Differences and Similarities at a Legal and Structural Level between a Private Association of Owners and the Horizontal Property Regime
In recent years the figure of Horizontal Property has become popular, but what benefits does it bring us to belong to this regime, what differences exist between the private urbanizations governed under Private Associations of Owners and the Horizontal Property Regime, although it is true that these two figures have similarities, nevertheless, each one possesses a series of own features in its content that characterize and distinguish them.
Before explaining the benefits, they offer, we will explain the structure and operation of both figures.
The Horizontal Property is not a particular real estate property but a regime that regulates the way in which a real estate property is divided and the relationship between the owners of the private property and the common property that has been segregated from a land or building. This horizontal property regime is governed under Law No. 284 of February 14, 2022, and the owners of the units that make up this building or complex may not voluntarily opt out of the regime and are therefore obliged to comply with a set of rules for a better coexistence.
On the other hand, there are Private Urbanizations that can be a group of lots, houses, buildings, among other types of structures of independent property with common areas, which is governed under statutes that establish duties and rights among owners.
In Panama, these urbanizations are organized through Private Associations Owners and members can be added progressively, however, they are not obliged to belong to the Association and those who already belong are free to withdraw if they wish, making it more difficult to collect fees for expenses since they are not obliged to pay for the maintenance of the common areas even though they benefit from all the services provided, such as security checkpoint, enclosure wall, 24 hour surveillance, parks and recreational areas. Therefore, the increase in lawsuits for the recovery of delinquent fees has increased in recent years and has led us to the conclusion that it is more complicated if a lawsuit is filed against a unit governed under the bylaws of a Private Association of Owners than a unit under the horizontal property regime.
Private Associations, unlike the Horizontal Property Regime, must thoroughly establish in their bylaws and regulations the collection of delinquent maintenance fees, so that they do not have problems when proceeding through court actions, since if they are not well established they must proceed through an foreclosure proceeding, as long as the formality of the process is complied with, otherwise an ordinary lawsuit would have to be filed, which would take much longer to recover the debt than it takes through an foreclosure proceeding.
Regarding its constitution, we can refer to another important difference, since in the case of the Urbanizations that want to belong to the Horizontal Property Regime, they must go through a process before the MINISTRY OF HOUSING AND TERRITORIAL PLANNING (MIVIOT), which is the competent entity to certify that a project is suitable to belong to the regime, who is in charge of the revision of the plans and approval of the Co-Ownership Regulations, after this, it must be notarized in a Public Deed and registered in the Public Registry of Panama, while the Private Associations of Owners are born from the assignment of a legal status and approval of bylaws, this process is carried out in the MINISTRY OF GOVERNMENT (MINGOB), which is the competent entity to approve non-profit associations, that said, the difference in terms of costs and estimated time for the constitution of both figures may be observed.
It should be noted that the similarity is very well established since, if a Private Association of Owners wishes to belong to the Horizontal Property Regime, it could do so, provided that it has the approval of all the units, in addition to the regular process required by the MINISTRY OF HOUSING AND TERRITORIAL PLANNING (MIVIOT).
We conclude that both the Horizontal Property Regime and the Private Associations of Owners are figures that have the purpose of establishing a housing complex in a particular way in better conditions, and to have common goods, which have exclusive use of the owners, therefore each one must be constituted according to the needs that exist within the Project in order to have a functional administration and achieve a peaceful coexistence among owners.
