1. WHAT IS CONDOMINIUM OWNERSHIP?

1.1 Historical background

            The concept of horizontal property as we know it today was not always as clear; its creation and perfection is the result of a historical process.

            Its earliest background can be traced back to ancient times: two thousand years ago in the Ancient East, specifically, in the region of Caldea. The recording of such transactions in the Babylonic Law reveals that it was in this place where the first multi-unit structures were built and every floor was sold.1

Likewise, some historical findings prove the existence of horizontal property in the Lower Empire, the Sirian-Roman law, Palestine, Egypt and among the Phoenicians. However, Roman law has no definite records of this type. Some believe it did exist during the Roman Empire, when the Roman commoners built this kind of structures in Mount Aventine, opposing the legal principles of the time. For others, it could not have possibly existed, for it went against the Roman concept of property. It was illogical to accept the idea of property owned by a person different from the owner of the land on which the building was erected.

Horizontal property emerged as an autonomous figure with well-defined characteristics during the Middle Ages, in the cities of Nantes, Rennes and Grenoble. Economic, geographic and social needs contributed to the establishment of this kind of property in those cities. The presence of walled in spaces, the threat of ravaging fires and geographic barriers like the ocean and mountains were some of the various elements that influenced such phenomenon.

This type of property was beneficial: acquiring a home of one’s own became easier and less expensive. For this reason, the system spread rapidly across France and other countries, to such an extent that it became part of the Napoleonic Code, which at the time served as an inspiration for other nations.

In Costa Rica, the Civil Code was based on the Napoleonic Code of 1804, which did not regulate horizontal property. Such an omission was justified by claiming that “horizontal property was unlikely in our legal regime, probably because the issue was still unknown, or because it was unnecessary.”

Nevertheless, different factors led to the regulation of this kind of property. Some of them were urban development, population growth, the high cost of lands, security, the possibility of having shared luxuries, and the need to protect the cities’ surrounding areas. In 1966, Law 3670 or the Ley de Propiedad Horizontal (Law on Horizontal Properties) was passed and then reformed by Law 6890 on September 13, 1983.

It developed especially at the beginning of the 1980’s. More and more buildings submitted to this special regime and gradually and cautiously, different residential projects, whose structure did not exactly fall into the category of “building,” were also a part of it.

            But there were more needs. Important aspects such as security, privacy and comfort uncovered a new reality – the urge to apply this regime to other kinds of constructions designed to serve other purposes.

            For not complying with its stipulations, shopping centers were the first edifications to experience the force of the law: some of them were submitted to the regime of horizontal property.

            There were more requirements to meet. Why not consider condominium lots or “private urbanizations?” Could we possibly have lots, houses and buildings inside a condominium, all in one? This and many other questions, along with social needs led to the promulgation of executive decree No. 26259-MIVAH-MP, published in El Alcance No. 44 in the official journal La Gaceta No. 168, September 12, 1997.

            This decree, known as “Reglamento al artículo ocho de la Ley de Propiedad en Condominio” (Regulations according to Article 8 of the Condominium Ownership Act) enabled, for the first time in Costa Rica, the submission of a building or group of buildings as well as their accessories and whereabouts, to the regime. This applied only if regarded as a single unit, either by building them simultaneously, one by one, in stages, for commercial, residential, industrial, storage or mixed purposes, and always considering eventual vertical, horizontal or mixed condominiums. 3  

            The previous decree satisfied the needs present at that time, but it was completely unconstitutional, for it regulated something that was not in the law.

With all this commotion, the Congress had to analyze different bills that could substitute for that of 1966 and this is how Law No. 7933 “Ley Reguladora de la Propiedad en Condominio” (Condominium Ownership Act) was published in La Gaceta on November 25, 1999.

1.2 Concept

Several or different individuals may own different floors, apartments, lots or locales (units or private units). In this way, they are exclusive owners of their own property as well as joint owners of common areas, such as the stairs, green areas and others.  

