ARC :La Copropriété en Europe Condominiums in Europe

Condominiums in Europe

As one of the leading French Associations of Condominium Owners, we would like to find out more about

* The functioning of Condominiums in European Countries (we have very limited information on this point).

* The problems encountered by European Condominiums and the solutions already adopted, or in the process of being applied, in order to resolve these problems.

With this in mind, we request that you

1- Read a short explanation of how a Condominium works in France.

2- Fill in the attached questionnaire.

Presentation of the Condominium in France

1- Under what circumstances does Condominium Law apply?

· Condominium Law applies to all buildings or groups of buildings, no matter what their planned occupancy is (residential, commercial, industrial), when the property is divided between several people into « lots » consisting of « private property » and a part- share of « common areas / property »

The Condominium can be divided into different types of construction, which basically are:

· « Vertical » for a residential block of apartments, which is composed of several zones deemed « private » belonging to individual Condominium owners ( 1 zone = a number of rooms), and zones or equipment which are shared (hallways, stairwells, elevators,…) which come under «joint ownership» as does the land on which the Condominium stands.

· « Horizontal » for a number of buildings for individual use which are detached or otherwise, each building having in principle a sole owner. The entire land and the shared equipment/infrastructure (e.g. roads, television aerials…) is the common property of all the Condominium Owners.

This should not be confused with:

Home Estates where each owner has complete ownership of the building and the land on which it stands.
A building with a single owner of which the different apartments or units are rented out to various occupants.

2- Which are the actual Bills of Law that govern a Condominium?

· The Bill of 10 July 1965, which was last modified in the year 2000 and 2006.

· The subsequent Act of Parliament of 17 March 1967, last modified in 2004 and 2006

· The new ‘Accountancy’ Act of Parliament of 14 March 2005, which will come into effect on the 01 January 2007

· The Condominium Regulations particular to each Condominium.

This is a document freely and unilaterally drawn up before the lots of the building are put up for sale. It describes the planned occupancy of the private areas, called « lots » and the designation of common areas /property (for example, the regulations can prohibit lots being used as offices on any level above ground level), they can stipulate the conditions of ‘right of access/enjoyment’ and they can decide, within the limits of the law, the Condominium rules concerning the administration of the common

areas /property. They also assign to each lot (in relation to the lot’s size), the number of part-shares (often expressed as « thousandths ») of the common areas / property (percentage). The Condominium Rules can go beyond the Laws of the Land, but never against them (for example, the rules can determine that the Condominium’s Annual General Meeting is notified 3 weeks in advance, but never 10 days in advance, as French law stipulates a minimum of 15 days notification in advance).

3-What is the purpose of the «Condominium» and how does it function?

· To preserve, maintain and administer the common areas and equipment (elevators) and to manage shared Condominium services (central boiler for example).

How is the Condominium organized?

Each Condominium disposes of a juridical identity (personnalité morale). Called the « Condominium Association », it is represented obligatorily by a « Management Agent » (syndic) who can be either a professional in the field or a Condominium owner. The Management Agent is ‘under mandate’ (a representative) and not a service provider.

· The General Assembly is formed by all the Condominium Owners in the Condominium Association and is convoked at least once a year by the Board of Trustees to take decisions by way of voting. It should be noted that decisions are only taken at the General Assembly (which means that no decision can be taken by a postal ballot or by « petitioning » )

· Please Note : The convocation of a General Assembly follows a strict procedure concerning :

- The method of convocation (form and advance notification)

- The order and content of the Agenda

- The enclosed documents which must be included

· The Management Agent, elected by the General Assembly, is either a professional (governed by special legislation) or a Condominium Owner. He/She is responsible for managing the Condominium, for its preservation, its safety and security and its maintenance, respecting the decisions taken by the General Assembly and the Condominium Regulations. He/She is also the legal representative of the Condominium Association in all civil and legal matters.

· The Board of Trustees is a group of Condominium Owners elected by the General Assembly. The Board’s mission is to assist the Management Agent and to check his/her management. The Board also serves as intermediary between the Condominium Owners and the Management Agent.

· The Board must be consulted on certain precise points (for example: expenditure above a certain amount) and can bring in experts to check the Management Agent’s work.

4-How are the everyday running costs of the Condominium financed? (overheads and small-scale operations)

Every year, a budget for the everyday running costs is approved by the General Assembly. Money for this budget is invoiced to the Condominium Owners quarterly (every three months).

At the end of each financial year, the General Assembly approves (or otherwise) the accounts, which authorizes the Management Agent -in cases where the budget has been exceeded for justifiable reasons-to invoice the outstanding difference.

5- How is work to be undertaken or other courses of action decided upon?

The General Assembly is faced with all manner of questions on such things as the everyday running of the Condominium (budget, the mandate of the Management Agent, the accounts for the past financial year,……), as well as being presented with plans for large-scale building work or other projects to be undertaken. For any such work exceeding an amount fixed by the General Assembly, the Management Agent must present several “estimates” or a detailed summary of estimates.

The General Assembly proceeds to vote according to the necessary majority:

· The General Assembly decides upon, if necessary, the method of finance,

· The General Assembly restates, if necessary, the method used to calculate each Condominium Owner’s individual part of the final cost (based on their number of part-shares).

