Arquivo de Negócios - MPCP Advogados

Local Accommodation in Fractions intended for Housing

MPCP — Wed, 13 Dec 2023 02:24:40 +0000

Local Accommodation in Fractions Intended for Housing – STJ Ruling 03/22/2022

In order to determine whether the use of an autonomous fraction (intended for housing) to operate a Local Accommodation (AL) violates the constitutive title of the horizontal property, the Supreme Court of Justice issued a standardizing ruling on March 22, 2022. of jurisprudence that has been considered controversial and controversial.

This decision states that “in the horizontal property regime, the indication in the constitutive title that a certain fraction is intended for housing must be interpreted as meaning that local accommodation is not permitted.”

Regarding this issue, it is important to note that under the terms of article 1418, no. 2, a) of the Civil Code, the constitutive title of an autonomous fraction contains, among other elements, a mention of the purpose for which that fraction is intended. This purpose may be residential or commercial, and must be respected as such, and it is prohibited to use the fraction for a purpose other than that stated in the constitutive title, as prescribed in article 1422, no. 2, c) of the Civil Code.

Thus, the discussion in question actually starts from a first fundamental question: does the activity of Local Accommodation integrate an act of commerce or the concept of housing?

Doctrine and jurisprudence are not unanimous on this point, with arguments supporting different interpretations.

It was understood in this ruling of the Supreme Court of Justice that from the point of view of the destination of the thing and its respective socio-economic condominium environment, a housing experience is different from its use in Local Accommodation.

In fact, it should be noted that in a Local Accommodation there is a rotation, randomness and temporary permanence of users, effectively incompatible with what occurs in a fraction intended for housing, which will always include a degree of certainty, continuity, security and familiarity absolutely distinct.

Nor is it possible to compare a user of Local Accommodation to a resident of an autonomous unit. Local accommodations are mostly sought after by people who are on vacation, looking to relax and abstract themselves from their daily lives, as any vacation presupposes. Unlike a normal resident, he goes to his apartment as part of his daily life, as part of his routine, looking for peace and quiet that is often incompatible with the relaxation, excitement and celebration of the users of a Local Accommodation.

On the other hand, it is also important to note that Law No. 62/2018 provides for the possibility for the condominium assembly to oppose, through deliberation, the exercise of Local Accommodation activity in autonomous units, based on the practice of acts that disturb the normal use of the building and acts that harm the rest of the condominium owners. This deliberation, moreover, could be the basis for the cancellation of Local Accommodation by the municipality.

Now, given that this protection exists in Law No. 62/2018, it seems precisely difficult to understand the STJ's decision, a decision based on the defense of condominium owners, who in truth, as far as the law states, were already protected by this means. The spirit of Law No. 62/2018, in fact, seems to result in the legislator's intention not to completely and from the outset prevent Local Accommodation in buildings on horizontal property, enshrining, however, to “counterbalance”, the admissibility of condominium owners' reaction to the Local Accommodation in circumstances that are harmful to them.

It is clear from this Ruling that standardizes jurisprudence that the installation of Local Accommodation in an autonomous fraction that, in accordance with the constitutive title of the horizontal property and in the absence of other legal elements, is intended for housing is prohibited.

Finally, it is worth talking about the applicability of this Judgment. It should be noted from the outset that the STJ's decision does not have the immediate and direct effect of changing the legislation on Local Accommodation, however, it will necessarily have an impact on the decisions that the courts will take regarding this topic, since An understanding different from that set out in this Judgment is not permitted. Furthermore, under the terms of art. 629, no. 2, subparagraphs c) and d) and art. 672, no. 1, subparagraph c) of the Code of Civil Procedure, an appeal will not be admissible in disputes in which the same fundamental question of law is at stake.

However, it should also be noted that this decision of the STJ does not prevent the constitutive title of the horizontal property and the condominium regulations from being subject to change, by agreement of all condominium owners, in order to allow Local Accommodation. *

* This article is for informational purposes only and does not preclude the need for advice from a lawyer.

O conteúdo Alojamento Local em Frações Destinadas a Habitação aparece primeiro em MPCP Advogados.

