This purpose of this note is to inform you about an interesting judicial precedent (i.e, a thesis) recently published in the weekly Federal Court Report, identified as “CONDOMINIUM. IT IS NOT A LEGAL OR COLLECTIVE ENTITY, BUT A MODALITY OF OWNERSHIP (APPLICABLE LEGISLATION FOR MEXICO CITY).” This thesis defines the nature of condominiums in accordance with the applicable statute in Mexico City.
Background
The Condominium Real Property Law for the Federal District, now Mexico City (the “Condominium Statute“) defines a condominium as a modality of property that allows the condominium owner to use and dispose of its exclusive property (i.e.; condominium unit, apartment) and utilize and share the designated common areas. To achieve a correct condominium administration, the Condominium Statute sets forth the following form of organization:
Organization of Condominiums:
- General Meeting: The highest governing body of the condominium, where matters related to condominium administration are addressed.
- Administrator: He or she may be a condominium interest owner or a different individual who performs the administrative and representation functions of the condominium.
- Supervisory Committee: A control body that oversees the Administrator’s duties and performance.
This organization establishes the characteristics and conditions for the condominium operation.
In practice, we see how the existence of a condominium can give rise to various obligations with the tax authorities, its own workers (security guards, gardeners, etc.), or other third parties, such as service providers or other creditors.
However, contrary to the misconception that the condominium as an entity is the obligated party, the actual debtors of these obligations are all the individual condominium owners.[1]
A practical solution has been the establishment of civil associations to manage condominiums (Art.- 82 of the Condominium Statute), which facilitates the identification and fulfillment of these obligations in a more orderly manner.
Nevertheless, there is a widespread and erroneous perception that the condominium possesses legal personality, a notion codified in the statutes of several Mexican states, as will be further discussed below.
The thesis being presented clarifies this misconception and establishes, in our opinion, an interesting precedent for dissipating doubts and accurately set forth these concepts in certain states of the Mexican Republic which legislation confers legal personality upon condominiums.
Content of the Thesis
The Second Collegiate Court in Civil Matters of Mexico City has determined that a condominium cannot be considered a legal entity, as it is merely a form of property ownership.
This determination does not imply that the condominium lacks legal representation, as the general meeting, the supervisory committee or the Administrator may exercise such representation.
Therefore, in causes of action related to the collection, withholding or refunding of maintenance fees, the condominium’s representatives have the exclusive prerogative to bring such claims before the competent authority.
In the event that the legal actions mentioned in the previous paragraph are exercised directly by the individual condominium owners, they shall be declared inadmissible due to a lack of standing on the part of the condominium owner pursuing such cause action since, concerning the shared services and assets of the condominium, those entitled to exercise such actions are the representatives of the condominium itself, and not the owners of the private units individually.
This last aspect could affect the rights of the condominium owners to protect their undivided interest of the condominium’s common property (areas). While the condominium has forms of legal representation, the common property is held in coownership, which should be susceptible to be defended by any of the co-owners (Art. 950 Civil Code for the Federal District).
Comparative Law
The aforementioned thesis applies to Mexico City, since pursuant to the legislation in force in such federal entity, condominiums are not considered as legal entities or juridical persons.
Notwithstanding the foregoing, the Civil Codes of the States of Baja California Sur, Durango, Jalisco, Querétaro, Quintana Roo and Sinaloa classify condominiums as legal entities, which creates a conflict of legal standards among the various state Civil Codes of the Mexican Republic.
Furthermore, a prior precedent established by the now-extinct Third Chamber of the Mexican Supreme Court of Justice concludes that condominiums cannot be considered legal entities, given their inherent nature.
Conclusions
Derived from contradicting criteria among the different Civil Codes in the country, a discussion about the nature of condominiums arises, for which it is possible that the Nation’s Supreme Court of Justice issues a jurisprudence with general and mandatory observance defining the nature of condominiums on a national level in order to unify criteria contained in local legislation, although it lacks the power to modify the articles of the state Civil Codes.
[1] Articles 4 and 43 paragraphs X and XVII of the Condominium Statute.
