Law on Condominium Property

The purpose of this Law is to regulate the Condominium Regime over real property by Unit, susceptible to independent use, granting to the Owner of each one of them, in addition to exclusive and singular property over the same, a joint and inseparable right of co-ownership over common assets. CHAPTER II CONSTITUTION OF THE REGIME

For the purposes of this Law, the following terms shall be understood as:

• 1)

  COMMON AREA: Things and assets of general or restricted use, regardless of whether they are constructed or not, and as they are intended for use and enjoyment of all Units or only some of them. It is composed of free common area and constructed common area.

• 2)

  FREE COMMON AREA: It is the portion of land that becomes the property of all condominium owners and is intended for general use and does not permit any construction.

• 3)

  CONSTRUCTED COMMON AREA: It corresponds to constructions that remain in co-ownership, are indivisible areas and of general and common use.

• 4)

  CONDOMINIUM: It is a form of property constituted over real property voluntarily constituted by its owner or owners, susceptible to independent use by different owners and subject to special legal regulations, whose operation implies the existence of particular or exclusive assets with real property registration and assets for collective common use of an indivisible nature. Condominiums may be: a) VERTICAL CONDOMINIUM: A modality whereby each owner is the exclusive owner of the part of the building that corresponds to him, which may be composed of several floors and common conduits with all the land and buildings or installations for general use. b) HORIZONTAL CONDOMINIUM: The modality where each owner is the exclusive owner of his own land and of the building constructed on it and co-owner of the common areas. c) MIXED CONDOMINIUM: Those where vertical and horizontal condominiums may be present in the same Unit. d) COMBINED CONDOMINIUM: It is a project where different uses and types of buildings are combined, they must be compatible with each other and must conform to the regulations that govern the area where they are located. e) CONDOMINIUM OF CONDOMINIUMS: A project where one or several of the Units are intended to become subsequent condominiums, regardless of their nature. The condominium of condominiums must be expressly authorized in the Condominium and Administration Regulations; and, f) CONDOHOTEL: A modality of lodging operation in which the ownership of the property is governed by the Condominium Property Regime, or applies principles contained therein and in which hotel operations are guaranteed by an administration contract with a hotel operating company, which assumes the functions corresponding to administrators according to the Law and those derived from the hotel nature of the operation.

• 5)

  DEVELOPMENT: The act of making improvements and/or buildings on land.

• 6)

  BUILDING: A unique structure that houses more than one unit and entails common assets to those units suitable for use in accordance with the established use or in conformity with what is provided in the constitution of each Condominium. Once subject to the Condominium Property Regime, it is composed of private or individual property assets and common assets;

• 7)

  REAL PROPERTY: Real assets including land, buildings and improvements constructed thereon, which may be subject to the Condominium Property Regime.

• 8)

  BOARD OF DIRECTORS: A body of the Condominium responsible for directing the affairs of the condominium community and which holds judicial and extrajudicial representation of the condominium with powers of a general attorney-in-fact. The powers of the Board of Directors may be expanded through condominium regulations or by agreement of the condominium owners' assembly.

• 9)

  CONTRIBUTION MODULES: They are the indices that establish the percentage participation of owners of individual property assets in expenses incurred in relation to common assets and services whose use and enjoyment correspond to a specific part or sector of the real property.

• 10)

  OWNER: Any natural or legal person, holder of the Condominium Property rights granted in this Law, over the real and personal property that make up the asset subject to the Regime.

• 11)

  TIME-SHARE: Any natural or legal person, holder of the right to use and enjoy a vacation or recreational unit of a tourist or commercial nature and of the personal property found therein, as well as its facilities, constructions, areas and common services, for a determined number of days or weeks, according to the modality, in a specific period of years; and,

• 12)

  UNIT: A private area constructed or not, in which the owner has full ownership rights over it, excluding common assets located within its boundaries.

