If you live in a homeowner’s association, you already know that cohabitating with your neighbours can be quite a challenge. But have you ever wondered about the legal structure of your community? Probably not, but… Why is it important to know this? First, because property of owners have some limitations in their capacity to act, and if anything goes wrong or there is misconduct, the responsibility falls on the owners and the President. Therefore, knowing this aspect can be crucial to resolving cohabitation issues and making the right decisions. In this article, we will discuss the legal personality of Community of Owners and the Horizontal Property Law. We will also address whether they can hire services and what similarities they have with a company. Keep reading!
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Do property owner communities have legal personality?
To start, it is important to clarify what a legal personality is. It refers to the capacity that certain entities, such as companies or associations, have to exercise rights and obligations. Property owner communities are a peculiar case, according to the Horizontal Property Law (HPL), these communities do not have a legal personality like companies or associations. However, the HPL recognizes their capacity to be a party in lawsuits and to contract services. They are a hybrid with some capacities from the business world.
Issues of not having a legal personality
The fact that property owner communities do not have a full legal personality can generate certain inconveniences. Some of the most common problems are:
Limitations in the capacity to act: Although these communities can participate in lawsuits, contract services, and hold rights to a driveway… they may encounter legal obstacles to carry out certain actions, such as acquiring real estate. For this reason, it is clarified that janitor’s residences are classified as common areas (not as an independent dwelling).
Individual responsibility of the owners: Lacking legal personality, the property owners can individually be held responsible for certain actions carried out in the name of the community and with the President at the head, as he or she is the legal representative.
Can Property Owner Communities contract services?
Property of owner communities can indeed contract services. In fact, it is quite common for them to do so for the maintenance of common areas. The HPL stipulates that these contracts must be approved by the property owners in a neighbourhood meeting.
What similarities does a Property Owner Community have with a company?
Although they are not exactly the same, property owner communities have some similarities with companies.
Internal organization. Property owner communities have governing bodies similar to those of a company, such as the Board of Owners and the administrator.
Ability to contract services. Both entities have the ability to contract services.
Resource management. Like a company, communities must manage their financial, human, and material resources to maintain the good functioning of the property.
Regulations. Both must fulfil certain tax obligations and are subject to specific regulations.
Decision-making. Both in companies and in property owner communities, decisions need to be made collectively.
In summary, although property owner communities do not have legal personality, they do have certain attributions that allow them to exercise their rights and fulfill their obligations. They can contract services, like any company, and are subject to specific regulations, like the HPL. Knowing these legal aspects is essential to ensure the smooth functioning of a property owner community and avoid possible conflicts or legal problems in the future.