Summary of Nayarit Development Law

The state of Nayarit has seen an enormous increase in development in the past 5 years. With the establishment of the Punta Mita market and the increase in golf courses, and better highways, developments had become a large part of the real estate inventory for sale in Nayarit.

Developers such as El Faro Real, Punta Vista II, Villas Las Parotas, Casa del Sol, Punta Mita Master Resort, Paradise Village Palace Royale, Punta Esmeralda, Flamingos Club Residential, among others, are building a large inventory of horizontal and vertical products.

The revision of the development law in Nayarit is a detailed, well-conceived body of regulations designed to protect the consumer and owners of developments in Nayarit.

The following is a summary of some of the elements of the law enacted and superseding prior law before June 2002. Developments not in compliance of the law change were given a period of six months after the 2002 law to be in compliance. This current law addresses many of the problems encountered in the past by government officials, developers, and development owners. This law is an evolution of further problem solving of development issues.

Vertical development: A property built on various levels on land commonly owned. Each owner has the right for private ownership over his/her unit and right to co-ownership of the land and other common areas, according to the deed and by-laws of their development regime.

Horizontal development: Property built, developed, or planned, where part of the land and other property have exclusive ownership. Each of the development owners shall have a right to private ownership of the land of his/her individual unit and in the co-ownership of commons elements as defined by the development deed and by-laws.

Combination development: This type of property and ownership is a combination of vertical and horizontal developments on the same land or in the same building complex.

Types of use: developments may be residential, commercial, industrial or a combination of all types.

By-laws and the development regime must be recorded as a public deed, which specifically includes the building permit, location, dimensions, measurements, and boundaries of the property, as well as a general description of the construction and quality of materials. It shall also include the description of each unit of private property, including location, boundaries, measurements, places and spaces for parking for specific identification.

The monetary value of a private unit shall be listed, as well as its percentage in relation to the monetary value for the entire property. The common areas and improvements shall be described in detail in the public deed.

There is an obligation by the development owners to contract for insurance with a legitimate authorized company against earthquake, flood, explosion, dire and third party damage.

The builders or those obligated for the construction of the project shall list their warranties, as well.

The public deed shall note the general plans authorized with the permit from the government agencies responsible for same and include the plans for each individual owned unit, as well as plans for the sewer and electrical installations, foundations, gas lines, common areas as certified by the federal agency responsible for giving approval.

The bylaws, as well as contracts of change of ownership or any legal act that affects the property or ownership, must comply with the requirements of this law and shall be registered in the public registry.

Any changes in the deed or by-laws must be agreed upon during an extraordinary general assembly in which at least 50% per cent, plus one owner shall be in attendance. A minimum vote of 75% of the total development and a simple majority of the total development owners is required to pass an act.

The right of each development owner over the common areas shall be proportional to the value of his/her individual property as stated in the deed.

There is an additional requirement that construction projects or repairs shall not be done at night, unless in the case of an emergency.

The Laws of Ecological Protection for the Environments is addressed. Trees cannot be chopped down or transplanted except in specific instances. Parking in common areas may not be marked by boundaries or have coverings unless an agreement is made at a general assembly. Possession of animals, that by their size, number or nature affect the security and well being of the owners, are prohibited.

When a development owner does not respect the legal use of the common areas, he/she will be liable under the law.

The law addresses the rights of co-owners as well as renters and occupants of a unit.

The law also addresses the issue of a renter's priority right to purchase the development, if it becomes available for sale. If the procedure is not followed according to the law in regard to the rights of the tenant to purchase, the sale can be in violation of the law. The renter has the right to sue for damages up to a certain monetary amount. The renter must follow the law as well, or he/she shall not be considered eligible for damages.

Improvements to the common areas may require payment by the adjacent development owners. In vertical developments where the land is owned in common, all development owners shall pay for the common area projects on it.

An interesting addition to the law is that in vertical development projects, the development owners of private units located on the first and top floors shall not have more rights than the rest of the development owners. Unless it is otherwise established in the by-laws, the development owners on the ground floor or top floor may not occupy common areas in an exclusive or preferential manner. This affects designated private use of common ground floor areas and the rooftop of the building.

The development owners must agree to the repairs of the construction of the common areas and general utility installations in the proportion that each one represents within the total development. There may be an agreement to the contrary, if said agreement does not harm another owner. This clause is attempting to address the practice of owners paying the same development dues, regardless of the differences in sizes of their private ownership and their percentage of common ownership.

A clause in the new law is so specific as to state that, in the case of eviction, the owners shall be responsible for cleaning of the unit.