The Condominium Property Regime may originate: 1) When the Units that make up a real property belong to different owners and have access to public roads; and, 2) When a real property is developed with the purpose of selling its different Units to different persons. Condominium shall exist when the Owner or Co-owners of a real property resolve to subject it to the regime established in this Law, provided that there exist in the building indivisible common elements, and the real property can be adjusted to the technical requirements that this Law establishes for its constitution.

The provisions of this Law are applicable only to the real property whose sole owner or all owners of the property, if there be more than one, expressly declare their will to subject it to the regime established in this Law, doing so in a public deed that must be registered in the Property Registry.

The Condominium Property Regime and the right of ownership over the Units of a real property are constituted and acquired by means of a public deed duly registered in the Real Property Registry.

For the purposes of the preceding Article, the deed constituting the Condominium Property Regime must contain the following requirements:

• 1)

  Clear and precise expression of the will of the Owner or Owners to subject the real property of their ownership to the regime of this Law;

• 2)

  Location, area, dimensions and boundaries of the land and detailed description of the real property;

• 3)

  Description of each Unit, its location, the number by which it is identified, its measurements, location and additional description;

• 4)

  The total value assigned to the real property and the particular value of each Unit;

• 5)

  Description of the common service assets of the real property and the indication of the percentage to which each of the Owners has the right to use the same;

• 6)

  Clear indication of the purpose given to the real property; and,

• 7)

  Any other data, provision or obligation that the grantor or grantors deem appropriate.

No Notary shall authorize, nor shall the Registrar register, public deed transferring ownership or other real rights and constituting liens that affect a real property subject to the Condominium Property Regime, without the constitutive deed of the regime having been previously registered.

For a real property to be constituted and maintained within the Condominium Property Regime, it must be free of liens or claims of any nature, or in its case, with the express consent of the persons in whose favor the liens appear registered or who have the right to claims.

Once the regime is constituted, by unanimous resolution of the Owners the whole or part of the real property may be burdened, but in this case, each individual Owner must be assigned the amount or portion of the lien that it must guarantee.

In the public deed in which the ownership of a Unit of the real property is transferred, the notary must certify having reviewed a certificate issued by the Administrator showing that the owner is solvent with respect to common expenses, or in such case, the amounts that are pending for such concepts, in accordance with what appears recorded in the respective books. If in default, the acquirer of the unit shall be considered a joint and several debtor for the certified amount, without prejudice to being able to collect from the transferor what he must pay by reason thereof. CHAPTER III OF THE REGISTRY

In the Real Property Registry a special book shall be designated for the registration of real property subject to the Condominium Property Regime and separately, of the different Units of the same real property, when they belong to different owners and meet the requirements provided in this Law. Likewise, the Internal Regulations of each condominium shall be registered.

Every registration made in the Registry shall contain the following circumstances:

• 1)

  Description of the land, location, surface area and boundaries. If so stated in the corresponding title, its name, number and acquisition value shall also be expressed;

• 2)

  Description of the constructions and improvements existing on the real property, with indication of the area they occupy, the materials used in their construction and the number of independent Units of which it consists, and the estimated value of the same;

• 3)

  Description of each Unit individualizing its location, rooms of which it consists, number and any other data that identifies them and the estimated value of each of them;

• 4)

  The nature, extent, conditions and charges of any kind of the right being registered;

• 5)

  The nature, extent, conditions and charges of the right upon which the one that is the object of registration is constituted;

• 6)

  The name, surname, profession and domicile of the person transferring or constituting the right to be registered and the same designations of the person in whose favor the registration is made. If they are not natural persons, the name, corporate name or designation of the respective association or company shall be stated;

• 7)

  The class of title being registered and its date;

• 8)

  The name and surname of the notary or registrar judge who authorizes the title to be registered; and,

• 9)

  The date of presentation of the title to the Property Registry, with indication of the hour.

In the margin of the registration of the real property, a record shall be formed of the transfers, which to any title may be made by the Owners of each Unit.