1.3 Definitions 

According to the previous concept, condominium property emerges when an edification is divided into floors, locales or apartments. Nowadays, we can refer to complexes that may have or have different owners. The following are some definitions of condominium property:

“Building owned under horizontal property regime.”4

“…legal figure created when the different floors or apartments of a house or property belong to several owners, constituting a special form of property considering its use. Due to its physical structure, some parts of it belong exclusively to its general owner, and other parts belong to joint owners.” 55   

“Spatial property exclusively constructed on buildings that are divided into floors or locales suitable for independent use, giving the general owner a common and exclusive right over them, as well as a right for joint or undivided ownership over the remaining common areas of the property.” 6

            Nevertheless, these definitions are closer to the concept of horizontal property than to that of condominium property. Horizontal property focuses on edifications. Since the sphere of action is broader, the term condominium and its relationship with joint ownership must be clear:

            “Condominium Property: form of real property in which the different apartments, houses or locales of real property built vertically, horizontally or both are suitable for independent use given the existence of a private exit to a common area or public thoroughfare. It belongs to different owners, each with a common and exclusive right to his apartment, house or locale, and a right to joint ownership over the elements and common areas of the real property, necessary for use or enjoyment.” 7

“Condominium: Real property right belonging to different people for an undivided part over goods or real property. In a condominium, each tenant can sell his undivided part and his creditors can place an embargo and sell before the division among the joint owners is made…” 8 

“The condominium is the real property right that entitles several people to decide over goods or real property; they are the general owners of an undivided share.” 9

“Joint Ownership: Property right to goods or real property in favor of several people and in the form of ideal shares, or actions.” 

It allows each joint owner to use property as long as he respects the coinciding rights of the others, to enjoy and dispose of it freely as far as his share allows him to.” 10

“In some cases, the right to own something is not only exercised by one individual, but by two or more, for different reasons. As long as it does not involve a company or association, but simple relations within a community, this common interest over a single object is called joint ownership or condominium. When this takes place, the share of each joint participant is not a specific portion of the property, but an ideal share, a right over the condominium.” 11

            All these definitions leave a bittersweet sensation. Costa Rican treatise writer Brenes Córdoba sustains that when dealing with joint ownership, we refer to condominiums. But, isn’t a condominium a horizontal property? Does the concept of condominium property confront us with the idea of horizontal property, condominium or joint ownership? Or is it perhaps a new kind of property? 12

1.4 Legal Framework 

The main characteristic regarding the legal structure of this particular kind of property is that there is an exclusive ownership over the entire locale, lot or apartment and its accessories. This ownership is limited by the law in case there is a special situation of interdependence between the private unit and the building or complex as a whole. At the same time, there is joint ownership over those elements that are common or necessary for the existence and maintenance of the building; these elements cannot be divided.

1.5 Terminology

Several names have been used to define this institution: property divided into floors or apartments, mapped property,cubic parceling of the property and condominium. In Costa Rica, the most common terms are horizontal property, horizontal property regime and condominium.

1.5 Legal Nature 

In condominium property, there is no such thing as absolute joint ownership; joint ownership exists along with exclusive ownership. Each owner has a special right, because he owns a floor or unit and is, at the same time, joint owner of the land and of other common areas within the building.

            Several theories have tried to explain the legal nature of horizontal property:

Surface Rights Theory: Some authors compare horizontal property to the surface rights applied in countries like Spain, where it is believed that land does not belong to a single person, but to everyone; therefore, the construction is done on someone else’s land. Nevertheless, this theory cannot be applied; according to surface rights, the land’s owner has no right to what is planted or built within his land and the owner of what has been built or planted has no right to the land.

Easement Theory: This theory denies the existence of common areas within the horizontal property and sustains that all the portions of the condominium building belong to an owner. The common areas are considered easements. This theory is not acceptable because for an easement to exist there must be two properties, known as servient and dominant tenements. Consequently, the easement cannot be accepted as legal nature of the horizontal property.

Emphyteusis and Usufruct Theory: This theory finds similarities between a multi-unit property under emphyteusis and the usufruct. This proposition must be rejected because the owners of each floor exercise their right to property of their own and not to that of others.

Joint ownership or Community Theory: In this case, horizontal property establishes a particular set of rights over a common property given to different owners. The common property is divided into independent parts. This is unacceptable; property cannot be both common and exclusive.

Society Theory: It compares horizontal property to a society or corporation, formed by different owners whose purpose is to enjoy, preserve and improve that common property. This theory cannot be accepted because within a corporation, there is a division between the property that belongs to the corporation and the property that belongs exclusively to its members; the latter is basically characterized by the presence of units that are independent from the exclusive property.   If this theory were accepted, “the corporation would stand for the real property and the partners could only obtain lease agreements, which would give way to a different kind of horizontal property.”13

Theory of Undivided Rights: The exclusive property right to a unit or floor is not given; instead, the possibility of using and enjoying a specific floor or unit is given to each joint owner with previous approval.

Sui Generis Theory: It develops from the concretion of two kinds of rights, one for each owner over his unit and the other, special joint ownership over elements of common use or elements that are essential for the condominium; these are undivided rights.

