The Supreme Court recognises the standing of individual co-owners to claim for breach of a works contract entered into exclusively by the owners’ association

The First Chamber of the Supreme Court, in its judgment No. 919/2026 of 16 June, has clarified a question of great practical interest for owners’ associations: the standing of co-owners to bring a claim against a defaulting contractor where the works contract was formally executed solely by the owners’ association.

The ruling overturns the approach taken by the lower courts and concludes that the owners do indeed have standing to bring a claim where they themselves have personally borne the cost of the works and the financial loss arising from the breach of contract.

The facts

The dispute stems from a contract entered into by an owners’ association with a contractor for the restoration of the building’s facades. The agreement established a distinctive financing arrangement: each owner was to bear exclusively the portion of the price corresponding to their share of participation, and could choose the method of payment, including financing through individual loans arranged with a bank.

Several co-owners chose to finance their contribution through consumer credit agreements and paid the loan instalments in full. However, the contractor abandoned the works shortly after they had begun, despite having received the financed sums, prompting the owners to bring legal proceedings against both the contractor and the lending institution.

Both the Court of First Instance and the Provincial Appellate Court dismissed the claim on the grounds that the owners lacked standing to sue, holding that the owners’ association alone had standing to bring a claim, as it was the contracting party under the works contract.

The Chamber’s decision

However, the First Chamber corrects this approach, regarding it as excessively formalistic. According to the Supreme Court, the judgments under appeal confined themselves to considering who had signed the contract, without analysing the true economic and legal structure of the transaction.

The Supreme Court points out that the contract expressly provided for each resident to bear individually and exclusively the payment of the portion of the works corresponding to them, and even to take out personal loans to finance it. Accordingly, this was not a mere internal allocation of communal expenses, but rather a contractual structure designed so that each co-owner would directly bear their own financial obligation.

On that basis, the judgment states that it was the claimants who personally made the payments, arranged the financing and suffered the financial loss resulting from the failure to carry out the works. Denying them standing would therefore create an unjustified separation between the party who bears the loss and the party entitled to claim redress for it.

The judgment further extends this conclusion to the claims brought against the lending bank. The Court considers that the loans taken out by the co-owners qualified as linked credit agreements under Law 16/2011 on Consumer Credit Agreements, as they were specifically intended to finance the contracted works.

On that basis, the Court rejects the lending institution’s argument that the transaction fell outside the scope of that legislation under Article 3, which excludes from consumer regulation credit agreements intended to acquire or retain property rights over land or over buildings already built or to be built. This is because the Supreme Court considers that the loans were not intended for the acquisition or retention of rights over a building, but rather for the financing of specific façade restoration works.

Practical significance of the judgment for owners’ associations

The ruling reinforces a substantive view of standing to sue, linking it to the party who actually bears the financial loss, rather than exclusively to the owners’ association that formalised the contract.

For owners’ associations, the judgment is particularly relevant to restoration, improvement or maintenance projects in which owners individually bear the cost of the works or resort to personal financing. In such cases, as the judgment confirms, co-owners may have standing to claim directly the sums paid where the contractor fails to fulfil its obligations, even though it was the owners’ association that entered into the restoration contract.