P.R. Laws tit. 21, § 6671
Associations duly constituted pursuant to the provisions of this chapter, are hereby authorized to issue bonds from time to time for those principal amounts and under those additional terms and conditions that, in their opinion, are needed to provide sufficient funds to finance any improvement project or projects duly approved by municipal ordinance. The financing shall include, but not be limited, to coverage of all expenses for the development and design of said projects, repayment of the obligations of and payment of interest on their bonds, for that period of time determined by the associations, and for the payment of those other expenses, including but not limited to, capital for incidental, necessary or convenient works to achieve their purposes and powers, and for the payment of any issue expenses and to establish the reserves needed to secure said bonds.
(a) The bonds issued by the associations may be payable fully or partially from the gross or net income, and from other income received by the associations. The principal and interest on the bonds issued by the associations may be secured by pledging all or part of any income of the associations, including the proceeds of any imposts charged for benefits or profits imposed under this chapter, including the tacit lawful lien established in § 6653 of this title which secures the payment of said imposts charged for benefits or profits, as well as any type of voluntary or special fee or contribution. Said pledge shall be valid and binding from the moment in which the document constituting the same is granted, without it necessarily being a public or notarized document. The income thus pledged, including that income which the associations may receive subsequently, shall be immediately subject to said pledge without the need to hand deliver the same, or of any other act, and said pledge shall be valid and binding and shall prevail over any third party having any type of claim against the corresponding association for damages, breach of contract, or for any other reason, regardless of whether said third party has been notified to that respect. Neither the trust contract nor the resolution authorizing the bond issue, nor any collateral contract through which the rights of an association on any income are pledged or assigned, shall have to be presented or recorded to perfect the lien on the same against any third party, except in the files of the association. The resolution or resolutions of the general assembly of an association authorizing the bond issue or the trust contract securing the same, may contain provisions which shall be part of the contract with the holders of the bonds issued under said resolution or resolutions, or under said trust contract, with respect to the guarantee and creation of a lien on the income and assets of the association, the creation and maintenance of redemption and reserve funds, limitations on the purposes for which the product of the bonds may be used, limitations on the issue of additional bonds, limitations as to the introduction of amendments or supplements to the resolutions or resolutions or to the trust contract or resolution, or the granting of rights, powers and privileges, and the imposition of obligations and responsibilities on the trustee under any trust contract or resolution, the rights, powers and obligations and the responsibilities that shall arise in case of noncompliance of any obligation under said resolution or resolutions, or under said trust contract, or with regard to any rights, powers or privileges conferred upon the bondholders as security thereof to increase the salability of the bonds.
(b) The bonds may be in one or more series, have a specific date or dates, mature in a term or terms that shall not exceed fifty (50) years from their respective dates of issue, and earn interest, if any, at such an interest rate or rates (which may be fixed or variable) that shall not exceed the maximum interest rate then allowed by law. The bonds may be payable at a specific place or places, be it in or outside the Commonwealth of Puerto Rico, may be of such a denomination or denominations and in such a form, whether as coupons or registered, may have such privileges of registry or conversion, may be payable through such a means of payment, may be subject to the redemption terms, with or without premiums, may provide for the replacement of mutilated, destroyed, stolen or lost bonds, may be authenticated in such a manner and after complying with such conditions, and may contain those terms and conditions and be issued in a temporary manner pending the execution and delivery of definitive bonds, which the resolution or resolutions or the terms of the trust contract may provide. The bonds may be sold at public or private sales at the price or prices determined by the associations; Provided, however, That the refinancing bonds may be sold or exchanged for outstanding bonds of the association under those terms which, in the opinion of the corresponding associations, answer to their best interests. The manner and tone of the bond notwithstanding, and in the absence of an express warning on the face of the bond to the effect that it is not negotiable, all association bonds, including any coupons belonging thereto, shall at all times have and it shall be understood that they do have, all the characteristics and incidence, including negotiability, of negotiable instruments under the laws of the Commonwealth of Puerto Rico.
(c) The proceeds of the sale of every bond issue shall be [disbursed] in the manner and under the restrictions, if any, provided by the associations in the resolution or resolutions authorizing the bond issue or in the trust contract securing said bonds.
(d) The bonds of an association bearing the signature of the officials of the association who hold office at the time the bonds are signed, shall constitute valid and unavoidable obligations even when, before delivery of and payment for said bonds, any or all of its officials whose signatures or facsimiles thereof appear in the said bonds, have ceased being officials of the association. Any resolution or trust contract securing the bonds may provide that any of said bonds may mention that it was issued according to the provisions of this chapter, and any bond containing said statement under the authority of said trust contract or resolutions shall be conclusively deemed to be valid and that it was issued pursuant to the provisions of this chapter. Neither the members of the Board of Directors of an association nor any person granting the bonds shall be personally liable for said bonds, nor shall they be subject to any civil liability whatsoever for the issue of said bonds.
History —Aug. 8, 1998, No. 207, § 4.001, eff. 60 days after Aug. 8, 1998.