Of every registration made in the other registries, relating to the totality of the real property, as well as of each Unit of the real property, a marginal note shall be made in the respective registration of the registry that contains the Condominium Property.

In the respective entry, reference must be made to the common service assets existing in general in favor of the Owner or Co-owners of the entire real property, and, in its case, of those that correspond in limited form to each Unit.

The addition of new buildings or land that affect the totality of the Owners shall be registered by signing a single entry with the existing property in Condominium, and shall not merit expansion of the property and also independently.

The total or partial cancellation of liens that affect the property in general and the common service assets thereof shall be annotated in marginal form in the respective registration entry of the property. When such cancellation refers exclusively and separately to a Unit, the annotation referred to in this provision shall be made in the margin of the entry that in independent form corresponds to each of them.

Every entry made in the registry, as well as the reference notes that are recorded in the titles, shall be preceded by the words Property in Condominium.

The general provisions contained in Title XVII of Book IV of the Civil Code and the corresponding provisions of the respective Regulation shall apply to the registry of Property in Condominium. CHAPTER IV OF COMMON ASSETS

The common areas regulated by this Law are classified as follows: 1) Common areas of exclusive use: Those designated for the use of one or several Units with the exclusion of the others. These may not be areas which by their location are indispensable for the development of the activities of all owners in general; and, 2) Free common areas: Those designated for the common use of all Units of the condominium.

The following must be common areas at minimum:

• 1)

  The land on which the condominium is built;

• 2)

  The foundations, main walls and party walls, roofs, galleries, vestibules and staircases, in addition to access routes, exits and internal circulation, when they should be considered as such due to the type of construction or development;

• 3)

  The premises designated for the lodging of personnel in charge of the administration or security of the condominium;

• 4)

  The premises and facilities for central services such as electricity, lighting, telephone, gas, water, refrigeration, tanks, water pumps, wells and others;

• 5)

  Elevators, waste incinerators and, in general, all appliances and installations intended for common benefit; and,

• 6)

  Easements for passage of service installations. Also common are the things necessary for the existence, safety, sanitation, conservation, access and beauty of the condominium, as well as also the things expressly stipulated in the constitutive deed or in the condominium regulation.

The assets, elements and zones of a property that allow or facilitate the existence, stability, functioning, conservation, safety, use or enjoyment of the assets of exclusive ownership, belong in common and in undivided form to the owners of such private assets.

Common assets are indivisible, inalienable and not subject to attachment while they retain this quality and shall not be subject to any tax separately from private assets.

The obligations of the owners of common assets are as follows:

• 1)

  Not to change the designation of the common asset;

• 2)

  Not to build above or below them; and,

• 3)

  To make the necessary repairs for their conservation.

The right of each owner over the common service assets and dependencies shall be proportional to the basic value of each unit in his exclusive ownership, which shall be fixed by mutual agreement of the Assembly of Owners and, in the absence thereof, by judicial appraisal conducted by an appraiser appointed by them, or by a judge, if there is no agreement in the appointment.

Each Owner may make use of the common service assets and dependencies, in accordance with their purpose, without prejudice to the legitimate rights of others.

The proportional basic value referred to in the preceding Article 25 shall be established through the co-ownership coefficients that shall be calculated based on the private area of each asset, with respect to the total private area of the property and shall be recorded in the co-ownership regulation.

The co-ownership coefficients shall establish the following:

• 1)

  The portion of the rights of each of the Owners of private assets over the common assets of the property;

• 2)

  The percentage of participation in the Assembly of Owners; and,

• 3)

  The index of participation with which each of the Owners of the Units shall pay the common expenses of the property, through the payment of ordinary and extraordinary administrative fees unless these are determined in accordance with contribution modules.

The Owners of the private assets of the property shall be obliged to contribute to the payment of expenses incurred by the provision of common services and by the administration, maintenance, repair, replacement, depreciation and reconstruction of common assets, in accordance with the co-ownership coefficients.

