BCS Condominium Law & Undivided Interest
FAQ
A.) Are we currently breaking the law?
Yes. We are messengers, please.
It’s important to understand that the developer never had the authority or right to break BCS State Law of Public Order. This has been confirmed by multiple attorneys including the developer’s attorney.
Confusion stems from a fairly standard statement in the Articles giving the developer authority to decide the initial method for conducting business; thereafter, the Assembly of condos will decide any change by 75% UI approval. This Civil filing gives the developer power to decide the initial business method, but only within those methods allowed by State and Federal Law.
No civil agreement, article, or filing can give a person or corporation power to break State, Federal, or Constitutional Law.
B.) What are the issues we are facing? Simple version please!
Keeping to critical concerns, we have two separate and distinct challenges:
1. Breaking BCS Condo Law of Public Order. Solaria sits in a Residential Zone and is required to conduct all matters of business according to Undivided Interest (UI) as it is filed with the municipality. The builder instituted an inconsistently applied method for conducting business that is not allowed by law.
2. Unbalanced Building Percent of Master. UI breaks down into three parts, (a) the Condo’s square meters, (b) the Condo’s meters as a percentage of its building, and (c) the Building’s (sub-regime) percentage of the whole. Multiplying (b) and (c) equates to the Condo’s final UI.
Item (c) was not planned or recorded in a way that creates balance with the final UI.
For example, two identical units might have the same square meters and their percentage of the building might be correct as well. But, the building’s percent share of the whole must be allocated in a way that results in a very close final UI for the two otherwise identical Condos.
What this means is that correcting #1 to start following the law would remove legal liabilities and allow owners to assume control from the developer, but owner UI (voting percentages and HOA fees) would be still be an issue. See FAQ item “F.)” below for more detail.
C.) What is an Undivided Percentage or Undivided Interest (UI)? And keep it simple!
Simply stated, UI is each Condo’s relative ownership of its building multiplied by the building’s relative share, or coverage, of the entire site.
The following table is a portion of the official published table for Building G, Solaria. Condo G101 is 7.715% of its building and the building is 14.73% of the entire site. In this example, UI would be 0.0715 x 0.1473 = 0.01136 or 1.136%.
By Public Order and the owner’s contract, G101 shall be invoiced as 1.136% of the total monthly operating budget.
The intent of the Public Order is that all business including insurance payouts, ownership interest, voting rights, regular fees, and extraordinary fees, will be conducted consistently and according to UI.
D.) Are Rooftops and Gardens included in UI? If not, can they be?
Let’s start with Gardens. First, it’s required to know if the garden is included in the owner’s deed or fideicomiso. Some gardens (buildings C-G) are deeded. In these cases, yes. The garden space is part of the owner’s (Condo’s) UI. Legally, these Condo’s participate across all matters of business, including voting, HOA fees, insurance payouts, special assessments, etc.
For buildings A and B, gardens are declared as Common of Exclusive Use. The gardens of these first floor condominiums are not included in UI. Article 27 of the BCS Condominium Law of Public Order states: “…They are objects of common property: – The land, basements, entrance doors, vestibules, galleries, corridors, stairways, patios, gardens …”. The spirit of the law was explained to be that gardens are required declared common as they add to common values and are a benefit or detriment to all.
Then how were the gardens of C-G allowed to be declared as UI?
The architectural filings indicate that the gardens were designed and declared as a spill-out or part of the living room. This is common in other areas of Mexico, such as Guadalajara, where gardens are typically enclosed or protected by higher walls with gates resembling doors. As such, they would be part of UI. (Committee comment: Realistically, their design is open and more in keeping with a community garden -perhaps why a correction was made for the final two buildings? We are not aware of these specific facts.)
- For the Fourth Floor Condo’s, no. Rooftops are not allowed by law to be included in UI calculations. However, accessible areas on the rooftop can be allocated as Common Areas of Exclusive Use. BCS Condominium Law of Public Order, CHAPTER II Property Considered Common Property, Article 27, Section IV. states: “Foundations, structures, load-bearing walls, roofs and roof terraces for general use …”.
