Buying a house is not a simple task, since it involves several factors, such as the desired profile, the location, and the budget. Besides this, there is all the bureaucratic paperwork related to the documentation of the property, the owner, and the buyer. A factor that has gained more prominence in the last few months is the condominium debts. The purchase of real estate with condominium debt is more common than it seems. In this sense, know some care to be taken not to buy a house with condominium debt. Responsible for paying the condominiums debt By law, condominium debts always fall on the property. If the condominium fees in arrears are not paid before the sale, they become the responsibility of the new owner. Thus, when you buy a property with condominium debt, you also assume the debts and the responsibility for paying them. It is essential to keep this in mind so that the purchase of the property is made with rigor and clarity. How to know if the property has debts In order not to run the risk of buying a property with debts, a certain amount of care must be taken when analyzing the propertys documentation at the time of purchase. Thus, you should analyze the following factors: Ask for proof or a statement of payment of condominium debts and expenses. You can look for the condominium administrator to make sure of the propertys situation. Take the opportunity to check the records of the last assemblies to find out if there is any provision for a capital call for works or renovations, which may make the condominium more expensive, or if there is any open capital call. At the Real Estate Registry, confirm the identity of the seller (that is, see if he is really the owner of the property) and if the property is free of liens or any other type of pendency. Some debts of the owner, the spouse or of a company in which the seller is a partner can compromise the property, such as labor debts. Ask for a Certificate of No Municipal Debt in the names of the owner, the spouse and the company. It is also recommended to ask for an electronic Judicial Certificate from the owner, the spouse and the company, if applicable. Negotiating the purchase of a property with condominium debt In case the property you intend to buy has condominium debt, you should analyze your options. The most prudent thing to do is to give up the purchase and look for another option. However, if you decide to go ahead, you can take some precautions during the negotiation. Check the possibility of pre-paying the debt The first point is to verify if the owner is willing to pay all debts before the sale, by providing a certificate that proves the payment. Negotiating the sale price If the owner is not able to pay the condominium debt before the sale, the value must be negotiated. It is fair that the value of the debt, including fines and interest for overdue condominiums, be deducted from the sale value of the property. Thus, the money saved with the discount can be used to pay off the debt. Record the existence of the debt in a contract It is also important that the existence of the debt be documented in the purchase contract. It should transparently state all information regarding the debts of the property, including any possible risks of seizure. Get expert help Due to the complexity of the negotiation and the risks involved in buying a property with condominium debt, we strongly recommend that the entire process be done under expert guidance. The role of the condominium manager when negotiating a property with condominium debts Although the condominium manager is one of the most interested parties when it comes to a property with condominium debt, he is not very open to interfere or get involved in the negotiation of the property. There is nothing to prevent the owner from selling the unit, even if it has debts. In this sense, what the condominium manager can do is to issue or not the certificate of non-debt and, in case it is sought by the buyer, to warn him that the debt exists. After the sale is completed, the condominium manager has the duty to collect the debts from the new owner.
The inclusion of the condominiums declaration regarding the charges of its fraction occurs as a resolution of existing conflicts regarding the responsibility for any amounts owed to the condominium at the time of sale of the property. The new law protects the potential buyer. That is, with the entry into force of law No. 8/2022 of January 10, when you acquire a property you will know how much you will pay for the condominium and whether or not there are condominium debts owed by the current owner. Requesting a statement of condominium charges from the condominium administrator If you intend to sell your house, you must ask the condominium manager for a written statement that includes all the condominium charges for your unit. This document must cover all charges detailed by type of condominium quota, contribution to the reserve fund, or others that may exist. It also covers the amounts and payment deadlines for each of the charges. In the event that there are debts to the condominium, these should also be included in the declaration indicating their nature, the amount owed and the respective date of default. The condominium manager has 10 consecutive days to respond to your request. Works approved by the assembly are the responsibility of the owner of the property at the time If the condominium assembly approves works related to the common parts of the building, these are the responsibility of the unit owners at the time of the assembly. In this sense, if you sell your property after the meeting, these amounts are owed by the owner, even if the works are carried out after the sale. This amount should be included in the condominiums statement of charges with reference to your situation. That is, whether it is paid or unpaid. The buyer is responsible for any costs that fall due after the sale. Only those charges relating to work in common areas approved before the sale are the responsibility of the owner at the time of the meeting. Thus, all other charges are the responsibility of the buyer. That is why it is important that at the time of the deed you understand exactly how much you will have to pay for condominium, reserve fund or other approved expenses. If when buying the house you dispense with the declaration of charges the debt is yours The declaration of charges to the condominium is a mandatory document in the sale of a property, however, the law gives the buyer the possibility to waive this document. In other words, the deed can be executed without this document by means of the buyers declaration in the deed that he/she does not need it. One can also choose to dispense with this declaration. However, be aware that you will be assuming eventual debts that the seller has with the condominium. Documents required for sale or donation of property Thus, if you sell your house, you will have to present the following documents: Certificate from the Land Registry. Caderneta Predial Licença de Utilização (mandatory for properties built after 1951) Ficha Técnica da Habitação (mandatory for properties built after 2004) Energy Certificate Condominium charges declaration