            Horizontal property or property divided into floors, known today as condominium property, has special characteristics, mainly because of its function: it bears certain limitations for the benefit of the other owners and submits to a special regime as well.

1.7 Other possibilities: other needs?

            Should it be called Condominium Ownership Act? Was the legislator thinking about a “condominium” or “a horizontal property” when he passed this law? These questions have not been answered yet. Nevertheless, it is valid to say that the law emerged as a need to look for a more dynamic and bold system.

            The legislative purpose of providing the community with more options is evident. This is achieved by leaving behind the old concept of “building” and considering new alternatives of private property within a community, which involve different concepts and hence, other uses. Among many other factors, current needs such as environmental protection, security and comfort have encouraged the creation of private property into community systems. These properties may have different uses, like residences, recreation, business, farming and others, always sharing common elements.

            But there is more to it. The structure of these complexes may be vertical, horizontal or both. What used to be urbanizations, residential areas or colonies with public access will be “private” in times to come. These buildings will be constructed under the system of condominiums with private units (lots, condominium lots or individual houses) and common elements like access, sidewalks, booths for security guards, walls, street lighting, intercommunication systems and even recreational areas.

            Similarly, a condominium can be constructed based on the traditional construction system, with the difference that it will no longer be used only for residential purposes. The building will be used, among other possibilities, for commerce, warehousing, offices or a combination of the above. 

            That is not all. These combinations are limited not only to the purposes, but to their constructive and legal structure. Therefore, the complexes that were submitted to a condominium regime will be able to have other condominiums inside the condominium (subdivided plot that is also the source property of other subdivided plots), condominiums along with other houses, lots and other buildings and for various uses, as well as the possibility to construct these regimes in the Marine Coastal Zone. This leads to a wide variety of alternatives, but at the same time, it introduces pre-horizontal management, and obviously, within the regime, a much more complex administration. The formation process must have the advisory and collaboration of an interdisciplinary group of professionals: lawyers, notaries, architects, engineers, topographers, and administrators. We should be clear about the constructive aspects: geographical zones in which these complexes are allowed, permits, requirements, necessities, plans, structures and finishes. As for financial aspects: credits and guaranties required by financial entities; legal aspects: types and number of private units or subdivided plots, as well as the use of common areas, unit sale, representation in case of joint ownership of units, leasing and eviction of the units, collection of duties within the condominium, and the writing and application of the condominium’s bylaws.

            These aspects are not entirely specified in the law. Nonetheless, through their study, one can decipher the need for a more efficient system that will satisfy these and many other needs. 

There is another possibility: the collective property regime. It is the kind of property that belongs to several individuals, who will be able to enjoy it similarly or proportionally, according to their right as agreed upon. They will submit to a special regime (like in the case of condominiums, but to a greater extent) created by law. This regime will allow the subjection to different types of collective property, depending on its use.

            This kind of property will be able to comply with the legislative spirit, only by anticipating everything necessary to satisfy today’s needs.” 

1.8 Conclusions

            Legally speaking, the terms “condominium” and “joint ownership” have been accepted. Therefore, the main differences between “condominium” and “horizontal property” in relation to joint ownership must be clear.

            In Costa Rica, condominium property stands for real property, submitted to a special complex regime, made up of private units, such as lots, houses, apartments or locales; suitable for independent use for having an exit to a common element or public thoroughfare, which may belong or belongs to different owners, each with a singular and exclusive property right to his or her unit; and common elements that are necessary for its use and enjoyment over which the owners have joint ownership rights and which can be developed vertically, horizontally or in a mixed way.

            The origins of horizontal property allow us to conclude that this type of property is meant for buildings and that the legislator, by means of Law No. 7933 – Ley de Propiedad en Condominio (Condominium Ownership Act), aims to regulate many other aspects, as it has certainly done. For this reason, it is necessary to think about the need to modify the law and establish a regime of collective property, which embraces different purposes.

1.9 Purpose

Condominium property is constituted by private units (floors, apartments, offices, warehouses, locales, parking areas, cabins, villas, agricultural farms and others), also called personal property, and by common property or property used by all the owners.

            The legal structure of this special kind of property is characterized by the existence of exclusive ownership over the unit and its accessories, which is at the same time limited because of the special situation of inter-dependence between the unit and the complex as a whole.

            At the same time, there is joint ownership of the common elements and of those that are indispensable for the existence and maintenance of the building or complex, establishing forced undivided right to this common property.

