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What happens to ongoing Owners Association loans upon sale?
What happens to ongoing Owners Association loans upon sale?
Some Owners Associations (Owners Association) take out a loan to finance major works, such as roof renovation, facade insulation, or elevator modernization. But what happens to such an ongoing loan when you sell your apartment? Does the seller continue to pay, or does the buyer take over the loan?
Is an Owners Association loan personal?
No. A loan taken out by the Owners Association is not a personal loan of the individual owner. It is a debt of the co-ownership as a whole.
Each owner pays their share via the common charges, according to their quotas (shares in the common parts).
Who pays the loan upon sale?
The principle is simple: the payment obligation follows the property.
This means:
- The seller pays the installments until the date of the notarized deed.
- From the transfer, the buyer takes over the future installments.
The loan therefore remains linked to the apartment and not to the person of the seller.
What if the works were decided upon before the sale?
Even if the works and loan were approved before the sale, the buyer will normally pay the remaining installments after the transfer.
Unless otherwise agreed in the sales agreement.
For example, parties may agree that:
- The seller fully repays the remaining loan before the sale.
- The sale price is adjusted.
- A portion of the outstanding capital is settled via the notary.
Without a specific agreement, the general rule applies: the buyer pays the future installments.
Must the buyer be informed about the loan?
Yes. The Property Manager must provide information to the notary regarding:
- The existence of an ongoing loan
- The outstanding balance
- The monthly or annual installments
- The duration of the loan
The buyer must be fully informed before signing the deed.
Can this affect the sale price?
Yes. An ongoing loan from the Owners Association can have an impact on the market value of the apartment. The buyer will take the future installments into account in their financial planning.
What is the conclusion?
When selling an apartment with an ongoing Owners Association loan, the seller continues to pay until the notarized transfer. From the date of the deed, the buyer takes over the further repayments, unless other agreements are made. Transparency via the Property Manager and clear agreements in the sales agreement (compromis) are essential to avoid disputes.
You don't sell a VME loan. You pass it on.
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