In the case of overdue fees, this Law considers the minutes in which the amount of expenses shall be agreed upon as enforceable, to which shall be attached a certification from the Administrator or Board of Directors regarding the existence and amount of the debt owed by the Owner in default.

The owner is obligated to contribute to common expenses even when they do not occupy their private property, or do not make effective use of a specific common service or property.

Common expenses shall be classified in the following manner: 1) ORDINARY: Those intended to cover administration, conservation, and repair expenses of common service parts or properties of the building, indispensable for maintaining its conditions of safety, comfort, and decorum; and, 2) EXTRAORDINARY: Expenses caused by unforeseen and exceptional situations that require attention by the co-owners in the absence or lack of an Administrator and shall have the right to reimbursement of expenses upon prior substantiation.

The contribution modules shall be the percentage participation of the Owners of privately owned properties in the expenses incurred in relation to common properties and services whose use and enjoyment correspond to a determined portion or sector of the real property.

The division into sectors of common properties and services that are not intended for general use and enjoyment of the real property must be stated in the condominium regulations. CHAPTER V PRIVATE PROPERTIES

Owners may, without need for the consent of the other owners, except for a provision agreed upon by them, alienate or transfer by any legal act the unit that belongs to them, or establish real rights or other encumbrances on the same, with the formalities and requirements required by Law.

The delivery in custody of a specific area vehicle document shall be considered as a private property for the owner of a Unit of the real property.

The delivery in custody of a specific parking area shall be regulated in the following manner: 1) The parking space in custody shall be only for use by the Owners or co-owners of the private Units of each one; and, 2) Under no circumstance may the Administrator or Board of Directors reduce the quantity of parking spaces in custody of a real property.

The area delivered in custody may not be alienated or encumbered by the Assembly of Owners, Board of Directors, or Administrator, and shall safeguard the right of way easement for the other Owners who exercise custody in the specific parking space.

Said custody must be delivered through the Minutes of the Assembly of Owners and incorporated through notation in the Condominium Property book where said regime is registered. Said notation must contain the following:

• 1)

  Description of the area delivered in custody, with its respective limits and boundaries;

• 2)

  Name of the custodian, as well as the floor, apartment, commercial space, or individual closed-circuit house of which they are Owner; and,

• 3)

  The term for which the parking area will be held in custody.

The obligations of Owners with respect to their Unit are:

• 1)

  Use them in accordance with their nature and purpose, in the manner provided in the Condominium Regulations, refraining from performing acts against morality or good customs;

• 2)

  Execute immediately the repairs of their private properties, the omission of which may cause damage to the real property and the properties that comprise it;

• 3)

  Refrain from performing any act that compromises the safety or solidity of the real property, produce noise, disturbances, and acts that disturb the tranquility of other Owners or occupants or affect public health;

• 4)

  Keep their unit insured against the risks of fire and earthquake; and,

• 5)

  Those provided in the Condominium Regulations.

The infraction of any of the prohibitions contained in the preceding Article, in the respective Condominium Regulations or those approved by the Board of Directors, prior to fulfilling due process, may include:

• 1)

  Written warning;

• 2)

  Sanction or fine; and,

• 3)

  Obligation of eviction by the condominium. The Condominium Regulations shall establish the specific fine regime. The eviction procedure shall be heard by the competent Judge. In the event that the competent judge declares eviction, the evicted property may be sold or leased in accordance with what is established in the regulations, and its proceeds shall be paid to the condominium with the deduction of pending obligations with the condominium, as well as the costs of litigation. CHAPTER VI GOVERNANCE OF THE REGIME

The governance of real properties subject to the Condominium Property Regime shall be governed by an Administrator or Board of Directors according to the provisions contained in the Deed of Constitution of the Regime and in the Regulations that shall be attached thereto. The Condominium Administration and Regulations shall contain:

• 1)

