Horizontal Property: Everything a Developer Should Consider

On Tuesday 24, we had the honour of being as guests at the Guatemalan Chamber of Construction again to share our knowledge about real estate development of Horizontal Property in which we have specialized for the last 15 years.

For 4 hours we had the pleasure of sharing before an expert public in the industry all the aspects that a developer must contemplate when carrying out the development of horizontal property both legal and procedural in all phases of a project. Below we share a brief summary of the key aspects within the 7 phases in which we divide the real estate projects:

 

 Phases:

1. Investigation;
2. Planning;
3. Tramitology;
4. Initial Contracts;
5. Execution;
6. Deliveries; and
7. Settlement.

1. In the investigation phase it is intended to make a Due Diligence of the property (s) on which the possible real estate project is intended to be developed, covering at least the General Registry of Property, the Municipality (Territorial Planning Plan, if applicable) , Directorate of Cadastre and Appraisal of Real Estate, Registry of Cultural Property (in case the construction was more than 50 years old or had architectural features that could classify it as Cultural Heritage), Registry of Cadastral Information, the Mercantile Registry (in case of people legal entities) and jurisdictional bodies. Based on this investigation, it can be determined whether the property (s) have the characteristics for future development.

2. The Planning phase begins once the research has been exhausted and the interest in the development has been determined, for this purpose a Financial Model must be worked on, which allows determining the viability and profitability of the Project. For this, a company must be established, which will be the developer of the Project, this company must acquire ownership of the property for future development and we recommend that you register the brand with which it will be marketed or identified.

3. To start the process phase it is necessary to have defined the product of the project, which complies with the municipal and governmental regulations, this will facilitate its processing and authorization.

4. Once the project product is defined, it is recommended that the initial contracts phase with potential buyers be initiated, which is strictly related to the commercialization of the project. Commonly in this phase, contracts of intent or promises of sale are made, which must be adjusted to the market to which they are addressed. 

5. Simultaneously the execution phase begins, which is another term is the construction of the project, in which it is important that the contractual relationship with each of the contractors, suppliers and service providers of the Project is documented. At all times the Project must be executed according to the documentation presented and authorized by the different competent institutions. Any constructive change generates the obligation to update the corresponding license and authorizations. 

As the work progresses, the plans must be prepared, the registration values ​​of each property to be sold, a description of the project and the Co-ownership Regulation, for the respective submission of the parent property to the Condominium or Horizontal Property Regime, as appropriate.

6. Once the estate has undergone Condominium Regime or Horizontal Property and farms subsidiaries are ready to deliver, we will proceed with phased deliveries, with the deed of the project and may take UNTIL 70/30, according to what is regulated by the Tax Update Law.  

7. Once the entire project has been delivered, the liquidation phase begins in which the return of the participation of partners, payment of profits and the respective liquidation of the Company proceeds.

For more information, do not hesitate to contact us.