San José, Costa Rica, since 1956

‘Horizontal Property’ a Common Model for Development

The booming real estate industry in Nicaragua has resulted in a growing number of development projects that operate under what is known as the Horizontal Property Regime, commonly known here among investors as “HPR.”

What is Horizontal Property? The Horizontal Property Regime was established under the Horizontal Property Law, passed in September 1971. It differentiates between two types of property ownership in any given development or condominium project: private areas and commonuse areas.

The law states that different owners can own independent sections or lots of the property, but that it must also have areas that are of common use.

Private areas are usually the individual apartments or rooms, along with their walls, floor and roof. The common areas are usually the surrounding land, soil, subsoil, gardens, yards, corridors and entrance gates to the building or development.

Every Horizontal Property Regime must be constituted through a public deed made by a notary and registered at the Public Registry.

In order to successfully record the Horizontal Property Regime at the Public Registry, the deed must contain the following: a) general description of the building/ development; b) description of each floor, apartment or lot in which the building/ development will be subdivided; c) description of the common areas; d) value of each floor, apartment or lot.

The HPR deed must also contain the regulations regarding the rights and obligations of the different owners.

An important aspect to mention is that all the developments or buildings that work under the Horizontal Property Regime are governed by an Assembly of Co-owners, which is the maximum authority of the HPR.

Each building/development is managed by an administrator chosen by the Assembly of Co-owners. This administrator can be a person or corporation and will be in charge of taking care of the common areas, managing basic services, and any other function delegated by the Assembly of Co-owners.

The functions of the administrator and regulations of the Assembly of Co-owners are regulated by condominium regulations.

An advantage of keeping a development under the Horizontal Property Regime is that it makes it easier for the developers to sell each individual parcel, which have been previously subdivided in the HPR deed.

The Horizontal Property Regime also brings more comfort to the owners, who will have a clearly defined administrator who manages issues such as paying the basic utilities, paying real estate taxes, property security, and other services.

The Horizontal Property Regime is a very useful tool for the developers and investors and is a very common legal figure used in Nicaragua’s growing real estate market.

Amilcar Navarro is a junior associate with law firm García & Bodán in Managua.


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