  Form of administration, indicating whether it shall be in charge of an Administrator or a Board of Directors; the norms relating to the designation of the Administrator or administrative Board, as well as relating to the exercise of their rights and attributes that correspond to the Assembly of Owners;

• 2)

  Requirements that must be demanded for the elected Administrator or member of the Board of Directors;

• 3)

  Powers with which the Administrator or Board of Directors shall be invested;

• 4)

  Manner in which the Administrator or members of the Board of Directors shall be appointed;

• 5)

  Period that shall be set for the Administrator or members of the Board of Directors for the performance of their duties;

• 6)

  Date on which accounts of the administration must be rendered;

• 7)

  Proportion and manner of payment of the contribution of owners to cover the common expenses of the real property in general and of their respective units; and,

The Administrator or the President of the Board of Directors shall have the legal representation of all owners in all judicial and extrajudicial matters that are brought in relation to the common interests of all of them, both as plaintiffs or defendants and to perform all kinds of acts and execute all kinds of contracts, except those that by their nature require express mandate, in accordance with the Law, or the Condominium or Condominium Property Regulations.

Matters of common interest that are not included within the powers conferred to the persons exercising the administration must be resolved by the owners in assembly.

The Administrator or Board of Directors, in addition to the powers conferred by the regulations and those assigned by the assembly, shall have the following:

• 1)

  Appoint and remove employees of the real property and assign them a salary;

• 2)

  Care for and supervise common service properties;

• 3)

  Order urgent repairs of things or common service properties of the real property;

• 4)

  Ensure that order is maintained in the real property, the purpose of the different units is fulfilled, and sanitary measures are observed;

• 5)

  Collect from each owner what corresponds to them in common expenses and make payments;

• 6)

  Prepare the budget of income, expenses, and investments for the corresponding period;

• 7)

  Keep directly or under its supervision the books of minutes of the assembly and make them known to the other owners; and,

• 8)

  Impose sanctions for non-compliance with the obligations provided in the Law and/or Condominium Property Regulations.

The obligations of the Administrator or Board of Directors shall be summarized as follows:

• 1)

  To ensure the harmonious coexistence of co-owners;

• 2)

  To convene the General Assembly to ordinary and extraordinary meetings; and,

• 3)

  To execute the resolutions of the Assemblies of Owners.

While no Administrator has been elected, the administration shall be exercised by the initial Owner, provided prior notice that a number of Units exceeding more than half of the property coefficients have been delivered; his responsibility as Administrator shall cease and he must inform all Owners of the property in writing so that the assembly meets and proceeds to the permanent appointment of the Administrator.

The Administrator or members of the Board of Directors shall be appointed by the Assembly of Owners and their term shall last one (1) year, which shall be considered extended as long as no substitute is elected or they do not take possession of their offices. The appointed individuals may be removed in an Extraordinary Session of the Assembly of Owners convened for such purpose. The Administrator and members of the Administrative Board may be reelected.

The Assembly of Owners is the supreme governing body allowing for the full development of the obligations and rights contained in this Law and in the Condominium Regulations. It must be composed exclusively of the owners or representatives of the respective units of a property subject to the Condominium Ownership Regime.

The Assembly shall meet with a number of Owners representing at least fifty-one percent (51%) of the property coefficients, and shall make decisions with the favorable vote of more than half.

The sessions of the Assembly of Owners may be held in the following manner:

• 1)

  Ordinary Meetings: They must be held at least once per year, on the date designated in the Condominium Regulations, and in the absence thereof, within three (3) months following the end of each budgetary period. The purpose of this meeting shall be to analyze the general situation of the property subject to Condominium Ownership, conduct elections within its jurisdiction, consider and approve the accounts of the last fiscal year and the budget for the following year, and modify and expand the regulations when necessary, in accordance with the provisions of the Condominium Regulations. This notice shall be issued by the Administrator with twenty (20) calendar days' advance notice;

• 2)

