Learn about the bill that will regulate lodging services or tourist accommodations in Horizontal Properties

The short term rental market in Colombia

In recent years, the short term rental market has been a solution to the high demand generated by tourists and digital nomads who see Colombia as a favorable place to vacation or reside temporarily with substantially lower costs than other destinations.

The high flow of tourists produces social dynamics that impose new challenges for coexistence and neighborhood relations within the horizontal properties, forcing the administrations of condominiums and buildings subject to this regime to question themselves about the advantages and disadvantages of allowing the lodging or accommodation of tourists in their facilities, as well as the legal instruments available to facilitate or prohibit this type of contract.

In these reflections, the social function of property and the right to free private initiative of each owner to freely use and dispose of their property within the limits of the law, a prerogative that implies the power to rent their private units according to their interests, are often put on one side; While, on the other hand, there are challenges in terms of coexistence and tranquility for those who consider that a high turnover of guests without local roots can generate security problems in the buildings, harmful dynamics for social morale and a greater risk of deterioration in the facilities produced by people who do not have a sense of belonging to the common areas of the co-ownerships.

Not infrequently conflicts are generated between condominium administrations that try to restrict lodging, and owners who conceive their private property as a source of income through the lodging and accommodation of tourists.

Current regulations in this area

To date, Colombia does not have a solid, clear and complete regulation that thoroughly regulates all the particularities involved in providing and acquiring a tourist or short-stay accommodation service in horizontal properties, since the legal framework contained in laws 300 of 1996, 1101 of 2006, 675 of 2001, Decree 2590 of 2009, 2119 of 2018, Law 1558 of 2012, and Law 2068 of 2020, among others, only tangentially addresses the aforementioned tensions, without developing clear tools or guidelines to determine under what conditions a co-ownership could influence the right that a co-owner has to rent, assign the use or lease its private unit.

Article 21 of Law 2068 of 2020 defines lodging as follows: "The lodging contract is a contract of adhesion that a natural or legal person enters into for the main purpose of providing lodging to another person called a guest, upon payment of the respective price, for a term of less than 30 days."

Decree 2590 of 2009 is the generic regulatory framework for tourist housing and establishes that any regular delivery of real estate for the use and enjoyment of one or more persons, for valuable consideration and for a term of less than 30 days, is considered a tourist service and, therefore, is governed by the rules of that sector.

Likewise, it establishes that all properties destined for tourist housing and other types of non-permanent lodging must be registered before the National Tourism Registry, and the marketer must register as an operator.

Finally, it states as a mandatory requirement that such type of lodging must be expressly permitted in the Condominium Property Regulations, since otherwise, it could incur in the penalties set forth in numeral 2 of article 59 of Law 675 of 2001.

The new regulation of lodging and tourist accommodation contracts in the reform to law 675 of 2001

With the purpose of reforming and adding to Law 675 of 2001, regulating lodging and accommodation contracts in the Horizontal Property regime in Colombia, the Congress of the Republic is processing Bills 205 and 282 of 2022, accumulated in Bill 205, which after undergoing the first debate in the House of Representatives, proposes the following amendments related to the provision of tourist services in co-ownerships and lodging and accommodation contracts:

1. Liability Insurance: Article 10 of Bill 205 of 2022, which adds Subsection 2 to Article 15 of Law 671 of 2001, contemplates the following:

"When the co-ownership is the direct operator or administrator of private units destined to the provision of lodging and accommodation services, it must have a liability insurance policy against damages to guests and third parties. This policy must cover any loss that may occur during the provision of tourist lodging services. As a minimum, it must cover the risks of death, permanent disability, temporary disability, injuries, damage to third party property and medical expenses."

2. Qualified majority to prohibit lodging: Article 28 of Bill 205 of 2022, which amends Article 46 of Law 671 of 2001, contemplates the following:

"Decisions requiring qualified majority: As an exception to the general rule, the following decisions shall require a qualified majority of seventy percent (70%) of the co-ownership coefficients that make up the condominium:

The prohibition or authorization to allocate private units to the lodging or accommodation service."

3. Additional requirement for registration in the single registry: Article 31 of Bill 205 of 2022 added Article 51B to Law 675 of 2001, which will read as follows:

"Article 51B. Requirements. For registration in the Registry, the following requirements must be complied with:

In the case of horizontal properties built for the exclusive provision of lodging or lodging services, the administrator must also have academic training in the degree of technologist or training for employment in tourism."

4. General authorization for lodging or accommodation services: Article 54 of Bill 205 of 2022 creates a new article 101 to Law 675 of 2001, which will read as follows:

"Article 101. Lodging or lodging services in the condominium. The execution of activities related to lodging or accommodation services in the horizontal property is permitted, unless the assembly of co-owners prohibits it by means of a qualified majority".

For the exercise of the activity, registration by the owner of the property in the National Tourism Registry shall be required, in accordance with the provisions of National Decrees 2590 of 2009, 4933 of 2009 and 1836 of 2021 or in the norms that add, modify or substitute them.

When the lodging or accommodation service is offered through technological platforms, it must be indicated in the same that the property is subject to the Horizontal Property Regime, indicating the rights and obligations to which the property is subject.

Finally, Article 55 of the bill expressly provides for the repeal of "the rules that are contrary to it", once the bill becomes law and enters into force.

According to the amendments set forth in the bill under analysis, it is clear that the lodging or accommodation service (less than 30 days) would be allowed as a general rule, unless it is prohibited by the assembly of co-owners with a qualified majority of 70% of the co-ownership coefficients that make up the horizontal property, which in our opinion would tacitly repeal the general prohibition established in article 3 of Decree 2590 of 2009 in case the bill is approved as it is proposed.

Likewise, it should be mentioned that the bill under analysis does not modify the conditions of urban housing leasing regulated in Law 820 of 2003, but it does impose obligations for the administration of horizontal properties that operate tourist housing services, as well as those built for the exclusive provision of lodging or accommodation services.

In conclusion, the bill under analysis evidences the Colombian legislator's intention to update the horizontal property regime and, among other things, to regulate lodging and accommodation services in an effort to bring the current rules in line with the social dynamism generated by the growing tourism in Colombia, and inviting to make decisions on the matter. However, the rules incorporated in the reform bill are silent on aspects that we consider relevant, such as the lease of real estate for terms longer than 30 days for tourism purposes, the scope of the horizontal property regulations to incorporate restrictions on the transfer of use of private property, among others.

Finally, it is necessary to indicate that the amendments included in the bill 205 of 2022 accumulated with the aforementioned bill 282, do not yet constitute the final text of the law that must be approved in subsequent debates in the House of Representatives and the Senate of the Republic, so from Mazars we will be informing its progress, changes and implications.