Who Pays the Assessment Fee in the Sale of a Property?

What Is an Assessment Fee?

Before discussing the possible situations, it is important to define this term.

An assessment fee is an additional payment approved by all members of a homeowners’ association to cover maintenance costs for the building.

Some examples of these improvements include repairing facade damage, upgrading electrical systems, improving plumbing, repairing or installing elevators, among others.

Types of Assessment Fees

Assessment fees approved by the homeowners’ association can be of two types:

• Assessment fees as treasury provisions: The goal is to collect an agreed amount to cover a large expense for which the exact date is unknown. In other words, the funds are gathered to maintain the building as needed, making it more affordable for homeowners.

• Assessment fees for an approved expense: In this case, the goal is to collect funds for a specific expense with a set deadline.

Once these differences are clear, we will examine what happens and what to do in each possible situation involving an assessment fee during the sale of a property.

Who Pays the Assessment Fee in the Sale of a Property?

To determine who is responsible for paying the assessment fee during a property sale, we need to refer to the Horizontal Property Law. Article 17.11 states:

“Assessment fees for improvements carried out or planned for the property shall be borne by whoever is the owner at the time the payment obligations are due.”

In other words, the property owner is responsible for paying assessment fees until the precise moment they cease to be the owner. Afterward, the new owner must pay any outstanding installments.

What Happens if the Assessment Fee Is Approved After Signing the Earnest Money Agreement?

There is a possibility that the earnest money agreement has been signed and, during the period between that contract and the signing of the deed, the homeowners’ association approves an assessment fee.

In this case, the situation remains the same. The seller must take responsibility for the pending assessment fee until they are no longer the owner, and the title officially transfers to the buyer. At that point, the buyer assumes responsibility for paying the remaining installments.

Who Pays the Assessment Fee if It Is Approved After the Sale?

It is possible that an assessment fee is approved after the buyer has acquired the property. In other words, the fee may be approved just as the buyer becomes the official owner. In this case, the buyer will be responsible for the expense, as purchasing the property means accepting not only its rights but also its obligations.

Other Possible Situations Regarding the Payment of Assessment Fees in Property Sales

Based on the scenarios already outlined, other questions may arise. Below, we address additional common doubts:

What Happens if There Is a Pending Assessment Fee During the Sale of the Property?

If there is a pending assessment fee awaiting approval by the homeowners’ association, the seller has a duty to inform the buyer about it before completing the sale. This allows the price to be negotiated with the extra cost in mind.

The best approach is to wait until the fee is approved in the association meeting so the potential buyer can be informed.

Can a Property Be Sold Without Disclosing a Pending Assessment Fee?

It is possible for a seller to omit information about an approved or pending assessment fee. For this reason, completing the property sale through a real estate agency is highly recommended.

If this situation occurs, it is considered a latent defect, and legal action can be taken to claim damages and compensation for withholding information. Buyers have the right to know the true condition of the property in order to decide whether to proceed with the transaction or renegotiate the price.

What Happens if the Seller Does Not Pay the Agreed Assessment Fee?

In the hypothetical case that there is an ongoing assessment fee during the sale of the property and the seller does not take responsibility for it, there is no need to worry. The buyer is not required to cover these payments, and no claims can be made against them.

Tips to Check if a Property Has Pending Assessment Fees

It is possible to avoid these types of situations if we act beforehand and with proper information:

Debt Certificate

Before completing any property transaction, it is essential to request a debt certificate. This document will confirm whether the property is up to date with payments and whether there are any pending assessment fees. To make the process faster, it is highly recommended to work with a real estate agent who can guide you.

The Simple Note

The simple note—issued by the Property Registry—is another document you can request to check whether the property has any encumbrances or liens before completing the purchase.

Thorough Inspection of the Building

If you plan to handle the property purchase yourself, you can always inspect the building to assess its condition. However, working with a real estate agent from Engel & Völkers makes this process much easier.

Our professionals will provide you with a complete report on the property’s condition. This way, you can enjoy the peace of mind of having a trusted advisor throughout the process, helping you make the best decision.

Choose a Good Real Estate Agency

As you can see, seeking professional advice and selecting a reputable real estate agency is essential to avoid rushed decisions and instead make informed choices. This will also ensure you understand your rights and obligations in the event of a pending assessment fee.

For example, Engel & Völkers agents have legal knowledge to assist you in situations like this. Additionally, we have a team of lawyers who support our agents and address any legal questions that may arise.

The question of who pays the assessment fee in the sale of a property is easy to resolve. It simply depends on who owns the property at the time of the transaction. Of course, having the assistance of a qualified real estate agent will make the process much smoother.

At Engel & Völkers, we are happy to assist and guide you so you can make the best purchasing decision without having to worry about anything.