E.) Can’t we all just pay the same?
Unfortunately, no. This method was a recent modification to the BCS condominium Public Order specific to Touristic Residential Regimes incorporated after 2016.
Solaria is a development within a Non-Touristic Residential area and is, therefore, not able to legally declare and operate according to this method.
Article 61 – “When opting for the form of regulation under the Residential Tourist Condominium Property Regime, the Articles of Incorporation and the Condominium and/or Sub-condominium and/or Residential Tourist Master Condominium Regulations, as the case may be, may contain, among others, the following provisions: …
X.- The payment of ordinary maintenance and administration fees and the establishment of the reserve fund by each Condominium Owner, may be calculated in proportion to the number of Exclusive Property Units existing in the Condominium and/or Sub-condominium, regardless of the percentage of undivided ownership that each Exclusive Property Unit represents in the Condominium and/or Sub-condominium and/or Master Condominium, as the case may be. For the determination of the payment of extraordinary fees, the voting shall be carried out based on the percentage of undivided ownership that each Exclusive Property Unit represents in the Condominium and/or Sub-condominium and/or Master Condominium, as the case may be”
F.) To Follow the Law, Don’t We Need an Assembly Vote?
No meeting or vote is required to follow the law. Following the law and what is written in our existing filings is not a change. Breaking Public Order is an ongoing legal infraction by Solaria Administration with mounting monetary liability. Returning to proper legal status would be a correction, not a change.
Transition Committee opinion: Waiting for assemblies to discuss and vote for corrections to legal infractions is only increasing financial liabilities and furthering divides in the community.
However, there still remains the issue of building UI imbalance. Making changes to the Regime to correct design flaws DOES require a vote of the Assembly. In fact, it requires that 75% of all condominiums (UI) agree to the change. This is difficult, but quite possible.
Once again (repeating what is stated in #2 above), neighboring communities gave the following advice:
- (1) Work on solutions before calling assembly – don’t try to argue or solution during an assembly.
- (2) Break the solution into workable components – don’t try to fix it all at once.
- (3) Use WhatsApp polls or informal meetings to conduct sample votes.
- (4) Only call an assembly when 75% appears achievable.
- (5) Utilize specific use proxies to the HOA attorney with voting instruction(s).
- (6) Then, call a Special Extraordinary Assembly with ONLY the agreed-to action(s) on the agenda.
G.) What’s So Difficult About Following the Law?
The developer of Solaria did a great job constructing the buildings and infrastructure. With exception of plumbing and irrigation, all formal and informal inspections concluded with compliments from inspectors regarding construction quality relative to other regimes in BCS. The plumbing and irrigation issues are partially the fault of improper use and poor maintenance – an Administration issue, not as much construction.
In general, Administration is the weak link for many developers. Solaria was not designed and launched with the eventual administration and management by owners in mind. There are three challenges created by Solaria’s initial design that owners must correct:
1.) Some gardens are Deeded and others declared as Common
In the declarations, some gardens are common-exclusive and others deeded (private) meters – an extension of the Condo’s living space. By Public Order, deeded meters must be used to establish voting rights, participation rights, and for the calculation of HOA fees and taxes. By the same Public Order, common-exclusive meters must not.
Possible Remedy? – Offer ground floor garden owners the option to retain the garden as deeded meters or to convert the meters to common areas of exclusive use. This will address HOA fees. However, each ground floor owner retains the right granted in their deed or fideicomiso and keep deeded meter status and higher participation rights in the common.
2.) Identical units in different buildings will have different HOA fees
See #1 above. Architects and Engineers, when designing the building layouts, could have balanced each building’s exclusive area to ensure a close match of resulting UI for two identical condominiums in different buildings. This did not happen.
Action Required – With approval of 75% of UI, building share of Solaria common can be refiled with the land registry. This would require some legal expense and a few months to complete.
The Transition Committee discovered larger condo communities facing the same 75% challenge. The way other communities have addressed this same challenge is to (1) declare a Special Assembly with an agenda limited to ONLY this one order of business, (2) educate owners in advance, (3) use WhatsApp or other electronic polls to determine when 75% achieved, (4) have all owners proxy their vote (in favor or against) to the legal firm representing the HOA with very strict language limiting authority to ONLY this one vote, (5) and hold the Special Assembly with at least the admin and those legal representatives holding proxy.
