How a Building Works: Governance, Co-ownership, and Management that Sustain Real Estate Value

An exploration of the co-ownership regime, building governance, and shared responsibilities that define the future of real estate assets, beyond architecture and location.

In the minds of many apartment buyers, real estate investment boils down to a simple equation: buy, rent, collect a return, and wait for appreciation over time. However, behind this simplified view lies a complex structural system, deeply regulated and absolutely crucial to the value of any property. A system that, paradoxically, is unknown to the vast majority of owners and investors: building management and the co-ownership regime that governs its operation.

In contemporary urban Paraguay, where vertical development is progressing at an accelerated pace, a lack of awareness about these issues is widespread. Owners rarely understand that, from the moment they acquire a unit, they become part of a community with specific rules, shared responsibilities, and a governance structure that defines the financial and physical health of the building. They are also unaware that the way the property is managed is one of the factors that most significantly impacts the preservation of its value, the quality of life of the residents, and future profitability. They believe that simply paying a monthly maintenance fee is sufficient, as if it were a fixed amount without further consideration, without questioning what is actually being done with that money, how maintenance is planned, or what mechanisms exist for decision-making.

The breaking point often comes when a curious owner begins to notice certain inconsistencies: unchecked wiring, unmaintained fire suppression systems, construction projects that are never carried out, unclear invoices, or simple signs of deterioration that reveal a lack of planning. This initial unease opens a door, for some, to a world they had never considered. With a genuine desire to understand how the building operates and how the collective investment is managed, many begin to investigate: they ask how the administration is governed, what the procedures are for an assembly, who actually makes the decisions, what the administrator's obligations are, and how expenses are controlled. Along the way, they discover that there is a legal structure that regulates all operations: the condominium bylaws.

The condominium bylaws are a key document drafted before the building is constructed and registered with the Public Registry. Simply put, it's the building's charter, similar to the articles of incorporation of a corporation. It establishes the ownership percentages for each unit, the administrative procedures, the relationships between owners, and the decision-making process. These bylaws determine how the assembly is formed, how a board of directors is elected, and the obligations and limitations of both the administrator and the owners themselves. None of this is optional. Nothing is informal. Everything adheres to a precise legal framework.

Despite its importance, this document is virtually unknown to most homeowners. Many owners never read it and, therefore, are completely unaware of their rights and obligations. They don't know that, according to the co-ownership regulations, there must be a board of directors elected at an assembly, made up of owners, and responsible for overseeing everything that happens in the building. Nor do they know that the contracted management company must answer to this board, which functions like a directory, and not make decisions on its own. In many buildings, the exact opposite occurs: the management operates without oversight, makes hiring decisions, purchases, manages budgets, and carries out construction work without the formal approval of the body that should be managing the building. This distortion is so common that many residents believe it's the normal way things work, when in reality it represents a breach of both the regulations and the basic principles of governance in a shared property.

When owners become more involved, they also discover that the smooth running of the building depends not only on the manager's will, but also on a balanced approach to roles. The board of directors, composed of individuals who must necessarily be co-owners, is responsible for managing the monthly budget, approving expenses, overseeing the hiring of suppliers, evaluating improvement projects, ensuring transparency in decision-making, and maintaining the overall condition of the building. The management, for its part, must implement the board's decisions, ensure compliance with regulations, maintain accurate records, submit regular reports, and always act according to directives, not on its own initiative.

When this system fails, buildings experience problems that silently erode their value. Purchases are made without oversight, suppliers are not properly vetted, maintenance staff are unqualified, emergency systems are neglected, preventative maintenance is indefinitely postponed, and minor issues accumulate into major problems. A lack of transparency breeds distrust, the absence of planning drives up costs, and physical deterioration impacts both resale value and the building's ability to attract good tenants. In practical terms, poor management can destroy more value than any market fluctuation.

The widespread lack of awareness about these matters has an additional effect: many owners believe they have no right to get involved. They assume that the management "takes care of everything" and that they have no say beyond paying their maintenance fees. The truth is that every owner, even those who don't actively participate in meetings, has the right to request all the monthly invoices, review the cash flow, meet the suppliers, verify that prices are in line with the market, and understand how every guaraní is being spent. It's everyone's money and, therefore, subject to everyone's oversight. The management cannot refuse to provide information because it is part of a condominium association that has a duty to be accountable.

As buildings grow in complexity, the legal dimension becomes even more important. Assemblies must be conducted in strict accordance with the Civil Code, both in terms of notice and quorum, as well as the validity of resolutions. Failure to do so can result in any decision being challenged and even lead to legal liability. Therefore, in many cases, it is advisable for a lawyer to oversee the assembly process, review the co-ownership regulations, verify compliance with formalities, and ensure that decisions are legally sound. This is not about bureaucracy; it is about protecting the building, the owners, and the collective investment.

The culture of involvement that many buildings are tentatively beginning to develop demonstrates that when owners organize themselves and get to know each other, operations improve immediately. Decisions become more strategic, transparency increases, expenses are optimized, and building maintenance becomes a shared priority. Management, far from being an autonomous entity, becomes an efficient executor of a common project. This interaction yields a double benefit: residents enjoy a more well-maintained and harmonious environment, while tenants obtain a more stable and predictable return on investment thanks to a property that is well-managed and valued by the market.

Ultimately, getting involved isn't about taking on too much, but about protecting the property. Real estate investment doesn't end with the handover of the keys; it begins there. A well-managed building retains its value, ages gracefully, remains competitive against new offerings, and inspires confidence in the market. A poorly managed one, on the other hand, loses value, increases vacancy rates, generates internal conflicts, and eventually becomes a problematic asset.

Understanding the co-ownership regulations, the role of the board, overseeing management, demanding transparency, participating in decisions, and maintaining open communication among owners are not optional; they are essential parts of modern real estate. In an increasingly vertical and sophisticated market, the sound management of a building is one of the strongest pillars for sustaining real returns and extending the asset's lifespan. What happens behind closed doors—in decisions, meetings, financial statements, and maintenance—often determines whether an investment thrives or declines.