1.10 Personal Property or Private Units          

Personal property is that belonging to the exclusive domain of its owner, comprised of each private unit, including its accessories and those spaces necessary for its correct use, all in accordance with the extension given to them by the correspondent attributive title deed and the purpose for which it is used.

            These private units are known as subdivided plots and are those areas suitable for independent use, which constitute an autonomous portion conditioned to be used and enjoyed by its owner or owners, excluding all other owners of private units.1 

            These areas must communicate directly with public thoroughfare or with common spaces that lead to it. Therefore, the existence of “joint subdivided plots” is not feasible.

            Given its special nature, exclusive property over a unit is limited for reasons of convenience and for the interests of all title members. Among other things, they should be used in accordance to their purpose and cannot be given immoral uses; the owner cannot do or not do anything that will disturb the tranquility of the other owners, or affect the solidity, security, health and comfort within the complex. Similarly, no changes regarding the external appearance of the façade, the colors and designs of walls, doors or external windows are allowed in the complex as a way to keep the building’s appearance. Innovations or modifications affecting the structure, main walls, general installations or any other essential element in the building and the complex in general are also forbidden.2   

            The owner will have the same rights established in regards to civil matter for property in general. Therefore, the owner will be able to use, enjoy and sell his unit and make all kinds of acts or contracts during his lifetime (inter vivos gift) and transfer it in case of an imminent death (gift causa mortis), with the possibility of selling, donating, and making use of it through testament and even mortgage it, all within the limitations that the Law and the figure itself imposes on it (for being under a special regime).

            The rightholder is also responsible for the owner’s duties, such as the payment of municipal taxes and real estate taxes.

            In regards to those buildings in condominium, as long as the Internal Bylaws allow it, the owner or owners of the first floor, in case there are several floors, will not be able to occupy the flat roof or the roof, build more floors or make more constructions. Therefore, these proprietors will not have any more rights than the rest.3

            In private or subsidiary units, it is the proprietors’ duty to carry out the necessary maintenance work; in addition to the maintenance of the mezzanines, floors, walls and any other intermediate division.

            These private units should be built on lands that are suitable for appropriation. Many recreational complexes are partly built in the Marine Coastal Zone where only usage concessions are given for many years and even extendible. For this reason, the appropriation of functional private units built in this zone is not possible. In this way, those complexes built in the coastal zone cannot be subjected to the condominium property regime, and the only possibility is that common areas be constructed in the zone mentioned, outside the restricted zone and that the private units be constructed in nearby lands .4

1.11Common Property

            Common property is known as belonging to all the owners. It is owned by all the title members of the condominium and it is common because they are in charge of the existence and integrity of the complex (floor, foundation, main walls, roofs, security booth, etc.). They contribute to the owners’ proper or maximum use and enjoyment of common elements (stairs, elevators, pools, saunas, green areas, recreational areas in general, among others). There is joint ownership over this property, giving way to obligatory undivided rights.

            All the owners are empowered to enjoy these things exclusively (pro diviso) and at the same time, they must contribute with the maintenance, reparation, and eventual reconstruction expenses in accordance with the legal portion or as agreed upon. Nonetheless, these common areas may also have a restricted use, depending on the use given to all the subdivided plots or some of them.5         

            These common elements are accessorial, for they allow the real use and independent development of private areas.

            Title members of the subdivided plots or private units are, for this reason and as mentioned above, owners of the common elements. They will have proportional right to the percentage represented by the fixed value of their unit, within the complex.

            In principle, none of the owners can be limited as to the use and rational enjoyment of common property, 6 nor can they claim a greater right to enjoy these elements for reasons of percentage. Similarly, each owner’s right to common elements cannot be sold, transferred or encumbered, in isolation. They are essential to the property of the correspondent unit, and for this effect, cannot be taken away from it.7

            The land on which the building is erected (in case of an edification), its foundation, main walls, intermediate divisions, roofs, corridors, vestibules, stairways, accesses (not only accesses, but also exits and shift areas due to the kind of construction), locales for the personnel or security booths, locales and service installations (electricity, telephone, illumination, water, gas, pumps, tanks, wells and others), elevators, residue incinerators and any other destined to common use, and of course, all that the regulation regards as common property.

