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A condominium property regime, commonly referred to as a condominium or condo complex, is a type of real estate ownership where individuals own individual units within a larger complex or building. Unlike traditional homeownership, where one owns both the dwelling and the land it sits on, in a condominium property regime, owners own their units (private area) and jointly own common areas and amenities with the rest of the condo owners.

Here are some key features and aspects of a condominium property regime:

  1. Unit Ownership: Each owner holds title to their unit, which, in some cases, includes the interior space of the unit and any designated parking spaces or storage areas.
  2. Common Areas: All unit owners jointly own common areas within the condominium complex. These may include hallways, lobbies, elevators, recreational facilities (such as pools, gyms, or green areas), landscaping, and exterior elements of the building.
  3. HOA or COA Association: A condominium association represents all the condo owners. It shall hold at least one annual meeting, commonly known as the Homeowners Association (HOA) or Condo Owners Association (COA). It oversees the election or re-election of the condominium administrator, when applicable, and the approval of the HOA budget. 
  4. Rules and Regulations: Condominium associations establish the rules and regulations that govern various aspects of living within the community, such as pet policies, noise restrictions, architectural and construction guidelines, maintenance responsibilities, and condo owners’ rights and duties.
  5. By-laws: The condominium association operates under a set of bylaws outlining the rights and responsibilities of the association and the individual unit owners. Bylaws may cover issues such as the election of the HOA administrator, assessment of the dues, dispute resolution procedures, and the process for amending the bylaws, penalties, and fines. 
  6. HOA or COA dues: Unit owners must pay monthly, quarterly, or annual fees to the HOA to cover the costs of maintaining and managing the common areas and amenities. These dues cover the landscaping, repairs, insurance and utilities of common areas, security, and administrative costs.

So, what happens when an owner does not pay the HOA dues?

According to law N° 7933, section 13 (CR Condominium Law), the HOA fee is an obligation for all Condominium Owners with the HOA. None of the owners can resign this obligation. It’s important to know that not all HOA expenses have to be included in the By-Laws. Instead, these should contain general information and how they can be assessed. The common expenses like gardening, security, and routine maintenance, among others, can be indicated in the By-laws. Other frequently changing expenses, such as extraordinary fees for repairs, improvements, new amenities, and legal actions, are usually mentioned in the By-laws, but the HOA Assembly must approve them. The non-payment of HOA dues can trigger payment of a penalty and or a default interest over the due amount. The HOA administrator can initiate a judicial collection process on the delinquent property, per section 20 of Law N° 7933.

Bylaws modifications: if the condo owners are aiming to raise the interest rate applicable to delinquent owners stated on the Bylaws, take into consideration that as per Art. 27 subsections 2 inc. 7) of Law N°7933, modifying the Condo By-laws requires at least 2/3 of the votes that represent the total value of the condominium, (66.6% of the total value of the condo complex). All the agreements that represent a modification in the Bylaws must be presented to the National Registry as part of the formal compliance of its legal validity.

Regarding moratory or default interests, it is always advisable that the Bylaws address this matter. The current CR condominium law and its regulations do not contain any limitation about the minimum or maximum moratory interest rate applicable to delinquent owners.  This doesn’t mean that excessively high and unreasonable delinquent penalties or interest rates will be accepted since the Commercial Code, section 458, indicates that moratory interest should not exceed 30% of the current interest rate set in a commercial transaction. Similarly, law N° 7472, “Law for the Promotion of Competition and Effective Consumer Protection,” established a set of limitations for interest rate and default interest rate applicable to credit operations even though the obligation to pay the HOA fee is neither a credit operation nor a commercial obligation, the aforementioned laws might be used to integrate the condo law and find a solution to avoid litigation. 

 

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