New sanctions in Catalonia for large holders who do not act in certain cases against squatters

1. NEW CATALAN LAW AGAINST THE INACTIVITY OF LARGE HOLDERS IN CASES OF ILLEGAL OCCUPATION OF RESIDENTIAL UNITS WITH DISRUPTION OF NEIGHBOURHOOD COEXISTENCE

On Friday, the Official Gazette of Catalonia published a new law (Law 1/2023 of 15 February) which establishes sanctions for large holders who, in certain cases, do not act against the illegal occupation of their properties.

Occupation without legitimate title in Catalonia does not prevent a property from being declared vacant and, if the property remains vacant, penalties may be imposed or even the property may be expropriated.

As of last Saturday 18 February, it is also considered a breach of the social function of housing when large holders do not initiate eviction actions against squatters after being required to do so by the competent administration due to the occupation disturbing neighborhood coexistence, public order or compromising the property.
Such inactivity can result in fines of up to 90,000 euros and can even entitle the competent municipality to take over the use of the property for seven years.

2. HOW CAN THE IMPOSITION OF SANCTIONS BE AVOIDED?

Law 1/2023 establishes a general obligation for large holders to take the necessary actions to evict unlawful occupants from their property if this situation has caused a disturbance of coexistence or of public order or if it endangers the security or integrity of the property.

However, it also provides that if they fail to act, the administration may require them to comply with their obligation. Sanctions can only be imposed if, once the large holder has been requested to act, it does not bring an action to recover possession of the property before the courts within one month. It is sufficient to bring the action and notify the administration within the one month time frame, regardless of how long it takes for the actual eviction of the occupants to take place.

In any case, it is important to bear in mind that Law 1/2013 provides that the period of one month starts to run even if the request is unsuccessful (and, therefore, it is communicated through public edicts).

3. WHO CAN REQUIRE A LARGE HOLDER TO BRING AN ACTION TO RECOVER POSSESSION OF AN ILLEGALLY OCCUPIED PROPERTY?

This requirement will normally come from the local town hall where the property is located, which may act ex officio or at the request of the community of owners of the property where the occupied unit is located or of the neighbors of the adjoining residential area. However, Law 1/2023 foresees that the requirement may come from other public bodies with competence in this area.

One month after receipt of the notice (or after it should have been received in accordance with public procedural rules), if the large holder does not provide the title of occupancy or proof of legal action having been duly brought, the town hall (through the mayor) can directly bring the eviction action (at the owner's expense).

4. WHAT OTHER SANCTIONS DOES THE NEW LAW 1/2023 PROVIDE FOR?

In addition to having to bear the costs of the procedure initiated by the town hall, large landlords who do not comply with the requirements of this new Law 1/2023 in due time will be committing a serious offence under Law 18/2007 on the Right to Housing in Catalonia and this may result in:

• Fines of between 9,001 and 90,000 euros. 80% of the relevant amount can be waived if the offender has repaired the infringement, i.e. if legal action is taken, even if out of time.
• The town hall where the unit is located can acquire its use for a period of seven years to dedicate it to public social rental policies, and with the revenues it can compensate itself for the debt arising from the exercise of the corresponding legal actions and the expenses derived from adapting the unit to the habitability regulations. Revenues can also be used to collect the penalties imposed.

5. WHO ARE LARGE HOLDERS FOR THESE PURPOSES?

The preamble of Law 1/2023 refers to the concept of large holder included in Law 24/2015 on extraordinary and urgent measures to deal with the emergency situation as regards residential units and energy poverty in Catalonia. According to Law 24/2015, these are large holders:

• financial entities, their real estate subsidiaries, investment funds and asset management entities, including those resulting from the restructuring of the financial restructuring, regardless of the number of properties they hold;
• legal persons who, directly or through their corporate group hold more than 10 properties within Spain with the following exceptions:
  
  o social property developers meeting certain requirements under Act 18/2007;
  
  o legal entities that have more than 15% of the habitable surface area of their Properties classified as social housing intended for lease; or
  
  o private non-profit organisations that provide housing for people and families in a situation of residential vulnerability;
• venture capital funds or securitisation funds; or
• natural persons which own more than 15 properties within Spain or are co-owners if their participation quota represents more than 1,500 square meters of residential land (exceptions regarding social property developers and having 15% of the area classified as social housing being also applicable to natural persons).

6. WHAT CHANGES HAS REQUIRED LAW 1/2023 IN OTHER CATALAN REGULATIONS?

Law 1/2023 amends Law 18/2007 on the Right to Housing in Catalonia to include the provisions described above. In addition, it defines occupation without title as an anomalous use of properties under the same Law 18/2007. This definition enables the housing department and the municipalities to initiate administrative procedures and to require those responsible to correct the situation, as well as to request the compulsory execution of these measures.

Finally, Law 1/2023 modifies the fifth book of the Civil Code of Catalonia in the article dedicated to horizontal property to expressly authorise the community of owners to report to the town hall any illegal occupations that cause them a nuisance and thus initiate the procedure described here. It also expressly includes that the action for cessation of acts against the coexistence or security of the property can be brought directly by the community against the squatters even if their identity is not known.

7. SINCE WHEN HAS LAW 1/2023 BEEN IN FORCE?

The regulation came into force on Saturday 18 February, although the provisions that may involve expenditures for the Generalitat will take effect when the next budget is approved.