On November 20, 2018, Federal Law No. 13,777 was passed,
establishing a new form of condominium—a
"multi-ownership" condominium. Multi-ownership allows the
co-owners of a property to each use it for a pre-determined period
of time as its single owner. Each "time fraction" is
indivisible and bound to the right of use of the property for
periods not less than to 7 days, which can be fixed and determined
or change from year to year.
The institution of the multi-ownership must be registered in the property's certificate at the real estate registry office with the indication of all time fractions established to each multi-owner and the correspondent occupation periods. Individual certificates and taxpayers' numbers will also be created and assigned to each time fraction of the property. Furthermore, a multi-ownership condominium must have condominium bylaws, which will rule the use of the property by each multi-owner and their proportional contribution to the costs of maintaining and managing the property.
Each multi-owner may freely assign and lease their time fraction as well as sell or encumber it. If selling or encumbering, they must inform the condominium administrator. The other multi-owners are not entitled to the right of first refusal in the sale, except if that is provided in the multi-ownership condominium bylaws.
Dissolution or Termination of Purchase and Sale Agreements of a Unit of a Real Estate Development or a Land Parcel, Federal Law No. 13,786
On December 27, 2018, Federal Law No. 13,786 was passed. Under this law, when an agreement between a real estate developer and a unit's buyer is terminated by dissolution or rescission due to the complete default of the buyer's obligation as per the agreement, the buyer is entitled to the restitution of the amounts already paid to the developer, increasing and/or deducting, whichever applies, the amounts stipulated in the law. The penalty due by the buyer must not exceed (i) 25 percent of the amounts paid, if the development is not subject to segregated estate, or (ii) 50 percent of the amounts paid, if the development is subject to segregated estate. The real estate developer must make the restitution in a single installment no later than (i) 30 days from the issuance of the occupancy permit, if subject to segregated estate; (ii) 180 days from the undoing of the agreement, if not subject to segregated estate; or (iii) 30 days from the resale of the dissolute unit, if prior to the other terms.
In land parceling, the same right of restitution is granted to the buyer that causes the termination of the agreement by its default. The penalty due by buyer must not exceed 10 percent of the value of the agreement adjusted for inflation, and the amounts must be restituted by the developer, which can make them in up to 12 installments, the first one being due no later than (i) 180 days from the date expected for the conclusion of the construction, or (ii) 12 months from the undoing of the agreement, if the construction has concluded.
In a real estate development deal, if expressly set forth and properly highlighted in the agreement, the delay of up to 180 consecutive days, counted from the date expected for conclusion of the construction, will not be a cause of termination of the agreement by buyer, nor contemplate any penalty to the real estate developer.
The law also indicates the minimum requirements to be observed when drafting a purchase and sale agreement, a purchase and sale commitment, or an assignment or assignment commitment of individual units of a real estate development or a land parceling. One notable obligation is to include a summary box of the terms and conditions set forth in the agreement and to include in the executed agreement—in bold—the consequences of undoing the agreement.
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This article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.