The key to success we were told, is limitation of assembly agenda and action – not combining with other assemblies or business; not trying to solve multiple extraordinary items at once. The more focused the greater the likelihood of success. Owners are able to better understand and agree on a specific need and take comfort in the limitation of any additional actions that can be taken. The assembly is called to order, vote takes place in the manner prescribed by owners, the Notaria records and releases our official recorded action.
3.) Condominiums have become used to the current method
From resident research with neighboring communities, this actually happens frequently given developer need for flexibility during the planning, permitting, and marketing phases. However, this has created a current liability for the existing Civil Association of approximately $60,000 US dollars. By year end 2024, this amount will increase to approximately $100,000 USD. It is important for owners to remove this liability and stem any further liability growth.
Owners are not required to accept transition of the existing Civil Association but can instead create a new Civil Association to assume transfer of Solaria Administration. This too is common since it creates a clean financial start and limits the assumption of certain legal obligations and issues.
H.) What’s at Risk by Continuing to Break a Public Order?
All matters of business are currently conducted within the law’s requirement of Undivided Interest with the exception of HOA fees. The greatest risk is that of a civil lawsuit. Given a clear public order and detailed documentation regarding rate methods in place, odds of a suit increase along with the amount of incorrect billing.
Incorrect billing consists of under-invoicing some condos and moving that cost to other condos. The correct budget amount is being collected, just not according to each owner’s actual interest.
As of May 2024, the total administration liability (amount of incorrect billing) is approximately $60,000 USD. By the end of 2024 the total will increase to approximately $100,000. Liability is increasing at an exponential rate due to the delivery of new buildings, increased expenses, and the need to build cash reserves.
If a successful suit is filed, the most likely outcome would be a court or arbitration demand to refund those over-invoiced. The Civil Association named in the suit would bear the responsibility for payment.
Which comes first, following the BCS Public Order or working to correct design flaws?
Initial legal advice suggests that the best solution is to adopt now an interim solution that mimics the desired legal end-state. See item “F.) below.
I.) Can We At Least Agree on an Interim Solution to Follow Law and Stop Liability Growth?
More detailed research and advice is required. However, initial legal advice was that owners adopt now an interim solution that mimics the desired legal end-state.
For Solaria Administration, this type of resolution would likely be viewed by the court as a “good faith” attempt to correct legal infractions while necessary legal actions are carried out. The result would be greatly reduced odds of legal action being taken.
For impact owners, liabilities would cease to grow. This would de-pressurize arguments and help to stem division in the community. Many impacted owners have stated willingness to put past issues and debt to rest if legal operations are restored.
For example, owners could resolve to:
- (1) Estimate the revised legal UI resulting from the correction to each building’s share of common
- (2) Update UI for gardens so there is not an over-payment of landscape fees
- (3) Replace the excess fee charged to 4th floor owners with a ‘Special Fee’ for annual maintenance that is supported by third-party invoice.
As transition from the developer and its administration proceeds, there have been many questions surrounding undivided percentages or undivided interest (UI). This brief article outlines the specific language regarding UI contained in the BCS Condo law.
- (1). The BCS Condo Law is deemed a Public Order and its direction must be followed.
- (2). The builder will submit a table outlining each condo’s official interest (UI).
- (3). Submitted UI will be approved by, stamped by, and published with the Municipality.
- (4). All HOA business must be conducted consistently by UI.
- (5). The Administrator is legally obligated to conduct all business based on UI.
J.) Do Other Condo’s Follow the Public Order?
Yes. From research it appears the vast majority of regimes follow the Public Order. Two data points:
(1) 95% of Associa customers adhere to legal UI. This was a formal, written response to questions during consideration. They also suggested “between 3% and 4%” Touristic Regimes operating with the ‘by-condo’ (same) method. This leaves just 1-2% not following condominium law.
