Condominium Arrears

This column debuts on Condomínios e Vizinhança magazine, focusing on condominium law. Each month, we'll tackle current legal issues relevant to condominium life. Your input is crucial! Send suggestions, critiques, and praise to condominio@pw.adv.br. In this edition, we address a major challenge for condo managers: arrears. Non-payment leads to reduced revenue, impacting basic services, increasing costs for other residents, and straining relationships within the community and with management. Article 1.348, VII of the Civil Code mandates the condo manager to collect contributions and fines. But how to do this effectively? While managers often delegate extrajudicial collection to administrators or accountants, a lack of supervision can let debts snowball. Research shows that earlier collection increases recovery chances. However, effective collection requires skill. We recommend managers hire specialized collection agencies to avoid personal exposure to residents. Contrary to popular belief, collection actions can be initiated sooner than 30 days after the due date, and lawsuits can be filed before 90 days. Establishing a clear collection policy with the administrator and agency, defining grace periods and actions for each stage, is vital. Managers must also enforce fines and interest, and refrain from offering discounts on condo fees. Debtors must not be harassed, whether judicially or extrajudicially. Their names cannot be publicly displayed on arrears lists in common areas. Utility services like gas and water cannot be cut off, nor can access to common facilities such as party rooms, pools, and sports courts be denied. Dialogue is always the best first step, but if it fails, the condominium should pursue legal action, as the property itself guarantees execution. Marcio Panno Waknin is a lawyer specializing in Condominium Law and a partner at Panno Waknin Sociedade de Advocacia.

Escrito por Adriano Ladislau

Publicado em 10 de fevereiro de 2020 às 20:02

It is with immense pleasure that I debut this column on Condominium Law in the Revista Condomínios e Vizinhança. Every month, we will address current and relevant legal matters for condominium life. Your participation is of utmost importance. Send your suggestions, critiques, and compliments to the email condominio@pw.adv.br, and we will be happy to respond.

In this edition, we will discuss one of the biggest problems faced by condo managers and administrators: arrears.

There is no doubt that condominium arrears lead to lower-than-expected revenue, causing various other problems such as: disruption of basic services, increased expenses for other residents, and, in more extreme cases, even affecting the relationships between co-owners and with the condominium administration.

Article 1.348, VII of the Civil Code states that "It is the duty of the condo manager: to collect from the co-owners their contributions, as well as to impose and collect the due fines". But how to carry out this collection effectively?

Generally, condo managers delegate these extrajudicial collections to the administrator or accounting firm but do not supervise, letting time pass and the debt increase.

Studies have already shown that the sooner a debt is collected, the greater the chances of recovery. But it's not enough to collect; one must know how to collect.

Therefore, the suggestion is that the condo manager does not undertake debt collection on their own, to avoid exposing themselves to the co-owners. They should hire a specialized collection agency.

Many believe that collection can only be carried out 30 days after the debt is due and that a lawsuit can only be filed after 90 days from the due date, which is not true.

It is of utmost importance that the condo manager, in conjunction with the administrator and the collection agency, establish a collection policy, determining grace periods and actions to be taken at each stage of the collection process.

Another important point to highlight is that the condo manager cannot fail to collect fines and interest, much less grant discounts on condominium fees.

Under no circumstances can the debtor be harassed during the collection process, whether judicial or extrajudicial. Their name cannot be disclosed on open lists of defaulters posted on the condominium bulletin boards. The supply of gas and water also cannot be interrupted, nor can the use of common areas of the building, such as party rooms, swimming pools, and sports courts, be prohibited.

Seeking dialogue is always the best option, but if conversation is ineffective, the condominium must file a lawsuit, as the property unit itself will guarantee the execution.

Marcio Panno Waknin is a lawyer, a specialist in Condominium Law, and a partner at the law firm Panno Waknin Sociedade de Advocacia.