The Government will soon proceed with new legislation to regulate condominium management companies. According to the sectors expectations, among the new obligations will be the requirement to have the door open to the public, to train the team, and to take out insurance. With this law, the Executive wants to certify the professionalism and responsibility of these companies and demand guarantees of suitability. According to the official source to Jornal de Negócios, the intention of the Secretary of State for Housing is to finalize the design of the new legislation in the coming months. This law results from the obligations set out in the Housing Framework Law published at the end of 2019. The design of the new law was prepared by the Institute of Public Markets, Real Estate and Construction (IMPIC). The president of the Portuguese Association of Condominium Management and Administration Companies (APEGAC) Vítor Amaral, says that the new legislation is necessary, since it is currently unknown how many condominium management companies exist in the country. He adds that anyone can engage in this activity, without having to meet any requirement, be it insurance or a door open to the public, recalling that APEGAC receives many complaints from condominium owners.
Last January 10, Law No. 8/2022 was published changing the Civil Code and reforming the horizontal property regime, and those interested in selling or donating properties need to be aware of new rules. Now, to perform one of these actions, owners must show a declaration of non-debt to the condominium. If the buyer abdicates the document, he or she is forced to pay the amounts in arrears. The guarantee must be included in the deed or in the notarized private document. Vitor Amaral, president of the Associação das Empresas de Gestão e Administração de Condomínios (Association of Condominium Management and Administration Companies), stated that a declaration to be issued by the administrator of the condominium containing a list of all expenses, all charges of the condominium and, in the event that the condominium member transferring the fraction has debts, must also contain the amount and origin of these debts. He also added that the buyer can waive this declaration, but if he waives it, he becomes responsible for the payment of these debts to the condominium, if any. The new measure, which appears in the wake of the changes to the regime of the horizontal property, seeks to avoid buyers being surprised with charges of which they were unaware. It should also help to settle at least a part of the payment defaults to the condominiums. The changes also clarify issues regarding the repair and conservation of patios and balconies that are for the exclusive use of one of the owners. Vítor Amaral also concludes that what the law now clarifies is that these expenses are only supported by the condominium owner if, eventually, it was that condominium owner who caused the damage. Lets imagine that a barbecue is built which makes a hole in the terrace and then, later on, there are repairs immediately underneath. These repairs, of course, are the responsibility of the owner who has the use of that space.
The condominium meeting is the ideal place to discuss all matters concerning the freehold property. However, for this to happen, it is necessary to prepare the notice of the condominium meeting. Owners meeting: Who can convene? The first condominium meeting can be called by any resident. This way, at this meeting an administrator will usually be elected who will have, from then on, several functions to perform, be it a resident or a company. Among these functions is to call the condominium assembly to meetings. This should take place in the first half of January, every year. This is a meeting where the budget for the current year will be approved, the accounts for the previous year will be reviewed, and the administrator will be elected - even if the same person remains. There will also be room to discuss other matters that are of interest to the condominium owners. Extraordinary meetings can also be called by owners representing at least 25% of the value of the building, when they believe that a certain issue should be discussed by all. Meeting: Who should be convened? All owners should be summoned, whether they live in the building or elsewhere. Non-residents should notify the administrator in writing of their address or that of their representative. If the latter is the case, then a power of attorney must be issued for a specific person to represent an owner at the meeting. Notice of meeting: Deadline for sending Notice of a condominium meeting must be sent by registered letter with acknowledgement of receipt 10 days prior to the stipulated date. If this formality is complied with, the notice is considered to have been served. However, if the addressee is absent or changes residence without informing the administration in writing of the new address, such as refusing to receive the letter or not picking it up at the post office, this does not serve as justification for later contesting the decisions of the meeting. Still, the notice can also be delivered in person, as long as the administrator keeps a receipt signed by the condominium member. There is also another alternative, sending the notice by e-mail, asking for confirmation of receipt also by this means. However, this method is only considered valid for the owners who agree to this method and provided that the decision is recorded in the minutes of the meeting. Thus, posting the notice of the condominium meeting in places of passage or placing it in mailboxes only serves as a reminder. How many condominium members are needed to decide? It is true that it is not always easy to get the presence of all the owners in the meetings. In this sense, a law was created to avoid compromising decisions that require unanimity. In these cases, decisions can be approved as long as representatives of at least two-thirds of the buildings total perimeter are present. However, those who are absent can have a say, since the decisions taken must be communicated to all absent condominium members within 30 days of the approval of the minutes. From that moment on, the absent owners have 90 days to communicate in writing (preferably by registered letter with acknowledgement of receipt) whether they accept or reject the approved resolutions. If they reject them, then they become null and void. On the other hand, the absence of a reply presupposes acceptance.
