Bank did not pay council tax

Q. I purchased an apartment in Mallorca in 2013. I was assured by the solicitor and the Notary, and the contract confirmed, that no debt was owed on the property. I am now receiving bills for 2010 and 2011 from Calvia Town Council for the yearly Council Tax.

The property we bought had been repossessed by the bank several years ago for non-payment of the mortgage. I no longer remember which bank it was. Can you please advise me on how to resolve this matter?

S.M. (Mallorca)

A. There may be good news for you. First, if you have a sales contract signed by the bank stating that the property is sold clear of all debts, this makes them responsible for the payment of any back Council Tax. If you want to know who sold you the property, try looking at your contract. It might be the bank itself or a company set up by the bank to handle the many thousands of repossessed properties that Spanish banks now hold.

These banks quite often do not pay all the back taxes on their properties, especially Council Tax, also known as the rates, and in Spanish as ‘IBI,’ short for the ‘Impuesto sobre Bienes Inmobiliarios.’

Because the Statute of Limitations restricts collection of this tax to four years, the town halls generally send out notices only when the cut-off date approaches. If it takes the bank six years to move the property, they have escaped two years of Council Tax.

Yes, your lawyer should have checked to make sure this IBI was paid up to date, and the Notary should have asked to see paid-up receipts. These lapses indicate poor legal service, but they are not sufficient grounds to bring a case against either of them.

However, the bank has made a false statement in its contract with you. Have your lawyer start proceedings against the bank to recover the amount. He may advise you to pay the tax first and then act against the bank, or perhaps the bank will simply pay the bill.

Spanish banks usually pay up promptly in these cases because they are in fact guilty of false statements in a contract.

Your lawyer may well feel that he should not charge you either, to make up for not checking in the first place.

Send your questions for David Searl through lawyers Ubeda-Retana and Associates in Fuengirola at Ask@lawtaxspain.com, or call 952 667 090.