By: Ricardo Ceballos

According to numeral 23 of Article 93 of Law 284 of February 14, 2022 on the Horizontal Property Regime, the administrator of the Horizontal Property (P.H.) shall have the obligation to handover to the Board of Directors, once the contractual relationship has ended, all documents pertaining to the administration and those that have been placed under his custody by the latter, which may include Books of Minutes of the Board of Directors and Minutes of the Assembly of Owners, account statements, correspondence, documentation related to bank accounts, keys of the administration office and the property.  Furthermore, all those under its responsibility, for which a Minutes of Handover shall be taken and signed by the administrator and a representative of the Board of Directors.

From the above-mentioned, correspondence is very important documentation that must be handled with security, protecting it from distortion.  It is for this reason that we recommend that the Boards of Directors make use of personalized e-mail accounts for the P.H., as well as that all the equipment used for administration purposes be for their exclusive use. Likewise, a technological equipment shall be used to store all the documentation and keep a backup of the same, which should always remain under the control and supervision of the Board of Directors.

The same would apply for the licenses of the different softwares that are used for the same purposes and that require to be used by the administrator due to his functions, we recommend that those be of exclusive use of the P.H., as, for example, the software for accounting, as well as for any other application, with the objective of having a healthy administration.

To adapt an office in the premises of the P.H. would be ideal, so that all the work or functions of the administrator are carried out within the P.H., in this way the service provided would be more productive and at the same time all the documentation mentioned in numeral 23 of Article 93 would be protected, said documentation should be kept in these offices under the custody of the Board of Directors and the Administrator.

Taking into account the aforementioned suggestions, the Minutes of Handover would be more expeditious and safe, which would end with a process of the contractual relationship to the satisfaction of the parties, even so the drafting of a Minutes of Handover signed by the administrator and the representative of the P.H., would be the most recommendable, in order to evidence that all the documentation that rests in the offices of the P.H. Administration is mentioned in the Minutes and in this way to perfect in a complete way the handover of the administration to another administrator or to the Board of Directors.

Keep in mind that an administrator can be a natural or juridical person, therefore, in case of being a formal company according to the law, that is to say a juridical person, it is important to check that the person who acts in representation of the juridical person or company, is the proper or designated person, since it may be necessary that she/he sign certain documentation, among these, the initial contract to hire the administration service.

For assistance regarding Real Estate in Panama, contact us at consultas@icazalaw.com.

Responsibilities of the Boards of Directors of Horizontal Properties according to Executive Decree 142 of July 9, 2021

By Ricardo Alberto Ceballos

Executive Decree 142 was issued on July 9, 2021, as regulatory of Law 226 of June 8, 2021, which regulates the design and building standards in Panama.

This legislation establishes and defines the responsibility of the Boards of Directors of Horizontal Properties, as well as their owners and/or inhabitants of the property, to perform the appropriate periodic maintenance work of their buildings once the Permit or Certificate of Occupancy have been issued. This maintenance must include the condition of the structure (slabs, columns, masonry), windows and roofs, coatings, as well as access ramps, evacuation routes, stairs and handrails, among others.

It is also established in said regulation, that the Boards of Directors of the Horizontal Properties, as well as their owners and/or inhabitants of the property, shall also be responsible for the periodic maintenance of the electrical and mechanical systems and equipment, such as elevators or escalators, electrical generators, pool equipment, fire detection systems and fire alarms, firefighting systems (including the maintenance of fire extinguishers and sprinklers), lightning and gas systems, as well as air conditioning and extraction equipment and any other equipment in use within the building, with their certifications updated by the Fire Department of the Republic of Panama, if required.

It is important to note that according to Article 62 of Law 31 of June 18, 2010, which governs Horizontal Property in Panama, the Board of Directors shall be responsible for complying with and enforcing the decisions of the Assembly of Owners regarding the administration and conservation of the common property and shall also have the functions and powers established in said article, which are not as specific as the responsibilities established in Executive Decree 142 of July 9, 2021 mentioned above.

However, and according to numbers 2 and 9 of article 72 of Law 31 of June 18, 2010, the administrator of the Horizontal Property has the obligation to: 

1. To perform the ordinary and regular duties of administration and conservation, carry out those that were of urgency for the integrity of the horizontal property and undertake those ordered by the Assembly of Owners and,
2. To order the urgent repairs in the common areas of the horizontal property and in the private areas that affect other real estate unit.

Although it is true that according to Article 62 the Board of Directors is responsible for complying and enforcing the decisions of the Owners’ Assembly, it is important to emphasize that it is the administrators who during the performance of their duties become responsible for verifying that everything is in order within the Horizontal Property so as to immediately inform the Board of Directors of what is happening, not only for the service they render, which is paid with the share of common expenses contributed by all the owners, but also for the duty they have of watching over the integrity of the co-owners and inhabitants of the Residential or Building, the latter with the sole purpose of ensuring that each owner has peace of mind in his daily life.

It is worth to remind the owners of a Horizontal Property, how important it is to attend the meetings of Co-owners’ Assembly of their Building or Residential, so that they can express their opinions and assert their rights, as well as to comply with their duty and take the opportunity to qualify the work of the administrators, who should be hired not only for the amount of services they propose or for what they charge, but for the experience they have, so that in the case of a specific situation they act with due diligence.