(2) The experience of neighboring regimes. During interviews, all nearby regime board members said legal challenges were their #1 issue during transition due to actions taken during development. Despite resident discomfort, each regime emphasized condo law as their guiding principle. Most shared the BCS Condo Order with TC2, and one regime posted the BCS Condo Public Order online for quick reference by residents.
K.) Ok, So What’s Next?
Committee opinion: Following Public Order is a very important step toward building a peaceful and healthy Solaria community. In whatever steps are decided, it’s critically important that owners begin making real progress toward course correction. Apart from following the law, Solaria owners will be at odds with one another.
A.) Leverage the Surveillance Committee to Demand Corrections – A crucial step has been taken with the formation of a 5-member official legal entity called the Surveillance Committee. This committee acts on behalf of the Assembly to ensure that all operations comply with Mexican law and that the Administrator’s actions align with the best interests of the owners.
Voice your concerns directly and request that they formally demand the Administrator and its Manager to follow the law and Solaria declarations.
B.) Begin to design the ‘to-be’ state – As mentioned in “F.)” above, the interim solution discussed within TC3 produced excitement and held promise. Use the documents available on this site to propose your own similar interim solution. Let your ideas be heard.
However, it’s not the role of the Surveillance Committee to design solutions and it’s not fair to put that burden only on the 5 who raised their hands.
Remember, we don’t need assembly to start the dialog. In fact, it’s far more constructive to begin discussing ideas in advance of assembly.
Many owners were quiet in the past due to fear of being attacked for speaking up. However, change in that environment is evident. It’s important now to understand facts, set aside personal agendas, and being working on common solutions.
What does the condominium law actually state?
Some key points of law are mentioned in the FAQ above. The following articles are also important to understand.
(1) Article 1
“The provisions of this Law are of public order and are intended to regulate the constitution, modification, organization, operation, administration and termination of the condominium property regime.”
The very first Article of the BCS Condo Law establishes the content with higher authority than typical civil law. It’s considered a law of “Public Order”, emphasizing its importance in maintaining a well-functioning community. Laws passed as a matter of Public Order are carefully contemplated and carry special significance in Mexico which cannot be altered.
Two recent federal court of first instance judgments have defined public order (quoted):
“Public order determines a state of peaceful coexistence between the members of a community; This idea is associated with the notion of public peace, a specific objective of government measures.”
“In a technical sense, it refers to the set of legal institutions that identify or distinguish the law of a community; principles, norms and institutions that cannot be altered either by the will of individuals or by the application of foreign law.“
(2) Article 3
“The owner of a property, understood as land or land and construction … must do the following before the Directorate of Urban Development of the corresponding Municipality … submit a report containing … The corresponding table of undivided property for each Unit“
For transparency and for the use of Owners and Administrators, the builder will create and publish a table outlining each condo’s official interest (UI) within both the individual building (sub-regime) and the overall complex (common regime). This table will be of permanent public record accessible within the municipality.
Solaria UI tables have been filed and can be accessed by owners at the municipality. The tables will also be published on this site for reference.
(3) Article 19 and …
“In the different types of Condominium property regime, each condominium owner shall enjoy his rights as owner … with respect to the Exclusive Property Unit, and its respective undivided percentage”
This article establishes UI as the common and consistent measure to be applied to all condominium related activity whether voting rights, invoicing, or participation in insurance payments. However, specific to HOA fees, Article 46 reinforces this intent.
(4) … Article 46
“The contribution of the Condominium Owners to the constitution of the maintenance and administration fund and the reserve fund shall be made in the following manner: … The amount of these funds shall be made up in proportion to the co-ownership rights corresponding to each condominium owner, as provided in Article 19 of this law.“
(5) Article 40
“It shall be the duty of the Administrator … To perform all acts of administration and conservation required by the Condominium in its Common Areas; as well as to contract the supply of electric power and other goods and services necessary for the facilities and Common Areas, and the amount of the consumption of the service or good in question shall be prorated among the Condominium Owners, based on the percentage of the undivided property corresponding to them.”
This article requires that all acts of administration and all share of common expense must be prorated according to UI. To invoice common expense by any other method is a clear violation of Mexico Public Order.