Posted by Lina Landivar
SUPERINTENDENCY OF COMPANIES REGULATIONS FOR THE OPERATION OF REAL ESTATE COMPANIES
Source: SUPERINTENDENCY OF COMPANIES
Resolution No. SC.DSC.G.13.014 of the Superintendence of Companies comprising the Regulation for the operation of companies that carry out real estate activities was published in Official Register No. 146 on 18 December, 2013.
In accordance with the Regulation, it is mandatory for companies whose corporate objective is real estate activity in any phase (promotion, construction, marketing etc.) and that receive money from clients in advance to delivering housing and buildings to comply with the following:
- To own the land on which the project will be developed or to hold the fiduciary rights in the trust that owns the land.
- To obtain the necessary permission for construction from competent public bodies.
- To possess an economic budget for each project. This must include the duly assessed financial projection, estimated time of completion of the project, the sale price of each housing unit, and the parameters for achieving the break-even point and profitability.
- To sign and comply with promissory purchase/sale agreements establishing price, payment conditions, closing date and deadline for signing the public deed, and to sign the final deeds of sale.
- To follow the requirements of the Superintendence of Companies and comply with all provisions issued by it.
- If companies carry out their activity through a Escrow Business Trust, they must also comply with regulations issued by the National Securities Council.
The Resolution also establishes that for the development of real estate projects that require “financial resources from promissory purchase/sale agreements for such project’s property units, before entering into the agreement a Fiduciary Escrow Trust must be created allowing a fund and trust manager to manage said resources”.
Companies who carry out real estate activity are, among other things, prohibited to enter into private preliminary reservation or promissory sales agreements; to sign more than one promissory sales agreement for the same asset; and to designate money from a specific real estate project to other real estate projects.
The Ombudsman will receive complaints regarding discriminatory or inequitable clauses, without prejudice to complaints made before the Superintendence of Companies and relevant legal action.
The Superintendence of Companies will carry out inspections to verify compliance with the current regulations by real estate companies. In the case of observations, the Company will have five days to give its view on the matter. If the Superintendence of Companies considers that the Company is involved in one or more grounds for intervention, it will proceed to “declare a state of intervention in the company and appoint an intervention supervisor”. The supervisor will issue a report regarding the general situation of the company. If the company cannot apply corrective measures to overcome a negative situation that presents risks to its clients, or if said measures are not complied with within the given deadlines, the Company may be declared dissolved.
December 19, 2013
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