The decision of the Supreme Court of Justice reveals that in the horizontal property regime, the indication in the constitutive deed that a certain fraction is intended for dwelling purposes should be interpreted as meaning that local lodging is not permitted therein and standardizes jurisprudence in an area that has been controversial for some years. The decision resolves the issue of whether or not a fraction, which appears in the horizontal property deed as being for residential use, can be used for an economic activity such as local accommodation. The magistrates conclude that it cannot. In an explanation of vote, one of the judges of the Supreme Court gives a warning: there may be an avalanche of lawsuits, since, by the rules of the Civil Code, this decision will imply the illegality of all operations of local accommodation installed in autonomous fractions of buildings constituted in horizontal property for residential use, even if registered and with a title to open to the public, and any condominium owner may separately demand the cessation of such activity.
Having pets in condominiums, such as dogs and cats, is not always a calm topic, since, on the one hand, there are certain landlords who, shielded by the internal regulations of the condominium, do not allow the property to be inhabited by pets. On the other hand, tenants who already have them deal daily with the nuisance caused to neighbors who do without their company. In this sense, discord settles in and conflict is certain. Learn more, according to an article by Caixa Geral de Depósitos. Lease Cases: With prohibitive clause It is essential to understand that there is no legal rule that prevents the landlord from including a clause prohibiting the keeping of a domestic animal in the lease contract, in the context of a horizontal property regime. That is, the landlord is free both to allow pets to remain and to prohibit them. Even so, this freedom may have certain limitations when the leased property is located in a building constituted as horizontal property and, within this framework, a condominium regulation associated with the constitutive title of horizontal property has been approved and in which the existence of pets is not allowed. If this clause exists, tenants can always talk to the landlord in order to obtain authorization for the presence of the animal in the house, since a lease is always a meeting of minds. It should be noted that the landlord is also free to celebrate the lease agreement with whomever he wants, within the limits imposed by the Law. Cases of Home Ownership: No prohibitive clause According to the current legal framework, based on Decree Law No. 314/2003, Article 3, the accommodation of dogs and cats in urban, rural or mixed buildings, is always limited to the existence of their good conditions and the absence of hygienic-sanitary risks. The purpose is to minimize risks of environmental pollution and diseases transmissible to humans. Up to three adult dogs or four adult cats may be housed in urban buildings, and the total number of four animals may not be exceeded, except if, at the request of the keeper, and by binding opinion of the municipal veterinarian and the health delegate, housing up to a maximum of six adult animals is allowed, provided that all the hygienic-sanitary and animal welfare conditions legally required are validated. Regarding autonomous fractions under horizontal property regime, the condominium regulations may determine an animal limit less than the one foreseen in the previous number. If a tenant does not comply with the law, the City Council, after joint inspection by the health delegate and the municipal veterinarian, may notify the keeper to remove the animals to the municipal kennel or cattery within the period determined by those entities. If obstacles or impediments are created to the removal of animals that are in disrespect of the law, the mayor may request the issuance of a court order that makes it possible to assign the place where they are and their removal. Rights of tenants who do not have pets Generally speaking, the legal framework guarantees to safeguard the basic rules of hygiene, peace and good neighborliness, which is why all tenants with pets must certify good coexistence practices. In this regard, it is also essential to highlight that the General Noise Regulation, namely paragraph r) of article 3 of the Decree, in which there is an explicit reference to Neighborhood Noise. Thus, and when noise occurs between 11 PM and 7 AM, neighbors may call the police authorities to put an end to the situation. The violation of this rest period constitutes an environmental administrative offence, punishable with a fine.