            These common elements can be leased,8 but only in accordance with the Condominium Council. The amount charged has to be destined to a common income.9

            As for the owners’ duties and obligations regarding the common elements, they should respect the uses of the common services and property, which should be used without limiting, minimizing or harming the rights of the other owners. Some examples of these obligations are: pay for administration, maintenance, service and common property service costs, contributing in proportion to the value of that belonging; proportionately pay for taxes, municipal rates, insurance, administration costs, cleaning and maintenance, among others.10  

2. ESTABLISHING A CONDOMINIUM

2.1 Requirements

Article 15 of the Ley Reguladora de la Propiedad en Condominio (Condominium Ownership Act) contains the minimum requirements each condominium should satisfy, according to its characteristics. It is important to know that all the clauses established in these regulations refer to buildings, either horizontal or vertical developments.

Especially those buildings subjected to the regime must comply with all the construction regulations required by special laws.1 But among other things, they must also be constructed with non-flammable materials, at least the main structure, main walls and floor divisions. 

The law also calls for the existence of ducts throughout the floors, which will allow the flow of drinking water, sewage water, and rainwater, as well as electricity and others, such as television, cable television and telephone services. There should also be ducts for waste and garbage disposal, which will be collected on the first floor for their respective treatment.2

2.2 Recording system

            Based on the fulfillment of the functional and structural requirements, the owner or grantee who decides to submit the property to the condominium regime, should do it by means of a public deed and with the presence of a notary who will state the owner’s will.3 Such a deed must contain the requirements established by the law,4 it should at least include the nature, location, extension and boundary lines of the property that will be submitted to the regime and that will become the source property. In addition, there should be a general description of it, and since it is a complex or development, it should state whether it is meant for residential, commercial, tourist, industrial or agricultural purposes; that is, establish its function and general characteristics.

The deed must also include the description of each private unit or subdivided plot: its nature, location, extension and boundary lines, as well as the proportional size of each in relation to the entire property (to the entire complex or source property, everything in relation to the total area). Any useful detail to identify the unit and its purpose should also be included.

The total value of the condominium and of each unit, as well as the percentage or corresponding proportion of each within the total value should also be mentioned in the deed.5

Common property can also be described in the constitution and bylaws, including its characteristics, location, limits and specific purpose.

The owner, and even the notary, should make sure that both common and private areas meet the requirements established by special laws.6 Similarly, all of the above stipulations will be described by the notary based on the construction’s plot plans, which he will have at hand.7

Finally, the deed must include all necessary rules for the consolidation or segregation of subdivided plots, specifying the minimum areas and the exit to public or common areas; in general, all necessary rules, not only those established by the Law, but also those required for proper human co-dwelling. In this regard, condominium and administrative regulations must be included, as well as any other regulations that the notary or the owners may consider important.

The affidavit of the public document must be submitted to the Public Registry, along with the plan, previously approved by the corresponding institutions8; it will contain all the pertinent information of the source property and subdivided plots, which will match the description provided. Likewise, area and distribution charts must be presented.

Once the testimony is free from defects of form, the registry will pay for the recording of the property in the Property Section of the Public Registry and record the first entry of the source property in the condominium property section. Subdivided plots originate after the principal property has been recorded, through the individual registration of each one of them, all based on the source property, bylaws and approved plans.

________________________________________________________________________

This article was prepared by attorney Andres Montejo. His law firm specializes in Costa Rica real estate law and has offices in San Jose and Guanacaste (Do It Center, near Liberia Airport).

            Andrés Montejo was born in San José, Costa Rica, on January 23, 1966. In 1989, he graduated from the University of Costa Rica as attorney and notary public. He also studied in Tulane University, Louisiana. Besides being a successful professional, he has also participated actively in the country’s public administration. He was first member and then president of the National Consumer’s Commission, an important institution within the Ministry of Economy, Industry and Commerce. He was designated vice-president and then president of the National Institute of Housing and Urban Planning, where he also worked as an external notary public for several years. In addition, Mr. Montejo was legal advisor to the Board of Directors and assistant advisor to the President of the Institute of Municipal Promotion and Advisory. At the same time, he was part of a specialized group of attorneys who provided notary services for one of the national banks, the Banco Popular y de Desarrollo Comunal (BPDC).

            Montejo has had a great deal of academic experience. Since 1994, he has been professor of property law in the University Of Costa Rica School Of Law, where he is the general coordinator, and he has also taught courses in the master’s degree program in Notary and Registration Law. He has led various seminars about property law and related topics and has published many articles in well-known magazines. Currently, he is teaching special courses about real estate and offers them at least four times a year in Guanacaste. Recently, he received a special distinction as Honorary Professor and vice-rector for Foreign Affairs in the Central American University of Entrepreneurial Sciences (UCEM) (Managua, Nicaragua). Andrés Montejo is considered an expert in real estate matters and is entirely devoted to this field of study.