Holding Co-Owners' Assemblies During the Pandemic

This article was published in July 2020 and describes temporary COVID-19 health-emergency rules that may no longer apply. It is kept as a historical reference.

In the context of the pandemic caused by the COVID-19 respiratory virus and its resulting disruption of everyday activities, the National Government adopted a series of measures as uncertain as the situation itself to cope with the break in the rhythm of life that people had known before March 2020.

One of the many matters the government tried to regulate during the health emergency, and one that by definition involves gathering people together, is the assemblies of the different legal entities, which by law had to be held before March 31.

The administrators and governing bodies of the various legal entities, including co-ownerships, faced with great bewilderment not only a new situation but also a change in the rules on assemblies. The most cautious sought the advice of professional experts, and others, for various reasons, tried to do their best within their budgets. The situation was especially difficult given that everyone who had not yet held their assembly needed to review the state of the entity, make appointments, obtain approval of the accounts, sign contracts and, most pressing of all, obtain approval of the budget.

To that end, the National Government issued three decrees on assemblies applicable to horizontal properties (P.H.): Decree 398 of March 13, 2020, Decree 434 of March 19, 2020, and Decree 579 of April 15, 2020. The first two are especially familiar to those who specialize in corporate law, business law, commercial law, company law, or cooperative law, to name just a few, and the last is used more by those who have had to handle issues around negotiating or terminating lease agreements and P.H.

Without claiming to offer an exhaustive analysis of the three decrees, I set out some of the most important elements of each in relation to ordinary assemblies of co-owners of P.H.:

Decree 398 of March 13, 2020

• It partially regulated Article 19 of Law 222 of 1995, allowing non-in-person meetings without the requirement of universality (100% quorum).

• It established the obligation to inform the members of the co-owners' assembly of the technological means that will be used to hold the meeting.

• It extended its effects and rules to all legal entities without exception, including P.H.

Decree 434 of March 19, 2020

• It set a special deadline for holding extraordinary meetings "…up to within the month following the end of the health emergency declared in the national territory".

• It established that the meeting by its own right may be held on the business day following the month in which the emergency ends.

• It extended its effects and rules to all legal entities without exception, including P.H.

With these two decrees there was relative clarity that: (i) non-in-person assemblies no longer required universality; (ii) the deadline for holding them was extended to within the month following the end of the health emergency; and (iii) these rules applied to P.H. However, weeks after Decree 434 was issued, without giving the administrative bodies of co-ownerships time to prepare financially and logistically, Decree 579 was issued, regulating a wide variety of subjects. For the purposes of this article, I will refer only to its changes regarding ordinary assemblies of co-owners.

Decree 579 of April 15, 2020

• It restricts virtual assemblies until before June 30, 2020.

• It establishes that in-person assemblies may be held no later than within the calendar month following the end of the economic, social, and ecological emergency (which ended on June 5, 2020).

• It prohibits imposing penalties for not attending an assembly held before June 30, 2020.

Several questions immediately stand out, such as:

Which rule applies? What happens if, after the deadline set by the decree, that is, June 30, 2020, and one month after the end of the economic, social, and ecological emergency (July 30, 2020), the assembly has not been held?

If Decrees 398 and 434 did not apply to co-ownerships, what happens to the assemblies that were held virtually between their issuance (03/13/2020) and the issuance of Decree 579 of April 15, 2020?

How can an in-person assembly, or one by its own right, be held when gatherings of people are prohibited?

Does the change regarding non-in-person meetings remain in force, or do we return to the universality requirement set out in Law 675 of 2001?

Some lawyers have adopted the thesis that Decrees 398 and 434 are in no way applicable to P.H. assemblies, arguing that Decree 579 is later and specific to co-ownerships; that Decree 398 is not a legislative decree and, by hierarchy, cannot modify a law; and finally that this decree does not apply to horizontal properties because of the authority that issued it, namely the Ministry of Commerce.

Although these arguments are valid, those who consider that Decrees 398 and 434 do apply to P.H. have answered as follows:

On the argument of later and specific rules, it has been said that the criteria of analogical application in the face of gaps also exist, and Decree 579 did leave gaps and doubts, as explained. As for Decree 398 not being a legislative decree, which is true, its very purpose was to modify two norms with the rank of law (Law 222 of 1995 and Legislative Decree 019 of 2012). And although this could not be done through an ordinary decree, a large sector of constitutional experts has asked the Constitutional Court to review similar decrees as materially legislative. Finally, on the non-extension of these decrees' effects to P.H., even if we disagree with the form or content of their issuance, and given that these acts carry a presumption of legality, it is clear that assemblies held virtually without universality between 03/13/2020 and 04/15/2020 cannot be left in legal limbo. It is also worth mentioning that two principles of legal interpretation cannot be set aside: (i) where the law does not distinguish, the interpreter may not do so, and (ii) when the legal provision is clear, the interpreter may not disregard its literal wording.

In conclusion, both positions have valid arguments and neither can be dismissed outright. On the contrary, the topic should be discussed in all the sectors it concerns, exposing both its weaknesses and its strengths, in light of two notorious facts: the health emergency and the public order rules of each local authority. Reality must also be part of the debate.

That said, I believe that the right answer from a realistic legal standpoint is that one should not be at either of these two extremes, and that beyond the academic and legal discussions on the subject, in practice there are risk scenarios in the way assemblies end up being held, and therefore regarding claims of nullity in actions challenging assembly minutes, which will surely come and will find in these divergent positions an argument either for attack or defense in a potential lawsuit.

In other words, it will fall to judges, in eventual proceedings and mainly on criteria of reasonableness and proportionality, to resolve specific cases. For now, the advisable course is to seek advice to analyze each particular situation, in order to reduce risk scenarios.

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