

The administrador de fincas issues a debt certificate when asked, and a short message in Spanish is enough. The request should come from the seller, or from you with the seller's written permission. Send it by email so you have a record of the date.

Message in Spanish

Asunto: Solicitud de certificado de estar al corriente de pago y actas recientes

Estimado/a administrador/a:

Les escribo en relación con la vivienda situada en [dirección completa, piso y puerta], propiedad de [nombre del propietario].

Les solicito:

1. Un certificado de deuda con el visto bueno del presidente, que indique si la vivienda está al corriente de pago de las cuotas ordinarias y extraordinarias, el importe de la cuota ordinaria y las derramas aprobadas, pagadas o pendientes.
2. Copia de las actas de las últimas juntas de propietarios [indicar: de los últimos 12 meses / de los últimos 2 años].

[Si escribe el comprador: Adjunto la autorización firmada por el propietario.]

Necesito el certificado antes del [fecha], ya que la firma ante notario está prevista para el [fecha de firma].

Gracias y un saludo, [Nombre y apellidos] [Teléfono] [Correo electrónico]

What the message asks for

• Certificate: it shows whether the flat is up to date with community fees, the size of the regular fee, and any special charges (derramas) approved, paid or pending.
• Minutes: the actas show what the owners have voted on, including planned works and new charges that may not yet appear in the certificate.

Before you send it

• Fill in every part in square brackets. Delete the line about the authorisation if the seller is writing.
• If you are the buyer, attach a short signed note from the seller allowing you to ask for the documents.
• Ask your notary how recent the certificate must be at signing, and set your date in the message to fit.
• If a flat is in a building with no community of owners, there is no administrador and this request does not apply.

Frequently asked questions

Can the mortgage be cancelled after the sale deed is signed?

Yes, the cancellation can be signed after the sale deed, but the outstanding debt must still be paid at completion. The bank signs the cancellation deed at the notary or later. It is then presented to the Registro de la Propiedad, the property registry, which deletes the charge.

Can I waive the community certificate of no debt?

Yes, you can waive the certificate, because the seller must hand it over unless you waive it. Waiving it does not remove the community debts that pass with the flat.

Can I take over the seller's mortgage instead of cancelling it?

Yes, you can subrogate to the seller's mortgage, which means you take over the existing loan instead of cancelling it. Ask the bank what this costs and what it requires.

What does cancelling a seller's mortgage cost?

Cancelling a mortgage carries notary, registry and gestor (paperwork agent) costs. The bank pays the AJD stamp tax on the cancellation. Exact fees depend on the bank, so ask it for a figure.