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New Condominium Law To Become Effective July 2

Long-Awaited Changes Impose New Obligations On Developers, Increase Enforcement Provisions, And Facilitate Resolutions Of Disputes Between Neighbors


June 5, 2003
Copyright © 2003 CARIBBEAN BUSINESS. All Rights Reserved.

Puerto Rico Law No. 103, passed April 5, 2003 and known as the Condominium Law, will become effective July 2. The various amendments to the Horizontal Property Law aim to facilitate the management and administration of condominiums, impose new obligations on developers, bolster enforcement provisions, and otherwise generally improve the living conditions in condominiums.

Following are some of the new requirements for developers:

  • The developer must obtain a bond for a minimum $25,000 to cover any wrongful or negligent acts that may occur while the developer is responsible for the administration of the newly constructed building.
  • At the closing of each condominium unit’s sale, the developer must charge the owner three months’ maintenance expenses. These funds will go into the reserve account.
  • The developer has two options for the payment of the maintenance expenses: The developer may assume the expenses for maintaining the property until such time as 51% of the units have been sold, or the developer may immediately charge each new purchaser his or her share of the common expenses while the developer contributes the share corresponding to the unsold units.

Other provisions of the new law seek to give teeth to the enforcement mechanisms available to the administration of a condominium. For instance, the current law allows the administration to suspend utilities and other services that reach the units through common elements, such as pipes and electrical conduits, to an owner who fails to pay the maintenance quota for three or more months. The new law stipulates that such services may be suspended after only two months of nonpayment or two months after the date established for a special levy. Additionally, such services need not be re-established until full payment of the debt has been made.

The new law also sets a harsh penalty for residents who use other means to reinstall the utility services before their delinquent account has been brought up-to-date. These people may be subject to a penalty equal to three times the amount they owe (principal and interest). The condominium’s board of directors now has the authority to impose a fine of up to $100 (for each violation) on any resident who breaches the Condominium Law, any applicable regulations, the deed constituting the condominium, or the bylaws of the condominium.

Other provisions of the new law aim to facilitate the resolution of disputes between residents. For instance, before resorting to filing a claim with the Department of Consumer Affairs (DACO by its Spanish acronym) or the courts, an attempt must be made to resolve the dispute internally, specifically by a reconciliation committee to be appointed by the council of owners. Owners now will have a maximum of two years to contest decisions or actions taken--or not taken--by the administration or board of directors. Additionally, a special division has been created at DACO to attend exclusively to condominium matters.

Under the new law, voting proxies may be given only to another condominium owner or lessee, or to a close family member of the owner or lessee. Some proxies must take the form of a power of attorney.

Additionally, 5% of the monthly maintenance fees received must be placed in the reserve account, which is to be used to pay unforeseen, extraordinary expenses and to alleviate the need for large special levies on condominium owners.

This Caribbean Business article appears courtesy of Casiano Communications.
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