Who is liable for the debts of a co-ownership (“comunidad de bienes”)?

Question

José Manuel Alburquerque · Accepted Answer

The co-owners themselves (“comuneros”), who are the members of the co-ownership, are liable with their own assets, because a co-ownership does not limit their liability in the way a limited company does. If the co-ownership simply owns and manages a single asset, for example inherited commercial premises that are let out, in Catalonia each co-owner is liable for the debts arising from that management in proportion to their share. If the co-ownership runs a business, the courts treat it as a partnership and, if the activity is commercial, the creditor can claim the whole debt from any of the co-owners. The tax authorities can claim from each co-owner the taxes owed by the co-ownership, but only in proportion to their share. If the co-ownership simply owns and manages a single asset This is the case, for example, of siblings who inherit commercial premises and let them out. The “Código Civil de Cataluña”, the Catalan Civil Code, says that the co-owners are liable for the debts arising from the management of the asset proportionately (“de forma mancomunada”), that is, each only for the part of the debt corresponding to their share in the co-ownership. Unless otherwise shown, the shares are presumed to be equal. So if the premises belong to three siblings and 3.000 euros is owed for a repair, whoever carried it out can claim 1.000 euros from each of them, but not the 3.000 from just one, unless each of them undertook to pay the whole amount when the work was contracted. In most of the rest of Spain, the Spanish Civil Code (“Código civil”) does not have such an express rule, although the same result is generally reached. If the co-ownership runs a business Many co-ownerships are set up to run a business, such as a shop or a bar. They usually add the letters C.B. to their name. Although they are called a co-ownership, when the members pool something in order to share out the profits, the “Tribunal Supremo”, Spain's Supreme Court, treats them as a partnership. How the co-owners are liable depends on the activity: If it is commercial, the rules on general partnerships (“sociedad colectiva”) apply. Each co-owner is personally liable for all the debts of the business and the creditor can claim the full amount from any of them, although in principle the creditor must first try to recover the debt from the co-ownership's assets. If it is not commercial, the Spanish Civil Code's rules on civil partnerships (“sociedad civil”) apply, because the Catalan code does not regulate them. Each co-owner is liable with their own assets, but only for their share of the debt. What to bear in mind The tax authorities treat the co-ownership as liable to pay certain taxes, such as the business's VAT. If these are not paid, the tax authorities can claim from each co-owner the part corresponding to their share. Whatever the co-owners agree among themselves about who pays what is not binding on the creditor. It allows anyone who pays more than their share to claim from the others what was theirs to pay. Anyone who leaves the co-ownership remains liable for the debts that existed up to that point. If the aim is to avoid being liable with your personal assets, another structure is needed, such as a limited company. Choosing between a co-ownership and a limited company is a separate question.