JaliscoCondosOrg Blog

Tag: legal technicality

  • Unconstitutionality of Article 1032

    The issue…

    In my last post about the delay in publishing the “Jalisco Condo Manual – Second Edition,” I mentioned that a higher court in Jalisco had found that Article 1032 of the Jalisco Civil Code was unconstitutional. I’ve received a surprising number of enquiries for details about this, and thought it easiest to deal with it in another blog post.

    Article 1032 is the civil code article that allows a condo to petition a judge to sell a unit at public auction if the owner repeatedly fails to pay fees, or violates other obligations.

    How we found this out…

    A condo decided to sue a particularly intransigent delinquent owner, and to rely on Article 1032 to rid the condo of the problem owner. This type of lawsuit is usually faster than a typical suit for recovery of a debt. However, there were unusually lengthy delays in getting the documents reviewed and approved by the judge.

    Working through a Guadalajara lawyer, we discovered that the local court had never had a suit like this before. In the past, local area condos had always just sued for the money owed. The judge, being unfamiliar with this article and its procedures, wanted more information before proceeding with the suit and the auction.

    The lawyer did some searching in court records in Guadalajara to find an example case the judge could review.

    He uncovered a case where a condo had successfully sued under Article 1032. The owner of the unit (a lawyer) had launched two appeals, which were denied. The auction was ordered to proceed, and a buyer was found. The owner launched one more appeal, and was, unfortunately, successful!

    The argument he used in this final appeal was that, the way Article 1032 is written, it precludes the owner from presenting a defence.

    The constitutional problem…

    Article 1032 just requires the condo to petition a judge with sufficient documentation, and if it has proven that it is a properly constituted condo, the identity of the titleholder, and that a repeated violation has occurred, the judge will then order the property to be sold at public auction. There is no provision in this article for any submission from the owner.

    Article 14 of the Mexican Constitution establishes the key legal principle of Seguridad Juridica (Legal Certainty). When the state seeks to use privation against someone (the act of taking away property or rights), this can only be done by means of a trial held in front of the courts. There can only be a judgement imposed against the defendant if they are allowed to contradict that which they are accused of, or that which is demanded from them, and that they be allowed to defend their interests.

    All laws passed in México must comply with this basic principle, and because Article 1032 doesn’t allow for this (because it has a defect in its wording), the higher court deemed it unconstitutional.

    History of the case…

    The case in question occurred in the Ninth Civil Court in Guadalajara. The lawsuit was admitted, and, following Article 1032 of the Civil Code and the corresponding civil procedures, the Judge gave the defendant a 5-day term to name his property appraiser. The defendant did not accomplish this. The defendant challenged the decision of the court, and the judge denied it, based on the way Article 1032 was worded.

    The defendant then filed an amparo lawsuit (a type of injunction on constitutional grounds) saying that Article 1032 violates his human rights. The judge for the amparo suit did not grant a hearing because he felt that the procedural stage of the lawsuit did not permit such an appeal.

    The Judge, following the rules in Article 1032 and the associated civil procedures, received appraisals from the condo and from a court-appointed appraiser, and established the value of the property. The Judge then ordered that the property be put up for auction following the auction procedures set out in the Code of Civil Procedures.

    A person was interested in buying the property, and presented an offer of purchase to the Judge. After publishing the required proclamations, they won the auction sale, and the property was ordered to be transferred to them as the new owner.

    Later, the defendant filed another amparo to revise entirely Article 1032 to comply with the constitutional principle that obliges the laws of all States of the Republic to not violate the Constitution. The judgement of the Fifth District Court in Civil Matters found that this article does violate the principle of a hearing, since the article does not allow the defendant to be heard in a trial before receiving a judgement. This higher court ordered the judge in Guadalajara to abandon without effects all judicial acts in that judgement.