Change of use of Indepenent Unit of an Urban Property”, em francês “Modification de l’allocation d’utilisation des bâtiments/fractions autonomes

MPCP — Wed, 13 Dec 2023 02:01:12 +0000

Change of use of Indepenent Unit of an Urban Property”, em francês “Modification de l’allocation d’utilisation des bâtiments/fractions autonomes

Horizontal property is the property that affects the various components of a building, which must be able to form independent units (art. 1414 of the Civil Code).

We are faced with a complex real right that combines, within the scope of real rights, singular ownership, over the autonomous fraction, and co-ownership, over the common parts of the building (article 1420° of the Civil Code).

The institution of horizontal property is based on the assumption that each of the fractions resulting from the division does not have structural autonomy and only acquires functional autonomy through the use of parts of the building that are necessarily allocated to the service of other fractions (Pires de Lima and Antunes Varela, Annotated Civil Code, Vol. III, 2nd edn, page 393).

In the horizontal property regime – taking into account the “dualistic nature” resulting from the competition of two rights: full ownership over the private parts and “forced” co-ownership over the common parts – there are limitations on the condominium owners that do not fit into the property in general.

Therefore, from the outset, condominium owners cannot give their fraction “a purpose other than the use for which it is intended nor for any other activities that have been prohibited in the constitutive title” (Mota Pinto, Direito Reais, 1972, p. 274).

It is important to note that the constitutive title of the horizontal property, subject to land registration, together with the regulations, form the so-called “condominium regulatory statute”.

According to art. 1418.º, nos. 1, 2, paragraph a) and 3 of the Civil Code, the constitutive title of the horizontal property may contain certain specifications, namely those relating to the purpose for which each fraction is intended, given that, if this specification appears in the title, it must be coinciding with what was established in the approved project, under penalty of nullity.

On the other hand, the constitutive title can only be modified – except in the case provided for in article 1422.º- A (joining and dividing fractions) – with the agreement of all condominium owners, meaning that the use of a fraction for a different purpose of what appears in the title is prohibited without this requirement being met.

Furthermore, if the constitutive title states the end of each fraction, the change to its use can only occur by public deed or by an authenticated private document, and on the assumption, as mentioned before, that there is agreement by all condominium owners (article 1422º , no. 4, contrary to the wording introduced by Decree Law no. 269/94 of 25 -10 and 1419º, no. 1, of the Civil Code with the wording introduced by Law 8/2022, of 10-01 , effective April 10, 2022).

In this case, the administrator, on behalf of the condominium, may grant the public deed or prepare and sign the authenticated private document, as long as the agreement appears in the minutes signed by all condominium owners (article 1419, no. 3, of the Civil Code with the wording introduced by Law 8/2022, of 10-01, coming into force from April 10, 2022).

So how to proceed in practice?

It will be necessary to have a Minutes of the Condominium Assembly in a unanimous decision taken at the General Condominium Assembly to change the constitutive title of the horizontal property, Certificate from the Lisbon City Council authorizing change of use, submit Model 1 (IMI) to the Finance Department (in the case of a legal person, delivery must be made through the Finance Portal) and finally carry out a Deed of Change of Horizontal Property or sign the Authenticated Private Document. *

* This article is for informational purposes only and does not preclude the need for advice from a lawyer.

O conteúdo Alteração de Afetação de Uso de Fração Autónoma aparece primeiro em MPCP Advogados.

The importance of Due Diligence in corporate and real estate business

MPCP — Wed, 13 Dec 2023 01:54:18 +0000

The importance of Due Diligence in corporate and real estate business.

I – The Concept

A Legal Audit, also known as Due diligence, can be defined as a set of legal procedures aimed at obtaining, analyzing and verifying information and legal documents (in the sense of containing legal rights and duties).
Due Diligence (and here we are talking about legal Due Diligence, which is important to distinguish from financial Due Diligence, which comprises the analysis of financial and accounting information) usually occurs in the planning or monitoring phase of a negotiation for the purpose of acquiring rights (for example acquisition of a shareholding in a company, or acquisition of real estate). And it aims to answer an essential question: what is really being purchased?

