I read almost everyday expats complaining about Brazilian condos and fees. The complains arise from the lack of understanding about how condos are structured in Brazil.
Most people in large Brazilian cities live in condos (condomínios). There are houses, apartments and even country houses condos; upper class, middle class and lower class condos.
Living in a condo is convenient and it is perceived as safer than a house. You don't have to care about gardening, building maintenance, outdoor cleaning, exterior painting and so on. Most of the times, you have a doorman and 24h electronic security, burglary is very rare and you can leave your unit empty of people for days and weeks while keeping your peace of mind.
It's unusual a condo to have just one landlord in Brazil. In most cases, each condo unit is independently owned. For each condo, the owners gather in an association called "Assembleia Geral do Condomínio". Then they meet and approve enhancements and expenses, elect a representative called "síndico", decide how to maintain the condo area, and what services should be provided and shared.
All the shared services and expenses are supported by the residents through a monthly fee called "taxa de condomínio". In most condos, the residents are a mix of owners and tenants. Permanent enhancements to the condo, like a new swimming pool, improve the property value and are supported only by the owners. It's usual to see the "taxa de condomínio" split between investment ("investimento" -- supported only by owners) and expenses ("despesas" -- supported by all residents -- owners or tenants).
Generally, the owners representative (síndico) hires a professional administrator (in most cases, the cheapest company he can find) to keep accounting records, pay employees by the Law, maintain the area and calculate and collect fees.
It's important to stress that the owner is the ultimate responsible for the "taxa de condomínio". If he rents the unit and the tenant does not pay the "taxa de condomínio", the owner will. If the unit is sold and there are outstanding debts ("taxas de condomínio em aberto"), the new owner is responsible for them. In the worst scenario, as the outstanding debts grow, the unit owner can be sued by the owner's association and lose his property.
When I have time, I'll post "Being a Tenant in a Brazilian Condo"! I hope you enjoy...
Ok and here is where it makes no sense. But correct me at any time. You don't own the condo, so therefore you are paying fees to live in an apartment. So if you don't own it why should you pay to maintain it? In other words if I don't own something I don't want to replace the roof. I am not getting any money back its not an investment for me its essentially a waste of money. Not that living in a condo/apartment can't be great with the security etc but why would I want to renovate? Pay for new siding for example? Or pay tax?
ReplyDeleteSecond thing that is ridiculous to me is why should I pay someone else's bills? Some stranger I have never met before. Send the bill to the last renter or take them to court. Why should I be punished? Again I don't own the property the person who benefits from owning the property and getting cash out of it is the owner They should take on any bills that are left over from a previous tenant. Real Estate prices rise in Brazil do they not? So there equity increases.
Seems like a artful way to get out paying for something. Passing the buck to someone that has not real investment in the property. Doesn't seem fair.
All the owners/landlord should get together and pay to maintain as they have the interest. Just charge a fair rate for rent.
It makes no sense how they do it down there.
Regarding your first item - what would you charge in rent if you had to rent your house out for 50 years - would you think about a new roof pipes and floor etc ?
DeleteIf you were smart you would - so it makes complete sense = you pay for maintenance of something you benefit from and wear and tear on and is loosing value during your stay !!!
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DeleteWell, cut it however you want, but if you don't want to pay for the fee you feel the property owner should cover, then don't rent the unit. Just assume it's part of the rental fee. What difference does it make, it's all about the bottom line cost to you, just like your monthy water or internet bill.
Deletebut just to touch on your point, you're also paying for the other features of the fee like the community pool/gym, or that lobby/gate 24/7 security that's there for your consumption/service, not your property owner's.
Thanks, Skarrlette! That's the kind of feedback I was looking for. Please understand I'm here to explain how it is done down here, not to take a side saying which country has the better logic. In one topic I fear you misread text.
ReplyDeleteMAINTENANCE
The tenant don't own the condo unit, but he has the possession and the use of the property. He receives the property in some state of conservation. So, by the Law, he is supposed to keep it this way. That's the logic behind the resident (owner or tenant) being in charge of the building conservation: who uses it has the charge of keeping it, and not necessarily the owner. It may not be the American way (I don't know), but it is the Brazilian way and you may agree with me that there is a reasoning behind the rule.