  Extraordinary Meetings: This type of meeting must be held when unforeseen or urgent needs of the property warrant it, by notice from the Administrator or by a number of owners of private property representing at least forty percent (40%) of the co-ownership coefficients;

• 3)

  Meetings by Right: These occur in cases where ordinary meetings are not convened, and the assembly meets by right, on the first business day of the fourth month following the end of each budgetary period in accordance with the place and time indicated in the regulations; and,

• 4)

  Meetings of Second Notice: These are applicable when the General Assembly of Owners is convened but cannot meet due to lack of quorum, such that this second meeting shall meet and decide with any percentage of co-ownership coefficients represented. CHAPTER VII EXTINCTION OF THE REGIME

The following shall be grounds for extinction of the Condominium Ownership Regime:

• 1)

  Destruction or total deterioration of the property or in a proportion representing at least seventy-five percent (75%) of its value, unless the Assembly of Owners decides its reconstruction with a qualified majority of seventy percent (70%) of the co-ownership coefficients;

• 2)

  The Condominium Ownership Regime shall be extinguished by express disposition of the owner or owners of the units of the property, through the favorable vote of two-thirds (2/3) of the owners, in assembly thereof. However, the minority that is dissatisfied with the potential resolution may acquire the units of those who vote for the extinction of the regime, in accordance with the judicial appraisal thereof. This resolution may only be taken when the units of the property are free of liens, limitations, or claims of any nature, or in the case that the persons in whose favor such liens, limitations, or claims are recorded consent to the extinction; and,

• 3)

  By order of judicial authority.

In order for the extinction of the Condominium Ownership Regime to take effect, the resolution and the manner in which it is carried out must be recorded in a public deed and registered in the respective Registry of Property.

Because the Owners of the Units have an undivided share of ownership over the common property in Condominium Ownership, when this is extinguished, the community is transformed into an ordinary community and the action for division or partition of property enshrined in the Civil Code and Civil Procedure Code is applicable. CHAPTER VIII TIME SHARING

Time-share holders shall have undivided rights of use and enjoyment over the proportional part of a residential unit, as well as over the movable property affected thereto and over the facilities, services, and common areas of the respective property.

In order to guarantee to the purchasers the use and enjoyment in the future, the owners of properties under the time-sharing modality shall establish a deposit in trust in favor of the purchasers for the duration of the construction of the project under promotion. The amount of said bond shall cover the acquisition cost established in the contract. If not done within the prescribed period, the guarantee shall cover the acquisition cost established in the contract. If not complied with within the prescribed period, the guarantee shall cover the acquisition cost established in the contract. Otherwise.

Time-sharing shall be classified according to the identification of the annual period of use and enjoyment and the respective Unit. It may be: fixed, floating, over-space floating, or mixed, as follows:

• 1)

  In fixed time-sharing the same unit shall be used and enjoyed during the same week or weeks of the year;

• 2)

  In floating time-sharing the same unit shall be used and enjoyed within certain seasons or periods of the year, the determination of which shall be made periodically, in accordance with objective procedures;

• 3)

  In over-space floating time-sharing a unit with precise characteristics shall be used and enjoyed, the determination of which shall be made according to availability and through objective procedures; and,

• 4)

  In mixed time-sharing the two previous modalities shall be combined, such that the right of use and enjoyment shall be exercisable in an indeterminate period within a certain season, a Unit with precise characteristics. The determination of the period of the unit shall be made in accordance with objective procedures. Under this modality the enjoyment of the week or weeks may also be divided into non-continuous days. The determinations made through objective procedures must respect the principle of equal opportunities for all time-share holders.

The right of time-sharing may have the nature of a real right or a personal right. In the cases of fixed and floating time-sharing, the holder shall acquire a real right over the respective Unit. In the cases of over-space floating and mixed time-sharing, the holder shall acquire a right based on obligational legal relationships.

