GIPE Newsletter (Nº24.174) July 15th 2025

HOMEOWNERS’ COMMUNITY:

NEGOTIATION WITH THE DELINQUENT

Before a homeowners’ association can file a lawsuit against a neighbor who doesn’t pay their dues, it is mandatory to attempt to reach a prior agreement with them.

This negotiation can be done directly, with or without lawyers, but it must be proven that an attempt was made.

A valid way to do this is to call a homeowners’ meeting attended by the president, the co-owners, and the delinquent neighbor. For this meeting to be valid as proof of negotiation:

• At least 30 calendar days must pass between the meeting being called and the meeting being held.
• If lawyers will be present, this must be indicated in the meeting notice so that the delinquent can also bring one.
• It is advisable to offer the debtor options, such as a payment plan, and not simply demand full payment.

The minutes of the meeting should be carefully recorded: they should only indicate the reason for the dispute and whether there was a willingness to negotiate, without revealing specific details of the negotiation or documentation presented. Recordings of the meeting should also not be provided as evidence in a lawsuit.

TAXES:

CHANGE OF USE FROM COMMERCIAL TO RESIDENTIAL

If you own commercial premises and want to convert it into residential housing, you must first ensure that it is permitted. Check the community bylaws and urban planning regulations, as there may be restrictions (for example, no residential buildings on the ground floor).

Necessary Procedures:

• Licenses: Apply to the City Council for a building permit and a change of use permit, submitting a technical project.
• Certificate: Once the work is completed, apply for the first occupancy permit and the certificate of occupancy.
• Registration: With all the documentation, amend the deed and register it in the Property Registry. You must also update the use in the Cadastre.

Taxation – Stamp Duty (AJD):

According to the Treasury, a change of use is subject to AJD if there is an increase in the cadastral value, applying between 0.5% and 1.5% of the property’s value.

However, some courts hold that this tax should not be applied, or that it should only be calculated on the value of the necessary works, not the entire premises.

Recommendation:

If the Treasury requires payment of AJD, you can pay and then file a rectification request to claim a refund, arguing that there is no taxable base or that it should be limited to the cost of the works.

GIPE: Together we will be stronger