PROPERTY TAX (IPTU)
Different countries have different habits. We can draw an analogy here: suppose that I go to a store in the US to buy a pen. I see one price on tag and pay another at the cashier. Why? Because the tag does not include taxes. For Brazilians, it's weird, for Americans it's a pretty understandable tradition. In Brazil, when you rent a property, the price tag does not include the property tax because there is a tradition in doing so. The income tax is supported by the owner, but the property tax is supported by the tenant. The owner could include the tax in the rental price, but it would be unusual. There is another reason for not including property tax in the rent: property tax can change a lot for one year to another at the city will! So, to include this tax in the rent, the owner would have to include some margin to accommodate the tax variation while preserving his return on investment. It's easier to exclude the property tax from the rent price.
PAYING SOMEONE ELSE´S BILLS
Please read my text again. I think you misread it. What do you mean when you say "renter"? The owner or the tenant? Renter has both meanings... (see http://www.thefreedictionary.com/renter)
The fact is that the tenant does not have to pay someone else's bills. If you are the tenant, you will not be punished by other people's faults. Bills that are left over from a previous tenant are to be paid by the unit owner. So, there is no artful way to get the owner out of paying for something.
Summarizing the rules:
ReplyDelete1. The condo has monthly expenses and someone have to pay the bills. When I say condo, I mean the non-profitable owners association. If the condo does not do anything to collect overdue bills, the other residents have to increase their payments in order to pay these bills.
2. In the condo's point of view, it does not matter if there is a tenant. The condo will always go after the owner to get the outstanding debts back. Why? Because the owner is responsible for letting the tenant moving in, he is the one that has the money (the property) and he is the one who is part of the association (condomínio).
3. In the unit owner's point of view, if the tenant does not pay the rent or the "taxa de condomínio", the owner will go after the tenant who defaulted. There is no way for the owner going after the subsequent or previous tenant. If the tenant is not available, the owner will go after the tenant's guarantor (fiador).
4. If you want to BUY (not rent) a condo unit, you have to check if there are unpaid bills. When asked for, the condo is required to issue a written statement about the existence of unpaid bills for the unit. If you, BUYER (not tenant), fail to do so, you accept the property as it is (that is, with bills included). There are many cases in the US where, when you buy or hire something, you accept it as it is.
5. The "taxa de condomínio" can be due before or after the respective month. It depends on the condo rules (convenção de condomínio). So the tenant should be careful about what he pays.
6. The tenant must get a written statement from the owner when the he returns the property to the owner. This statement must contain the date of return and the state of conservation of the property, and must be kept for years. If the tenant fails in doing so, an dishonest owner can sue the tenant making up another return date or some problem in the property.
There are some complexities that are beyond the scope of the blog, as I am a businessman and engineer, and not a lawyer. For example: hidden flaws in the property that are not easily perceived by the tenant when he or she rents the place. For example, he rents a house that seems OK, but it is infested with termites. Who has to pay the fix? The owner!
ReplyDeleteWelcome again, Danielle! I wrote this post because of you...
ReplyDeleteAs I told above, the condo bill is split into expenses and investments. Investments are supported ONLY by owners (as required by law), while expenses are supported by the tenants.
You're right: owner and tenant can negotiate who pays the expenses bill. I saw one rent agreement some years ago where the owner paid the whole condo bill. Of course, the rent price was elevated accordingly. I think the tenant was American...
And you're right about everything else.
Sometimes the bill keeps the owner's name. The owner may forget to communicate the rent to the condo, or the condo administration is a mess, or the condo is not interested to know who the tenant is.
The shared utilities system is changing. Many (or most) cities today require new projects to be built with individual meters for water and gas consumptions. So, if you move to a brand new apartment, you are not going to pay someone else's shower!
The always changing condo bill issue... 20 years ago, Brazilian inflation was so out of control that it was impossible to set a fixed amount bill. Things have changed since then and now the fixed amount bill is the norm. It requires some reorganization to set a fixed amount, so, for old condos, the owners have to gather in the Assembly in order to change the system they're used to.
Someday Alexandre will buy an apartment or a house in a gated community (another kind of condo) and you may become síndica!
Wow, great information! I live in a condo and had no idea about a lot of this! Thanks for shedding some light on it!
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ReplyDeleteI'm getting the point of Skarlet up there in the comment. Why would you invest to something that you don't own?
ReplyDeleteIt really is interesting to see the different laws in place in different countries. Outside of the US, I know a little about the laws in Thailand and there is WAY more relaxed than what it seems to be in Brazil. Interesting read. Thanks for this.
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ReplyDeleteThere's no way I would move there and pay someone else's expenses just to live in their apartment. Absolutely crazy. Hopefully, they will reform this highway robbery someday! You mentioned that the renters were enjoying the communal benefits of the place and should pay for it. Guess what? That is what the RENT is for!
ReplyDelete