Time-share holders shall have the following obligations:

• 1)

  To pay the price for the acquisition of their rights in the respective property;

• 2)

  To pay ordinary and extraordinary fees intended to cover the expenses of maintenance, operation, maintenance, and replacement of the corresponding Unit and the respective property, which shall be prorated among the time-share holders, in accordance with what is established in the Condominium Property Administration Regulations. The frequency of such fees and the amount per residential unit shall be set forth in the respective Regulations, in accordance with the classification granted to the property. Time-share holders must fulfill this obligation whether or not they make use of the unit, areas, and common services;

The time-share holder shall be responsible for the material damages caused by him or by the persons who have access to the residential Unit through his intermediation, to its movable property, to the facilities, or to the common property. He must report and pay the amount of damages caused before abandoning the property. He shall also pay, moreover, default interest until the full payment of the replacement value of destroyed or damaged property, which shall be calculated in accordance with market prices in the area.

Time-share holders shall have the following rights:

• 1)

  To sell, transfer, encumber, and lease their right of use and enjoyment without the consent of other time-share holders;

• 2)

  To use and enjoy a unit in a vacation or recreational manner of a tourist or commercial character, the movable property affected to it, as well as the common installations, areas and services, in accordance with the provisions of this Law and the Condominium Property Regulations of the respective property and the corresponding contract;

• 3)

  To request information from the promoter or, failing that, from the operator, at any time, regarding any aspect related to the respective property; and,

• 4)

  The others established by this Law, the Condominium Property Regulations, and the respective contract. CHAPTER IX OTHER PROVISIONS

The Owners of the Units are obligated to insure against all risks according to the geographic location of the Property, its Units, and the common service property. The Owners may agree to another form of property repair.

In the event that a loss occurs which appears to be covered by insurance, the proceeds from the indemnification shall be used, first, to cancel the encumbrances affecting the property, and second, for the repair or reconstruction thereof.

The reconstruction of the property shall be carried out, prior to a resolution that must be issued by the Assembly of Owners, which in turn shall determine the manner and proportion in which the owners shall participate in the cost of the reconstruction work, if the amount of insurance is insufficient to cover it.

For the resolution of any conflicts that may arise between the Owners or occupants of the property, and the Administrator or the Board of Directors, conciliation and arbitration are established as alternative means of resolution, without prejudice to the proper jurisdiction of judicial or police authorities.

Any Condominium or Unit regulated under the regime of this Law may be constituted as a bank guarantee. Said encumbrance shall be registered in the Property Institute in the Condominium Property record book to safeguard the rights of third parties. CHAPTER X FINAL PROVISIONS

This Decree repeals Decree Number 45 issued on October 23, 1965, containing the Horizontal Property Law.

Any modification to the constitutive deed of the Horizontal Property Regime to which a property is subject, made by its owners, shall be carried out in accordance with the provisions of this Law.

The provisions of this Law shall govern the effects of legal acts prior to its effectiveness, provided that their application does not result in retroactivity.

When properties subject to the Condominium regime are registered in the Real Folio System established in the Real Folio Property Law, they shall be subject to the provisions pertaining to the Real Folio Law and to a Simplified Cadastral Regime. For the purposes of this Article, the Property Institute must issue a Special Regulation within sixty (60) business days.

This Decree shall enter into force twenty (20) days after its publication in the Official Gazette "La Gaceta". Done in the city of Tegucigalpa, Municipality of the Central District, in the Hall of Sessions of the National Congress, on the twenty-sixth day of the month of September of Two Thousand Twelve. LENA KARYN GUTIÉRREZ AREVALO PRESIDENT RIGOBERTO CHANG CASTILLO SECRETARY JARIET WALDINA PAZ SECRETARY To the Executive Branch, Therefore: Let it be executed. Tegucigalpa, M.D.C., October 26, 2012. PORFIRIO LOBO SOSA PRESIDENT OF THE REPUBLIC THE SECRETARY OF STATE IN THE OFFICES OF THE INTERIOR AND POPULATION, CARLOS ÁFRICO MADRID HART