Guatemala: The liability of owners in Horizontal Property projects.

Written by Sandra García De Zedán

 

We cannot ignore the recent event suffered in Surfside Florida, United States, when in the early morning of June 24, a residential apartment building on the seashore collapsed in a matter of a few minutes. Of this event, very little is known about the structural origin that could have caused the accident. However, the repairs that the building required derived from the fact that the “Champlain Towers South” was already a building of more than 40-year-old construction and county standards required in accordance with Florida’s own regulations regarding constructions and their inspections on an annual basis, are mentioned in different media. The first civil lawsuit filed and supported by an owner resident of this building was filed against the Board of Directors of Condominiums of the building, under the demand for accountability that could evidence the omission of tasks and resources for the repairs that it required derived from previous inspections made.  

 

Despite the fact of Guatemala being a country high in earthquakes, our construction system differs both at the structural, building and material level, which makes it significantly safer in terms of buildings, the recent preliminary reports generated both in the Florida Building and in the Mexico’s metro, show signs of structural failures, a soil study that presented failures due to its natural topography and proximity to aspects that always present a challenge in construction. When we acquire an apartment or housing unit, we must be sure of the elements that generate value, that surround this important decision in our life. And above all, of those construction and maintenance elements that a Horizontal Property structure will generate for life, so that the elements that led to put our trust in the purchase last for our investment, security and goodwill in our properties.      

 

When a developer bids or launches a horizontal property real estate project, large elements come to validate what is known within a timeline as the “planning and building process”. The bidding of contractors, its significance in similar projects, guarantees, materials, times, previous work, experience that they have in the market, are all elements of value that attract the attention and provide confidence of the buyers. The construction and delivery process must always provide the buyers the necessary guarantees that a new building requires in construction processes. As of such moment, the owners must ensure that a building has the required short, medium, and long-term maintenance. It must be remembered that the guarantees do not last for life and have their limited validity according to the law and those that were granted contractually.        

 

In Guatemala it is common for owners to appoint their representation to the Board of Directors of Owners, who are owners of units within the building who must ensure that the building is well managed, preserved and its maintenance is adequate. It is through them that decisions that lead to proper administration are determined. In accordance with our current civil code, the execution of the administration of a Building is granted to an individual or entity who manages it. Annually, the owners, according to the report provided by the administration and through the rendering of accounts of the administration, must decide and provide the necessary expenses to cover the repairs, maintenance, and provisions that are considered necessary for the building. Preliminary reports of the Champlain Towers South Building in Florida indicate that the building required structural repairs that had to be covered by its owners in an estimated amount of nine million United States Dollars (US$9,000,000.00). Such repairs had been determined since the first reports that were generated by a consultancy carried out at the end of 2018. For a one-bedroom apartment the fee that was required to cover the amount of repairs and maintenance was an estimated US$80,000.00. For a Pent house the extraordinary fee required was an estimated US$330,000.00. This, distributed in an average of 100 units. As real estate advisers, and the accompaniment that we give both developers and owners in Annual Assemblies of owners, we have observed that more and more these elements are not considered as part of the fundamental elements to be discussed between owners as mandatory reserve funds. If a building is new, the centralization of the issues limits to the understanding of the integration of the administration fee required by the building. The general components are insurance, security, salary of administrative maintenance personnel, electricity, maintenance of common areas, improvements, etc. In an older building, without a doubt, the elements to consider must be other, and this shows that the cost of living in a Horizontal Property is higher and to be considered for any purchase of a property of this type. Those who seek to live in a Horizontal Property must commit in their purchase to cover this important element at the time of its acquisition, and must be willing, so that the goodwill of their property is kept, to maintain strict control in the revisions, improvements, repairs that it may require. And this is undoubtedly exercised through proper representation and administration.              

 

The Board of Directors of a Building must undoubtedly be formed by committed, capable and suitable people who undoubtedly seek through their professional efforts to maintain correct communication between neighbors to always watch over those necessary interests that raise, maintain the elements of the own building and its units in excellent condition.    

 

Civil liability for the actions of the Administrator or Board of Directors of owners of a Horizontal Property building in Guatemala?

In Guatemala, all administrative decisions are based on the guidelines determined by the Building Owners Assembly, and the Administrator’s actions are delimited in the Horizontal Property and Coexistence Regulations. The Board of Directors must supervise the tasks carried out by the Administrator and observe the proper management and use of the resources of a building or residence, controlling the administrative management, increasing the efficiency of the administration. Therefore, any omission in the performance of their tasks in pursuit of the purpose pursued by their appointment may cause, according to the severity, civil or even criminal liability and therefore compensation for any damage or injury that is consequently caused.   The tasks of a Board of Directors of a Horizontal Property Building, do not only involve the aesthetic, use and coexistence measures that a building requires. They must also ensure over time the inclusion in their budget of those inspections that attend and ensure stability due to the wear and tear of time and natural conditions of living in a country like Guatemala, which presents great challenges due to its seismic nature, in addition to supervise those additions that are made inside the building that may alter the structural weight under which a building is designed. Undoubtedly, the appointments and expectations must include elements of value that determine the suitability of those who make up these administrative and management structures. The commitment of each of its members shall be the commitment to ensure in perpetuity those decisions that grant their owners the tranquility of the measures that are adopted thinking about the future.

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