    You can find the details in “Juicio de amparo indirecto 213/2012-III” (Judgement of Indirect Amparo 213/2012-III) published by the Juzgado Quinto de Distrito en Materia Civil en el Estado de Jalisco (Fifth District Court in Civil Matters of the State of Jalisco) on March 8, 2012.

    The ramifications…

    It is important to understand that this ruling does not change the Civil Code, nor does it create new law. Article 1032 still exists as written.

    However, if you use the procedure outlined in this article to sue a delinquent owner, and that owner appeals using this constitutional argument, you will likely lose your suit, and will have to pay the delinquent owner their legal costs, as well as being out of pocket for your own costs. If, as was the case for the Guadalajara condo, the case had proceeded to the auction stage, these out of pocket legal costs combined with the paid-out costs for the defendant were substantial (I believe about $70K to $80K pesos).

    Until the state Congress rewrites this article, and modifies the Civil Code, a condo’s best approach may be just to sue the owner for the unpaid fees as a debt.

    The problem with this is that, depending on the back-log of cases in the local court, this could take 1-1/2 to 2 years. It’s unlikely such an owner would pay fees during the duration of the suit. Therefore, if you won, you’d likely then have to initiate a new suit to recover these new unpaid fees. And on and on…

    The ideal, in my opinion, is what was intended by Article 1032 – removing the problem once and for all.

    As I mentioned in my last post, we have a modified suit before the courts now that we hope will accomplish this goal, but which we hope cannot be overturned using this constitutional argument. Unfortunately, we don’t yet know if it will succeed. Once it has concluded, one way or another, I will include all the details of what we learned in the “Jalisco Condo Manual – Second Edition.”

    We also intend to work to lobby the state legislature to make the necessary changes to the wording of Article 1032 to make it comply with the Constitution. Although they are continually updating and changing the Civil Code, this issue is likely not high on their list of priorities. We hope to change this, and get it on their radar. However, this is a future project…

  • Status of the “Jalisco Condo Manual – Second Edition”

    The “Jalisco Condo Manual – Second Edition” was originally scheduled to be published in July, 2015. Unfortunately, there has been a significant delay in this new edition because we need to include details from two ongoing and important issues:

    1. We are currently walking a condo through the entire process of SAT registration, bank account set-up, contracting of an accountant, and regular financial reporting – to be sure they fully comply with the new tax laws. Once this is done, we’ll have a detailed real-world guide on how to do this for the new edition of the book. Not surprisingly, this is taking longer than expected.

    2. A high court in Jalisco has ruled that Article 1032 (that allows a condo to sell the property of a delinquent owner at public auction) is unconstitutional as written. Because this is such a key article, as well as a vital weapon in a condo’s arsenal against delinquencies, this has significant impact on how to sue a delinquent owner. We are walking a test case through the Jalisco courts with a modified method of suing that we believe circumvents the legal problem. Once we figure out how this can be done successfully, with the end result being the removal of the delinquent owner from the condo, we’ll include complete details and procedures in the new edition. The case is progressing well, but such things always take longer than you might expect.

    Since these are both vital issues affecting condos, we have decided to wait until we have all the information before completing the new edition. This will make the new book much better and more relevant! Unfortunately, at the time of writing this post, we are still a few months away. We believe that the finished product, however, will be worth the delay.

    We hope you understand, and thank you for your patience.

  • What’s Legal and What’s Not?

    Most of the questions I get from book owners start out, “Is it legal to…?”. Sometimes there’s a clear answer, because the condo law covers the issue explicitly. However, sometimes this isn’t the case. What then?

    Basic legal principle

    There’s a basic concept in civil law (the type of legal system used in Mexico) that at first glance seems very simple. It says that anything that isn’t specifically forbidden is allowed.

    I said, “…at first glance.”

    To be accurate, when you think about this, mentally expand it to, “anything that isn’t specifically forbidden by any governing law in Mexico is allowed” Therefore, the problem for condos is that this principal doesn’t just apply to the condo law all by itself.

