A dispute has erupted in Madrid between apartment owners and the management board of a large residential community. The conflict was sparked by a method of expense allocation that, according to one resident, violated both the building’s internal regulations and the provisions of the Horizontal Property Law. As a result of legal proceedings, Spain’s Supreme Court (Tribunal Supremo) issued a ruling that could set a precedent for similar cases across the country.
The core of the conflict was that some of the building’s maintenance costs were allocated not according to the established participation coefficients, but equally between different entrances or even among all residents. This approach dissatisfied one of the owners, who felt his rights were being infringed upon, and he went to court demanding a revision of the payment allocation process.
The Legal Battle
Initially, the court of first instance sided with the plaintiff, ruling that expenses must be apportioned strictly according to the coefficients set out in the building’s founding documents. However, the Court of Appeal (Audiencia Provincial de Madrid) overturned this decision, concluding that the community has the right to independently determine the allocation procedure for certain types of expenses.
The case reached the Supreme Court, which reviewed the property owner’s cassation appeal. During the proceedings, it emerged that a similar situation had already been considered by the same court in 2022, at which point a clear approach to interpreting founding documents of residential complexes had been established.
Supreme Court position
The Supreme Court noted that a building’s founding document may provide for expenses to be individualized by entrances or groups of premises; however, within each group, costs must be distributed according to a participation coefficient. In this case, it was found that some expenses—such as hall rental for meetings, antenna maintenance, and meter readings—were divided equally among residents, regardless of their ownership share.
The court ruled this approach unlawful and ordered that the relevant expense items be recalculated using the proper participation coefficients. At the same time, the court did not annul all of the homeowners’ association’s decisions, but only required a review of the disputed budget items so that they would comply with the law.
Impact on property owners
The Supreme Court’s decision sparked significant reaction among homeowners in Madrid and other regions of Spain. Many saw it as a signal for stricter compliance with rules for distributing expenses in apartment buildings. Now, property management companies and residents’ committees will need to pay closer attention when preparing budgets and considering the interests of all residents.
Experts note that such disputes arise not only in Madrid, but also in other major cities across the country, where residential complexes often include several entrances, garages, and commercial premises. In each case, it is crucial to strictly follow the provisions of the founding documents and the law to avoid lawsuits and conflicts between neighbors.
Legal nuances
The court ruling emphasizes that unless otherwise specified in the statutes or founding document, all expenses must be distributed proportionally to each owner’s share. Exceptions are only possible if there are clear provisions in the documents or the community’s statutes. Otherwise, any attempts to change the expense allocation procedure may be challenged in court.
The Supreme Court also noted that its decision sets a legal precedent to be taken into account in similar cases in the future. This means that property owners and management companies should carefully review not only the letter of the law, but also judicial practice, to avoid mistakes with budgeting and expense allocation.
If you didn’t know, the Supreme Court of Spain (Tribunal Supremo) is the country’s highest judicial authority, and its decisions are binding throughout Spain. Its rulings often set precedents for lower courts and influence the evolution of legal practice. In this case, the issue concerns a residential community in Madrid, where a dispute over cost allocation led to a review of several years’ worth of bills and sparked debate among lawyers and property owners nationwide.
