Amendments to the Mexico City’s Condominium Property Law

On January 13, 2015 the Government of Mexico City published in the Official Gazette a decree by means of which various provisions of Mexico City’s Condominium Property Law (the “Law”) were reformed (the “Reforms”), and entered into force on January 14, 2015.

Listed below are the Reforms that we consider to be most relevant along with a brief explanatory comment thereon.

A. Meetings.

1. The Ordinary General Meetings shall be held quarterly.

Comment: Prior to the Reforms, the Meetings were to be held at least once every six months.

2. The Reforms establish the authority of Mexico City’s Attorney for Social Affairs (the “Social Attorney”) to call for a Condominium Owners’ General Meeting in the following cases (in addition to the cases where there is no administration):

a. By judicial order; and

b. By request of at least ten percent of the condominium owners, when the manager or the audit committee refuses to call a Meeting.

Comments: (i) Prior to the Reforms, the Social Attorney could only call for a Meeting when there was no administration and only with the purpose of “spreading” the condominium culture; and (ii) in subparagraph b) it is noted that the percentage is computed by the number of condominium owners and not by percentage of the undivided interest of each property. For example, the undivided interest of 0.02 % accounts for one condominium owner the same as the owner of an anchor store with an undivided interest of 30 %.

B. Administration.

1. In the event that the Condominium through its audit committee engages the services of a professional administrator, from now on it must submit for registration before the Social Attorney, in addition to the contract, the relevant guaranty or bond, and the certificate issued by the Attorney, to support the Social administrators’ course offered by the Social Attorney on the subject.

Comment: Prior to the Reforms, the professional administrator had to attend the course but it was not a requirement to approve the course; now, after the Reforms, the professional administrator must approve the administrators’ course offered by the Social Attorney on the subject.

2. The administrator and the members of any of the committees within the condominium shall have a maximum period of thirty days from their appointment to attend the training or update courses offered by the Social Attorney on the subject.

Comments: (i) Prior to the Reforms, only the administrator and the members of the Administration Committee and the Audit Committee were required to attend training courses offered by the Social Attorney; after the Reforms, all members of any of the condominium committees are required to attend; and (ii) prior to the Reforms, they had to prove their attendance to the courses at least once a year; after the Reforms, the term to comply with this obligation is 30 calendar days after their appointment.

3. The condominium administrator appointment shall be valid for all legal effects against third parties and all kinds of authorities, on the condition that the administrator proves its legal authority with Social Attorney’s registration as administrator. And in case of a dispute regarding the administrator’s legal authority in a judicial or administrative proceeding, the Audit Committee shall assume the role of administrator.

Comment: Prior to the Reforms, when the legal authority of the administrator was a disputed matter at a judicial or administrative proceeding, there was a gap in the Law that left the condominium in a state of legal helplessness.

4. The condominium administrator is jointly liable for the services engaged by the same, in terms of the Civil Code provisions on the subject.

Comment: This joint liability did not exist prior to the Reforms. After the Reforms, the administrator (individual or entity) is jointly liable for all services engaged by the same, which implies that the administrator shall be careful, e.g., with services agreements executed by the same in such capacity.

5. In the event of default by the condominium administrator to its obligations under article 43 of the Law, at the request of at least 20% of the condominium owners and ratification of the Meeting, its appointment may be revoked.

Comment: Prior to the Reforms, the Law did not provide for the possibility that part of the condominium owners could request the revocation of the administrator’s appointment.

6. For new constructions subject to a Condominium Regime, the first administrator shall be appointed by whoever grants the articles of incorporation for the condominium, and such administrator shall call for a Condominium Owners’ General Meeting to appoint a new administrator and to appoint the members of the following committees: environment, education and culture, security and civil protection, physical activities and sports, and mediation; said appointments shall be made in a period not to exceed 30 calendar days from the date of the incorporation of the condominium regime.

Comment: Prior to the Reforms, there was no obligation of the first administrator of the condominium to call for a Condominium Owners’ General Meeting to appoint a new administrator and the members of the various condominium committees.

C. Fees.

1. The ordinary and extraordinary administration and maintenance fees shall not be subject to compensation, personal exceptions nor any other assumption that can excuse its payment, unless the relevant condominium owner proves to the Condominium Meeting it does not have the resources or it has been declared bankrupt, in which case, the Meeting may agree such fees to be paid with work for the benefit of the condominium.

Comment: Prior to the Reforms, the Law did not contemplate the possibility to compensate the payment of condominium fees with work for the benefit of the same.

2. It is established as a prerequisite to initiate a conciliation procedure before the Social Attorney, for disputes between condominium owners, tenants or between the same, its Administrator, and Audit Committee, to prove that they have exhausted the internal mediation procedure before the Administrator or relevant committee.

Comment: Prior to the Reforms, it was not a prerequisite to initiate a procedure before the Social Attorney to have exhausted the internal mediation procedure before the Administrator or relevant committee.

D. Condominium Committees.

As part of the condominium internal environment in addition to the (previously named Committee on Ecology Committee), of the Education and Culture (previously named Socio-Cultural Committee), the Sports Committee, and the Safety and Civil Protection Committee, which, pursuant to those Reforms, are subject to the Internal Civil Protection Programs and the Crime-prevention Plans of the Ministry of Public Security, the Reforms create the Mediation Committee, which is responsible for promoting the resolution of condominium conflicts through alternative dispute resolution methods to settle disputes within the condominium.

Comment: Prior to the Reforms, there was no Mediation Committee, therefore the inclusion of such privileges the alternative dispute resolution methods to settle disputes within the condominium.

E. Destruction, Collapse and Rebuilding of the Condominium.

For properties subject to a Condominium Regime that have collapsed or have been entirely destroyed or in a proportion representing more than 35 % of its value, by any direct or indirect condominium owners may request directly or through the Social Attorney, the involvement of another authority to obtain an opinion regarding structural strength, civil protection or any other deemed necessary.

Comment: The Reforms introduce the possibility for the condominium owners that are in this situation to request the intervention of another authority to obtain an opinion regarding structural strength, civil protection or any other deemed necessary.

General comment: The Reforms override all provisions opposed to the provisions therein; however, the same do not establish whether the condominiums created prior to the Reforms must comply with registration, regularization, update, and other obligations (or if a deadline is given to comply with said obligations), therefore, we suggest to meet the same as soon as possible.