Very important difference from previously: the original owner(s) of the development shall be responsible for hidden defects of the construction for one year after the turnover date of the property.

Owners are required to make urgent repairs to common areas or utilities if the administrator is absent. This requirement gives the owners more responsibility in this type of situation. The law does not allow owners to blame the administrator for damages when they are not on the property.

All the development owners shall pay for the expenses that are part of the operating and maintenance of the common areas and utilities.

Professionals must be hired to handle the maintenance of common areas and utilities.

What is not covered specifically in this body of law is covered in the Civil Code for the State of Nayarit and other applicable laws.

This development law is more advanced at this time than the one in Jalisco.

In a vertical development the common areas are the entire land, the foundations and retaining walls, hallways and stairs, general use roofs, gardens, installations and appliances that have common use such as sewer system, wells, holding tanks, elevators, electrical installation for cable televisions, computer networks, and gas lines.

In a horizontal development, the difference is that the land individually owned is NOT part of the common land ownership. The rest of the common ownership is similar to that of vertical development ownership.

In both types of ownership, parking spaces are common areas when they are for general use.

The assemblies in Nayarit are to be held every 6 months, which is a big change from the once a year requirement. The goal of the ordinary assembly is to inform the owners of the business of the development and to deal with issues pertaining to the ownership.

The extraordinary assemblies are held when there is a need to decide on:

Modification of the deed of the development or its by-laws.

To voluntarily dissolve the development by-laws.

To complete new construction projects.

To decide whether or not to rebuild the construction in the event damage.

Decide upon urgent issues as they arise.

In the case of joint development, the administrators of these properties may hold their own assembly or meeting, which shall be run by the committee for the overall administration. Assemblies may also be held by a section or group with which issues relate their buildings only. The administrator shall run this meeting, and his/her decisions may not be contradictory to decisions made in the general assembly or affect the owners as a whole.

Resolutions or decisions of these assemblies will be made by simple majority of the votes present, according to the percentage of common ownership, except in the case when the current law, development deed or the by-laws have established a special majority.

The vote in these assemblies or meetings shall be personal and direct. Under no circumstances may a single individual represent more than two development owners, even with power of attorney. Under no circumstances may the administrator represent any development owners at the assemblies.

When an owner is named administrator or to the Board, he or she must be in good standing in maintenance payments, dues and reserves.

If a single owner represents more than 50% of the votes and the rest of the total value of votes are in attendance, at least half of the remaining votes are required in order for a vote to be valid. If there is not al least a 75% attendance of the total value of the development, a second call of the assembly will occur, and a 75% percentage of the votes will be required for vote to be valid. If these conditions are not met, the majority owner or minority owner may submit any discrepancy to arbitration as provided in the lower or to special courts.

The minutes of these meetings shall follow a certain procedures, including being written and current in the book of minutes with the history of the assemblies. The President, secretary, members of the Vigilance Committee (Board of Directors) who are in attendance and developments owners (who are asked to) shall attest to the accuracy of the meeting by signing the record of the minutes.

The development owners' book of minutes shall always be in sight and each owner shall be informed, in writing, the resolutions adopted at the assembly. The minutes of the meeting shall be sealed before a notary public in the following cases:

The deed is modified and it shall be registered in the Public Registry.

The by-laws are modified.

Announcements of the general assemblies shall be made in advance with details of the meeting time, date, agenda, as well as the name of the person/group calling the meeting.

The notices of meetings shall include delivery of the notice to the individual properties; the notice shall be posted in visible locations around the development.

Either the administrator, the V Committee (Board), or at least 25% of the total owners, may call a meeting.

When the first meting is held after the first announcement, 75% of the owners are required to be present. After the second announcement, a simple majority quorum will be sufficient. In the event of a the event of a third call for the meeting, the assembly will be declare legal with the development owners who are present and in attendance. Resolutions voted upon in this case, should re require a majority of those present.

Adopted resolutions in proper assemblies held within the terms of the law, the ay-laws and any other applicable legal regulations, shall be followed by all development owners, included those who are absent or opposed.

Notice of assemblies shall be sent out 8 natural days in advance of the date of the first announcement. Between the second announcement and the convening of the assembly, the minimum time will be a half hour and the same for the third announcement and convening of the meeting. This procedure allows owners to conduct a meeting when there are fewer owners in attendance than anticipated.

If there is an emergency, the by-laws shall take into account the circumstances and shall be subject to other regulations of the law and the by-laws.

The administrator or at least 25% of the development owners may request the presence of a public official, if they believe the importance of the issues being discussed warrant such a presence at the meeting.

This article is my summary of some of the high points of the English translation of the Law Change in Nayarit for developments.