New rules for amending condominium building agreements

Ordinance No. 64/2024 of the Office of the Inspector-General of the Courts of the State of São Paulo (CGJ-SP), published in the first half of January 2025, amended the content of items No. 81 and No. 82 of Chapter XX, Volume II, of the Service Standards of the CGJ-SP (“Ordinance”).

The items that underwent amendments are as follows:

Regarding item 81, in the case of Query no. 1125194-47.2024.8.26.0100, which was processed before the 1^st Public Registry Court of the Central Civil Forum, for the State of São Paulo, mentioned in the Provision, the need for the consent of the fiduciary creditors of autonomous units of the condominium to change the text of the condominium agreement was discussed, in view of the refusal of the 3^rd Real Estate Registry of São Paulo/SP to register such change. The registrar’s refusal was based on the lack of consent of the fiduciary creditors, as he understood that these creditors also have real rights over the units and, therefore, should, in the same way as the other condominium owners, have consented.

The condominium argued, in view of the refusal of the 3^rd Real Estate Registry of São Paulo/SP, that article 1,351 of the Civil Code establishes that the amendment of the agreement depends on the approval of two-thirds of the votes of the condominium owners, suggesting that the Service Rules could not impose additional restrictions beyond those established in the Civil Code and that, therefore, the registration was admissible.

In the first instance, the need for the consent of the fiduciary creditors was confirmed by the judgment. However, in the second instance, a decision was issued reversing the understanding and ordering the endorsement of the amendment of the condominium agreement, dispensing with the consent of the fiduciary creditors, and immediately ordering the issuance of the Provision to give clear wording to item 81 in the sense that there is no need for the consent of the fiduciary creditors to amend the condominium agreement, as well as restricting the need for approval of the amendment to those who are subject to real rights of enjoyment and fruition or acquisition rights over the property that makes up the condominium.

The previous wording of item 81, which referred to “holders of registered real rights”, included potential creditors of real rights over real estate units in the list of those who must necessarily make up the quorum for voting at a meeting to amend the condominium agreement.

It is true that a possible discussion regarding the voiding of the real guarantee due to a possible change implemented on the property subject to the guarantee, without the consent of the respective creditor, may arise, but this debate will be reserved for each specific case. Such a situation may, as a preventive measure, be addressed in the instrument of constitution of the real guarantee itself, as soon as it is contracted.

In relation to item 82, the wording was changed to clarify that, if the modification of the condominium specification concerns the change in the purpose of the building or real estate unit, it will not require the approval of all condominium owners – in contrast to the general rule provided for in such provision –, in accordance with the current wording of article 1,351 of the Civil Code, introduced by Law No. 14,405/2022.

However, in this case, the attempt to align the provision with the referred law may have been successful, but the maintenance of the wording “condominium owners”, without the due reproduction of the changes introduced in item 81, does not seem to have clarified whether, for the modification of the condominium specification, only the condominium owners should be considered in the strict sense (i.e., owners of the property, proprietors), or those holders of real rights of enjoyment and fruition or of acquisition rights – in the form of the updated item 81 –, or all holders of real rights. Based on this context, the intention was apparently to dispense with the participation of creditors with real guarantees, preserving the scope of the new item 81. However, different interpretations may be admitted due to the lack of clarity of the provision in the context of the change.

The fact is that the changes produce significant effects, since the Provision regulated, albeit with little clarity, the lack of need for participation by potential creditors who have a real right of guarantee over the condominium’s real estate unit, fiduciaries or mortgagees, for example, in the deliberation and approval of changes made to condominium agreements and specifications in the State of São Paulo. As a practical effect of the new rule, changes to condominium agreements and specifications in the State of São Paulo do not need to be approved by creditors with real guarantee over the condominium’s real estate unit, while, in order to avoid any potential emptying of real estate security in this context, financial institutions may include a provision on the subject in the instrument of constitution of the guarantee itself.

Demarest’s Real Estate team continues to monitor the matter and is available to provide additional clarifications.