Last January 10, Law no. 8/2022 was published, which changes the Civil Code and reforms the horizontal property regime. Among the several changes covered is the need to show a declaration of the condominium containing the charges of the property that will be sold. This novelty assists in the resolution of frequent conflicts regarding the responsibility of possible debts at the time of sale of the property, protecting the buyer. This new obligation will go into effect next Sunday, April 10, 2022. Condominium Declaration to Sell the House As of the aforementioned date, a particular condominium owner who intends to sell his or her home must request the condominium manager to issue a written declaration. The declaration must cover all the current condominium values on the fraction, specifying their nature, respective amounts and payment deadlines. In addition, it should also contain the existing debts, their nature, amounts, dates of establishment and maturity, if valid. After the owners request, the condominium manager has 10 days to deliver this written statement. As stated in article 1424-A of the Civil Code, this statement constitutes an obligatory document for the deed or certified private document of alienation of the fraction in question. Regarding this topic, it is also essential to highlight what is stipulated as to the responsibility for the condominiums debts when the fraction in question is sold. According to the same mentioned article, the law clarifies that Article 1424-A Liability for condominium charges [...] 3 - The liability for existing debts is assessed according to the time at which it should have been settled, unless the purchaser expressly states, in the deed or in the notarized private document certifying the sale of the fraction, that he waives the declaration of the administrator, accepting, as a result, the liability for any debt of the seller to the condominium. 4 - The amounts that constitute charges of the condominium, regardless of their nature, which are due on a date subsequent to the transfer of the fraction, are the responsibility of the new owner. The purpose of this novelty is to ensure that someone becomes responsible for the condominium debts when a transaction succeeds. Thus, the owner should always be the responsible party prior to the transaction. However, the buyer can take that responsibility by waiving the declaration of the condominium manager, as stated in the law. After the transaction, it is up to the new owner to assume the expenses that fall due at a later date than the transfer of the fraction.
The responsibility of managing condominiums carries a certain weight of duties and obligations. For this reason, many people prefer to leave it to companies that specialize in this. However, if you have agreed to take on such a role, here are some tips and advice on how to manage a condominium. #1. Condominium management: Remuneration Condominium management is a paid job. From a legal point of view, according to Article 1420 and following of the Civil Code, the administration of the condominiums common parts is carried out by the assembly of unit owners and by the respective administrator, who must be paid for his work. #2. Terminating the contract with the condominium management company When the contract is terminated, the responsibility can be taken over by you. All you have to do is wait for the contract with the management company to end, or you can send a registered letter stating the intention of the owners to terminate the agreement. However, if you want to do the latter you should take into account the rules of termination stipulated in the contract and always ask for all documents and accesses concerning the administration of the condominium. The company has a duty to provide such documents. Afterwards, the neighbors should vote together to elect the new administrator. #3. Condominium registration Despite being an autonomous and organized group of people, the condominium must have a legal entity identification number (NIF). To obtain this, it is only necessary to register the condominium at the National Registry of Legal Entities. The NIF serves to identify the collective in the presence of the Tax Administration. It should be noted that the condominium cannot contract or pay suppliers without this number. #4. Separate accounts The money from the condominium management and the personal money of the condominium manager should be separated. This is a good management practice, moreover, the condominium owners have the right to access the records of the collective accounts, since if you associate everything, the neighbors will access all the information. It should be noted that the law establishes that condominiums compose a Common Reserve Fund equivalent to at least 10% of the monthly quotas. In this sense, a separate account in the name of the condominium is required to store these savings. #5. Scrupulous budget Having the condominiums accounts up to date and presenting some transparency so that any neighbor can understand them, protects the condominium manager from any kind of distrust. The secret is in the organization of all the procedures and monies, so that at any time it is easy to clarify expenses and gains for the collective. You can still schedule at least one condominium meeting per year, to close the previous years budget and approve the next years budget. Also emphasize to regularly re-evaluate the fixed expenses incurred to anticipate the following years and adjust the dues accordingly. This re-evaluation also applies to building maintenance work, which can be anticipated if you are careful to monitor structural conditions. #6. Organized documents Transparency of accounts also overlaps with documents. That is, keep the invoices and stubs of all the expenses and expenditures that have taken place in the name of the condominium, since they can be requested by neighbors at any time. A tip for organizing documents can be by type or by category. In addition to presenting a structured and careful organization, it presents professionalism and conveys confidence to the other condominium owners. #7. Renting common spaces in the condominium owners income tax This context turns out to be more technical, however, essential. When condominium management includes the rental of common spaces, i.e., to condominium owners or third parties, the money from this rental is considered individual income of the owners and not of the collective entity. Since it is exempt from corporate income tax, the condominium does not need to declare anything of what it received for renting the spaces, however, each of the condominium owners will see its share going into the income on the annual income tax return, as regulated by Article 19 of the IRS Code. #8. VAT on the condominium expenses can not be deducted This happens when the condominium has fractions used for activities subject to VAT. For example, in buildings that have stores on the first floor. Here, the owners of these businesses can, since the law makes it possible to deduct VAT from everything they pay to maintain the operation. However, they cannot include condominium expenses in these deductions, since regardless of whether the activity performed in the fractions is subject to VAT, the condominium management does not profit anything from it, because it has no stake in the process. #9. Condominium income: Declaration Despite being exempt from virtually all taxation, condo income must be declared to the IRS. This responsibility lies with the condominium manager, who is also the one who issues the electronic rent receipt. The declaration must be shown at a local tax office and must be accompanied by the minutes proving that the administrator has delegated the powers to make tax declarations on behalf of the collective. #10. The joint owners cannot demand to see the letters that the administrator exchanged with the neighbors Even if there are condominium owners in arrears, neighbors cannot demand that the condominium manager have access to the correspondence exchanged between the parties. Although your neighbors have the right to know what is being done to regularize the context, they cannot invade the privacy of the defaulting condominium member. So, the administrator can refuse to hand over these documents. He only has to share the minutes book and the regulations in force.
