Peru's Legal Gap After an Earthquake Destroys a Building

Peru sits in a seismically active region, and a major earthquake could leave a residential building collapsed or unfit for habitation. When that happens, the legal status of what remains is not clearly defined. Luis Francisco Paz, a real estate specialist and partner at Pérez-Llorca, Miranda & Amado, says Peru currently has no specific rule governing what happens to the property after a collapse.

The practical consequence is that the horizontal property regime attached to the building would disappear, leaving only the plot of land. Because that land is common property, Paz says the workable solution is to allocate ownership among apartment owners according to their existing participation quota in the condominium.

This gap could eventually be closed. The regulation for Legislative Decree No. 1568, which covers the horizontal property regime, is still pending publication. A 2024 draft from the Ministry of Housing proposed that after demolition or destruction, the land should become a co-ownership regime held by unit owners in proportion to their previous participation, unless all owners agree otherwise in a public deed.

In practice, specialists say owners would have three main paths: sell the land to a developer, rent it out, or develop a new project themselves. Each option operates under the co-ownership rules in the civil code, meaning decisive actions require the unanimous vote of co-owners, Paz notes.

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Why Owners Would Keep a Share of the Land — and What It Is Worth

Why a Collapse Does Not Mean Losing Everything

Under current Peruvian practice, the building itself is lost, but the underlying land is not. Paz explains that once the horizontal property disappears, the land becomes common property and can be allocated to owners by their condominium participation quota. Jair Peralta, a real estate lawyer, stresses that the loss is therefore not 100%: a sale in a well-valued residential area may still return a meaningful sum, though owners cannot recover the value of the construction they originally paid for.

What the Pending Decree 1568 Regulation Would Change

The draft regulation published by the Ministry of Housing in 2024 proposes a clearer rule: the destruction or demolition of the building would create a co-ownership regime over the land in favour of unit owners, according to their participation percentage. A different arrangement would require a unanimous contrary agreement recorded in a public deed. This would convert today's practical solution into a formal legal rule, reducing uncertainty for owners and potential buyers of affected plots.

Where the Three Post-Collapse Options Actually Lead

Selling to a construction or real estate company is seen as the most viable route because developers have the financial capacity to carry out a new project. Renting the land can generate ongoing income but is likely less attractive than a sale if the owners want to exit. Developing the project themselves is the most complex option because it requires significant financing and coordination. All routes are governed by the civil code's co-ownership rules, so unanimous approval is required for selling or renting the land as a whole.

What Peruvian Condominium Owners Can Do Before and After a Collapse

  • Check your condominium participation percentage. Under the proposed Decree 1568 rule and current practice, that quota determines your share of the land if the building is destroyed. Having this document in order matters before any claim.
  • Consider earthquake insurance for the built unit. Peralta notes that a policy can compensate for the affected housing, so you would collect an insurance payout in addition to your share as co-owner of the land.
  • Know that any sale or rental of the land requires unanimity. Paz says co-ownership rules in the civil code demand the unanimous vote of co-owners, so one co-owner can block a collective sale — and can, separately, sell his or her own participation quota.
  • Do not assume a total loss. Peralta says the recovered amount depends on land valuation, but owners in valued residential areas can recover part of their investment, not 100%.
  • Watch for the official publication of the Decree 1568 regulation. Once published, it would formalise land rights after demolition or destruction, replacing today's legal vacuum with clearer rules.