    The condo law in Jalisco is, in reality, a small section of the Jalisco Civil Code. When considering whether something is legal or not, you need to consider: municipal laws, the rest of the Civil Code, state laws, the Federal Civil Code, federal laws, and the Mexican Constitution.

    Be very sceptical…

    Be sceptical of people who say, “There’s nothing in the law that forbids this, so we can do it!” If they’re referring only to the condo law, they might not be correct.

    If an issue clearly applies only to a condominium, then you’re likely safe in relying on the condo law, and nothing else. Such things as:

    • the duties and responsibilities of the Administrator and Council/Board;
    • obligations of a condo owner;
    • the method of calling an assembly; or
    • the quorum and voting needed at an assembly.

    Other things are not so cut and dried.

    For example, issues affecting common property are regulated in two places in the Civil Code. As they relate specifically to the peculiarities of a condo regime, they’re in the condo law. However, the rules in the condo law are in addition to basic regulations about all common property (condo or otherwise) that are set out elsewhere in the Civil Code (this section is in the “Jalisco Condo Law in English”). If your particular issue with common property isn’t covered by the condo law, then you must also check the general common property regulations before deciding you can go ahead and do something.

    Some things might appear to apply only to a condo. When I looked at the issue of proxies at an assembly in an earlier post, this was an issue that the condo portion of the Civil Code was silent on. However, other parts of the Code were not.

    Beware of reducing rights

    Some actions you might be thinking about taking could impact a condo owner’s rights. Rights are taken seriously in Mexico. While there might be nothing in the condo law, these rights could be protected because they’re fundamental rights, real rights attached to the ownership of property, or rights given by another law.

    Before doing anything that lessens or removes something that looks like it might be a right, make sure you have the law on your side. I strongly recommend that you get a written and cited legal opinion. If you get only a verbal opinion, it might not be correct, and the condo, not the lawyer, could be liable.

    You also need legal citations that you can use in a court case if the person objects, and this becomes a legal issue. It’s also a good idea to quote these citations at the time you lessen or eliminate something that could appear to be an owners’ right (for example, in a by-law clause or in a letter to the owner). This gives you solid, defensible backup.

    Don’t forget to check your by-laws

    There could be an issue that isn’t covered by the condo law, or any other law, but might be regulated closer to home: in your by-laws!

    By the way, while we’re on this topic, if one of your by-law articles contradicts the condo law or some other law, then it has no validity. So what exactly does this mean? It means that it can’t be enforced.

    If you have an illegal by-law article, there’s nothing you can do to force any owner to follow it. Owners might not know it’s illegal, and could happily comply. Sometimes for years. But, if someone does not, you can’t impose fines, sanctions, or penalties (OK… you can try, but you can’t legally collect them if they don’t pay), you can’t successfully carry out a legal action, and you can’t force the sale of their house at public auction. You’re welcome to try any of these, but you won’t win in court.

    Never assume knowledge

    My final piece of advice is to not rely on your knowledge of condo laws and practices from other jurisdictions, or legal practices from the U.S. or Canada.

    Each state in Mexico has its own condo law. While there are fundamental concepts that are the same, there can be significant differences. The same is true in the U.S. and Canada. Each U.S. state, and each Canadian province, has its own condo legislation, and these do vary.

    It’s also important for foreigners to realise that Mexico, and the U.S. or Canada have significantly different legal systems. The U.S. and Canada use a common law system, while Mexico uses a civil law system. Many legal concepts and practices fundamental to the legal systems North-of-the-Border just don’t apply in Mexico.

    Common law legal systems rely on a history of earlier judicial decisions (jurisprudence) as the main source of law. Under common law, the judicial branch has great discretion to interpret and create law over time.

    In contrast, a civil law, or code-based legal system, relies mainly on the written law. Changes to the law come about through the actions of the legislative branch. Judges don’t usually have the discretion to interpret the law, or to take positions that differ from the law as it’s written.