Ecuadorian Condominium Debtors to Incur Interest Under New Decree

Ecuadorian condominium owners who fail to meet their payment obligations will now face accumulating interest charges from the first day of default. President Daniel Noboa signed Executive Decree 462 on Friday, reforming the General Regulations of the Horizontal Property Law and establishing stricter rules for collecting economic obligations within condominiums.

The new regulations stipulate that late payments will be automatically registered as a default. This means condominium administrators will not need to issue prior notices or requests for payment. Interest will accrue from the day following the payment deadline, calculated using the active interest rate set by the Central Bank of Ecuador.

Beyond interest, defaulting owners will also be responsible for covering all costs associated with debt collection processes, whether judicial or extrajudicial. These interest charges can be applied to various obligations, including ordinary and extraordinary expenses, mandatory contributions to the common reserve fund, fines, and any other amounts stipulated by law or internal regulations.

Administrators are required to issue a liquidation of outstanding debts when two or more payments are overdue. This document, detailing the principal, accrued interest, and total balance, must be approved by the General Assembly of Co-owners. Once approved, it gains the status of an executive title, enabling legal action for debt recovery.

The decree also permits administrations to enter into payment agreements with delinquent owners. These written agreements must outline the total amount owed, payment terms, applicable interest, and consequences of non-compliance. Failure to make two installment payments under such an agreement will result in the acceleration of the entire outstanding debt.