Common responsibilities among the residents are the cleaning, use, and maintenance of these spaces. In this sense, it is essential to understand where your private space and the common areas begin and end. First of all, it should be pointed out that it is only possible to be a condominium if the building is divided into distinct parts, that is, the so-called autonomous fractions. Here each one belonging to different people. In other words, if the building has only one owner, and even if the houses are rented to several people, there is no condominium. When the building is occupied by several separate units there is a condominium consisting of both privately owned and shared ownership spaces. Shared property refers to the common parts of the building. It should also be noted that the law states that the rights and duties of the joint owners are established by the Civil Code, where it is stated that, according to article 1420, each joint owner is the exclusive owner of the fraction that belongs to him and the owner of the common parts of the building. Still based on the same article, none of these duties may be disposed of separately and it is also not possible to renounce the common part as a means for the condominium member to be released from the expenses necessary for its maintenance or fruition. In other words, by buying the apartment, you are also assuming responsibility for the common parts as well as the associated expenses. Learn more, based on an article by Caixa Geral de Depósitos. Common parts of a condominium The common parts of a building, explained in the law and applicable to all buildings where there is a condominium, are: Soil, foundations, columns, pillars, load-bearing walls and all the parts that make up the structure of the building; Roof or the roof terraces, even if intended for the use of any fraction; Entrances, vestibules, stairways and corridors of use or passage common to two or more joint owners; General installations of water, electricity, heating, air conditioning, gas, communications, and the like. However, there are also other areas that can be considered common, apart from the constitutive title, that is, the notarial deed that establishes the building in horizontal property, such as: Parts and gardens attached to the building; Elevators; Fractions for the use and habitation of the doorman; Garages and other parking spaces; Garbage room; In general, the things that are not affected to the exclusive use of one of the joint owners. It should be noted that the memorandum of association can define that certain areas of the common parts are intended for the exclusive use of one unit-holder. In other words, this document contains information regarding the location of the building, the description of the units and the value each represents in relation to the total value of the building. Based on the total value, the quota to be paid by each of the condominium is calculated, and it can also identify the purpose of each fraction. Expenses of the common parts: Who pays? The common areas involve expenses, and for this reason there are condominium quotas. The law establishes that the expenses necessary for the maintenance and use of the common parts of the building and the payment of services of common interest must be paid by the unit owners in proportion to the value of their units. However, if the majority of the apartment owners agree, the expenses related to the payment of common services can be paid by the apartment owners in equal shares or in proportion to their use. The expenses related to the common parts of the building which are exclusively used by some of the owners are borne by the owners who use them. Only the apartment owners whose units are served by the elevators are responsible for the elevators expenses. Works in the common areas Regarding the works in the common parts of the condominium, these are determined at the general meeting of the apartment owners, with the right to respect the rules relating to safety and noise. Here, it is up to the administration of the condominium to organize and manage the process, covering issues associated with budget requests, contracting and licensing. However, in situations where indispensable and urgent repairs are needed to the common parts of the building, they can be carried out on the initiative of any unit owner. According to Law 8/2022, regarding the regime of horizontal property, indispensable and urgent repairs are considered those aimed at eliminating, in a short period of time, defects or pathologies in the common parts that may, at any time, cause or worsen damage to the building or group of buildings, or to property, or endanger the safety of people. If a common part is used by only one unit owner, that unit owner must maintain, conserve and make good use of that space. However, if works are required that are not motivated by misuse, the condominium is responsible for carrying out and paying for the work.
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