Guatemala, for several decades, has been the stage for a large number of real estate projects, both commercial and residential. Developers, whose main activity is organizing construction, from administrative tasks, obtaining construction permits, hiring services, and creating a legal structure that allows for efficient operation, face significant challenges in completing projects successfully. However, their main goal is the final sale of the real estate units, whether commercial spaces, houses, or apartments. Ultimately, the business is not to keep the property that took so long to bring to life. But, due to the circumstances of the market, developers often find themselves in a position where they must balance the entirety of the project’s sales, meaning the delivery of every real estate unit they promote and the effective transfer to the new owners. Often, they face the complicated situation of having unsold properties, un-delivered properties, and properties already transferred to the final buyers. These situations place developers, whose main focus is not property management, in a position where they lack administrative knowledge, negatively impacting their business and often causing financial losses, as they end up dedicating financial and human resources to property management companies that do not generate income to justify the costs of their management.
The solution in these cases is often simpler than it appears at first glance: the implementation of legal modes that ensure proper management of operations for both developers and new owners. This is generally done through the Co-ownership Regulations, which may include the Horizontal Property Legal Regime for buildings, or the Condominium and Co-ownership regime for housing developments. If management includes efficient operational manuals and integrates them from the very beginning into the appropriate legal framework, including their registration with the relevant authorities, many headaches and future losses can be avoided. Some of the most important aspects to include in these manuals should be the activities of the administrator, payment of fees, operating budgets, hiring third parties, insurance coverage, and customer service, among others.
In our experience, in real estate development projects where these aspects are taken into account from the beginning, customer satisfaction is higher and the project’s success increases significantly. Perhaps the most important thing to keep in mind is that a company that focuses on development has no advantage in making improvised management decisions. Our constant recommendation to our clients is to plan in advance for those transitional moments in their projects.
