Condominium Management Companies Will Have to Comply with New Rules

One of the main changes is the creation of specific requirements for companies that professionally manage condominiums. The proposal stipulates that these companies must have a license or permit, civil liability insurance, and adequate training.

The insurance aims to protect condominium owners and third parties from potential damages caused by the company's actions or omissions in the exercise of its activity. The proposal also provides for mechanisms to hold companies accountable, including the possibility of license revocation in case of non-compliance.

Written Contracts Become Mandatory

Another change foreseen is the mandatory existence of a written service agreement between the company and the condominium.

This measure aims to clarify the obligations of each party and the services that are actually contracted.

This is a particularly relevant change in a sector where high values ​​may be at stake and where companies assume responsibility for the financial management and maintenance of the common areas of buildings.

What if the company disappears with the condominium's money?

This is precisely one of the situations that the new rules seek to help prevent.

There are cases of management companies that are responsible for funds intended for works or other condominium expenses and end up disappearing, leaving the residents with a problem to solve.

Civil liability insurance should function as additional protection against any damages caused by the company.

However, the Portuguese Association of Condominium Management and Administration Companies (APEGAC) itself warns that a new regulation, by itself, does not eliminate all bad practices.

Will it be mandatory to hire a company?

No. The future law will not oblige condominiums to hire a professional company. The residents themselves will continue to be able to assume the administration of the building, as is currently the case.

This is an important distinction: the new regime is mainly intended for the economic activity carried out professionally by condominium management companies and not for the internal administration carried out by the residents themselves.

Can the same company handle cleaning?

The proposal includes rules to avoid conflicts of interest between condominium management and the provision of other services.

The idea is to prevent the company responsible for management from accumulating services such as cleaning or gardening without transparency rules.

APEGAC, however, considers that this separation could penalize smaller companies and argues that it should be possible to accumulate services, provided that the condominium owners are aware and that the different services and their respective prices are clearly identified.

Will there be new rules for construction work?

The proposal maintains a duty of building conservation on the part of the building manager.

It also provides for the possibility of the building manager proposing a maintenance plan, but its approval will continue to depend on the condominium owners.

In other words, the building manager may recommend that certain works be carried out, but may not decide alone to proceed with interventions that depend on the approval of the assembly.

Is there more bureaucracy for reporting construction work?

This is one of the measures that is generating reservations from the sector.

The proposal foresees the communication to municipalities of works carried out in buildings, including maintenance and conservation interventions.

For APEGAC, this obligation could create more bureaucracy for condominiums and also more work for municipal councils, especially when interventions without a significant impact on the structure or architecture of the buildings are involved.

Will condominiums become more expensive?
This is one of the consequences that is not yet possible to determine.

The requirement for a license, civil liability insurance, and training represents new costs for administrators, which may end up being reflected in the fees paid by condominiums.

APEGAC admits that there may be some impact on prices, although it does not necessarily anticipate substantial increases.

On the other hand, the professionalization of the activity could represent an advantage for condominium owners, especially when it comes to managing money, contracts, works, and other responsibilities related to the building.

And what about building insurance? Will it change?
This is not the main change foreseen in this legislation.

The proposal focuses on the activities of companies that professionally manage and administer condominiums. The insurance provided is a civil liability insurance for the companies, intended to cover damages that may result from their actions.

According to available information, the proposal in question does not foresee the creation of a single multi-risk insurance policy for the entire building, a demand advocated by APEGAC.
When will the new rules come into effect?

There is no date yet.

The legislation is in the legislative process, which means it still has to go through several stages before it can become law. First, it will have to complete the analysis process within the Government and be approved by the Council of Ministers. Then it will go to the Legislative Assembly, where it will be discussed and voted on.

Until then, the rules can still be changed.

Essentially, the proposal aims to professionalize an activity that manages the money and common assets of thousands of condominiums. For residents, the promise is greater security and transparency; for companies, it means more obligations and costs. The real impact will only be known when the new regime is finalized.
Real Estate News, Notícias Informativas