Among the series of financial and tax obligations of those who own or rent an apartment is the monthly condominium bill. Have you ever stopped to think about what might happen if the resident does not have the money to pay the debt?
The property can be seized or auctioned off. This is what happened to Marcelinho Carioca, a former soccer player and idol of Corinthians. Marcelinho lost a property valued at R$1.3 million in Mooca, São Paulo, due to condominium debt. The 319-square-meter apartment was auctioned off by court order. After 20 years, the player’s debt totaled more than R$2.5 million, considering interest, fines and monetary correction. The value of the debt was greater than the value of the apartment.
AFTER HOW LONG CAN THE DEBT BE COLLECTED?
In general, the defaulting resident has a bank term of up to 30 days to pay off the debt. In addition, there is a fine of 2% on the monthly payment amount plus interest of 1% per month adjusted for inflation during the period of arrears.
In general, after 60 days from the original due date of the condominium fee, the amicable period for receipt ends and then legal collection begins.
With the new CPC (Civil Procedure Code) in force since 2016, collection is now faster. According to Rafael Verdant, a specialist in civil procedural law and legal management, condominium debt can be classified as an extrajudicial executive title. In other words, the process begins in the execution phase and the debtor is already summoned to make the payment, eliminating the awareness phase that existed before the changes.
“It is important to highlight that the condominium owner who fails to comply with his payment obligations is subject to legal action, which may even force the sale of the property to guarantee the debt”, emphasizes the lawyer.
WHAT HAPPENS TO THOSE WHO DON’T PAY THE CONDOMINIUM FEES
Strictly speaking, condominium owners, even those with debts, cannot be prevented from using the building’s common areas or any other service. However, those who fail to pay their condominium fees may have their name blacklisted and be banned from voting at condominium meetings, warns Verdant.
The first consequence for those who have a condominium debt is a fine. In addition to the interest on the amount owed, charged by the bank, there may also be a fine stipulated in the condominium agreement.
The debtor may be registered with credit protection agencies, such as SPC and Serasa, i.e., have a bad credit rating.
The condominium may file a collection action or judicial execution, which results in the seizure of assets. However, the seizure of the property is only done as a last resort, says Angélica Arbex, marketing director at Lello Condomínios. The loss of the property is not directly linked to time, but rather to the value of the debt and the court decision in the execution process. The execution process may be initiated after the debt is incurred, and the time for the completion of the auction of the property will depend on the efficiency of the judiciary and the procedures adopted.
WHOSE RESPONSIBILITY IS IT?
Generally, the responsibility for unpaid condominium debt falls on the property owner. This is according to Paulo De Maria, a specialist in civil procedure and business law.
Typically, in lease agreements, the landlord stipulates that the tenant is responsible for paying the condominium fees. Even so, “if the tenant does not pay the debt, the landlord is still responsible to the condominium,” says the expert. It is the landlord who must go after the tenant to make the payment, says Maia.
To avoid legal proceedings to resolve the default, there are some alternatives. Direct negotiation with the condominium, formalization of an out-of-court agreement and refinancing of the debt with property used as collateral are some of them. However, some care must be taken, as the condominium manager cannot offer discounts or installments without prior authorization from the assembly, under penalty of being held personally liable for this difference, says Verdant.