II – Care to be taken when preparing and carrying out Due Diligence

There are several precautions to be taken when preparing and carrying out Due Diligence, which can be extended to
all parties (sellers or buyers), of which we highlight:

Respect for confidentiality rules – From the moment a demonstration of interest is presented (for example Letter of Interest) and it is validated by the selling entity, the information circulated within the scope of Due Diligence is often sensitive and confidential information. Everyone who will have access to this information must be identified and be prepared to sign confidentiality documents (NDA's) that reflect the conditions of the respective intervention.

Protection of personal data – Increasingly, national and community legislation requires compliance with various legal requirements regarding documents and databases that contain personal information.

Cross-reference the information with the Financial Audit (Financial Due Diligence) – It is often the case that, in parallel to legal Due Diligence, financial Due Diligence is being developed. The patrimonial reality, the set of rights and duties (I understand the recognition of payments, debts, credits, employment contracts, insurance contracts, etc.) however, is only one and will have to be reflected in both Due Diligence. It is therefore important that the information resulting from these two audits is shared between those responsible for each area, not only for the purposes of preparing the acquisition but also for the purposes of preparing the company's activity after the acquisition (for example, in order to identify the needs capitalization of the company in specific matters by the new owners).

Observance of third party rights – It is important to ensure that the documents and information on which the Due Diligence analysis will be carried out may include the rights of third parties or rights prior to any negotiation. A mortgage creditor, for example, has a right (embodied in a debt in his favor) that directly affects the equity value of each asset.

III – Advantages of Due Diligence:

In practical terms, there are several advantages to carrying out Due Diligence, whether it is an acquisition of a shareholding or a real estate asset.

Knowledge of the real and financial risks of each operation or each asset – First of all, Due Diligence allows us to better understand the real risks involved. A company that has several processes under litigation will necessarily have to have its value assessed taking into account the risk in question. A company that is not complying with its licensing obligations will also have to have its value assessed taking into account the risk in question. A company that does not have up-to-date land or industrial property registrations (trademarks, patents, etc.), or that are in the process of being cancelled/terminated, will also have to have its value assessed taking into account the risk in question. And these are just a few examples. At the end of the day, what is worth money is only what is registered, or what is protected in documents (for example contracts). The identification of the real and financial risks of each operation or each asset must always be prior to the acquisition.

Improve the negotiating position – Directly associated with the identification of risks comes negotiation. Many negotiation solutions are possible but only if the risks are known. For example, making the payment of part of the price conditional on the favorable resolution of litigation processes. Or simply, lowering the acquisition price.

Support decision making according to rational criteria – Given the uncertainty in the business world, it is relatively common to see pressure to hold directors of companies responsible for taking a certain
decision to acquire a shareholding or real estate asset that may not result in asset appreciation. From this perspective, a Due Diligence report not only clarifies in advance which criteria
that were verified and followed (and their respective support) to arrive at a certain assessment, as it immediately eliminates the liability of an administrator for negligence. In practical terms, an administrator in light of legislation
currently in force – See article 72, no. 1 of the Commercial Companies Code – you can never be held responsible for negligence in a business of the company you manage, if you have made your decision following rational criteria in the interests of the company.
company and embodied in a Due Diligence report.

Prepare acquisition financing more rigorously – Assuming that the desire to acquire remains after carrying out Due Diligence, it is important to start preparing the financing of the acquisition taking into account the information gathered. It may, for example, be in the buyer's interest to establish that the price will be paid at different times, or conditioned on certain results or objectives. It is also important to consider preparing the future of the company's activity after the acquisition itself. Where is greater financial caution or greater investment justified?

Asset optimization and identification of new markets – Several of the legal documents that are submitted for Due Diligence analysis allow us to identify points where there is waste in a company's activity, or at least, where the company's activity could gain new customers and even new markets. For example, when analyzing contracts and partnership agreements.

* This article is for informational purposes only and does not preclude the need for
advice from a lawyer.

O conteúdo A importância da Due Diligence nos negócios societários e imobiliários aparece primeiro em MPCP Advogados.