Please note: There is no obligation in France to establish a « building fund » to finance future repairs or improvements (obligatory savings fund). This is regrettable in the eyes of UNARC, as such work is often difficult for the Condominium Owners to bear financially and therefore often deferred for lack of such a fund.

6- How does the General Assembly express its wishes?

The Bill of 10 July 1965 introduced the idea of different types of majority which are applied according to the course of action being proposed, (repairs, mandating the Board of Trustees, the selling off or buying of shared areas/property….). The more important the decision or the higher the stakes, the more difficult to obtain the corresponding majority.

Please note that Condominium Owners who can not be present may delegate their right of vote to almost any person (proxy) of their choice; they are then said to be « represented ». The use of mandates avoids non-decisions on questions needing a 'high' majority, which would otherwise often be the case due to an insufficient number of persons being present.

The majorities are based on the part-shares (thousandths) of common areas/property and the following types of majority exist:

· Article 24: Majority of part-shares of Condominium Owners present or represented, who vote ('for' or 'against') a proposition during the General Assembly. This majority, called the « simple majority », is required, for example, to vote on the present budget for overheads or large-scale maintenance and repair work.

· Article 25: Majority of all the part-shares of the Condominium Owners (including those not present nor represented). This majority, called the « absolute majority », is required to elect a Management Agent or to give a construction permit to a Condominium Owner for example.

· Article 26: A combined majority combining Article 25 with the added proviso that the majority achieved in Article 25 is the wish of 2/3 (two thirds) of the Condominium Owners as well (headcount). This majority is called a

« double majority » and is needed to sell off common areas (a landing for example) or to carry out improvements.

· Unanimous, which is not in itself a majority, as it requires all of the Condominium Owners in the Condominium Association with their respective part-shares to be in agreement. Unanimity is required to change the distribution of part-shares for example.

7- How are decisions taken by the General Assembly subsequently applied?

Once the General Assembly is over, the Management Agent sends the Minutes of the Meeting to each Condominium Owner and in particular by registered letter to all the Condominium Owners absent or who were opposed to at least one « resolution » (after the question had been debated). This procedure allows the Condominium Owner to legally contest either a decision taken or the legitimacy of the General Assembly itself.

8- What happens if a Condominium Owner does not pay the Condominium’s demands for payment?

In the case of unpaid bills, legal proceedings can be taken.

Nevertheless, if the Condominium Owner, after being ordered by judgment to pay, continues not to do so, and a sale by order of the court is imposed, the Condominium Association has no priority over other creditors, except for a part of the outstanding debt (the last two years plus the current year).

The legal guarantees protecting the Condominium Association are therefore limited.

9- In the case of a dispute, what are the available recourses and how are they reviewed?

The available legal recourses are long and expensive and entail the High Court of Justice (GB), [District Court (USA)] with a legal obligation to engage a lawyer in the case of an appeal. It can take one or two years to have a General Assembly judged « null and void » for irregularity of procedure.

Consequently, the Condominium Owners often find it difficult to have their rights respected.

This situation explains why the professionals do not hesitate to «misinterpret » the law, knowing that the risks are very small for themselves and their cabinet.

10- What are the main criticisms of the actual system?

ARC has three main criticisms.

1- The absence of an absolute guarantee concerning unpaid bills.

The Condominium Association has no absolute guarantee to recuperate unpaid debts as we have already seen, which is inadmissible as the Condominium Association is not a « creditor » in the usual sense (it merely supplies services and liquids such as water and heating to people that it has not chosen to deal with).

As long as the Condominium Association does not benefit from an absolute guarantee to recuperate all debts concerning individual condominium owners, it will always be the victim of major difficulties.

2-The absence of any obligation to establish a saving fund for large-scale work.

We regret that there is no legal obligation for the Condominium Association to «make provisions for » large-scale work.

The consequence is that, when such work needs to be undertaken, the decisions are more difficult to make and the work more difficult to finance. This is the reason why numerous Condominiums fall into disrepair and quickly gets into insurmountable difficulties.

3-The absence of penalties against the professional Management Agents in the case of errors (involuntary or voluntary) and their disregarding of the law.

The absence of realistic penalties on professional Management Agents explains both the fact that the law is often disregarded as well as the fact that you can find so many errors in their management. Here too, we are lobbying for reforms to solve this major problem.

The Condominium in Europe

When we speak of Condominiums, we are talking principally of residential buildings of which the dwellings (or commercial premises on the ground floor), belong to different owners.

We would like to know what are, in the different European countries, the regulations which are imposed upon the owners and the relationship between them, which have the aim of:

- assuring the everyday functioning of the building

- assuring the maintenance of the building, both minor and major

- guaranteeing the interests of the different owners within the Condominium and with respect to third parties.

I. The « texts »

- Are there bills or laws concerning the Condominium?

- How old are they? Have there been any major developments and if so, what?

- Besides the law, are there any (systematically or optionally), internal regulations or statutes specific to Condominiums?

- Who establishes these optional regulations?

- What are their contents?

- What do they concern?

- How are they modified?

II. The Distinction between common and private areas/property

- What is the definition of private areas/property?

- What is the definition of common areas/property?

- To whom exactly do they belong?

- How is the maintenance (minor and major) of common areas/property assured?

- Can such areas/property be modified (divided, bought or sold off)? Under what conditions?

III. The financing and accounts

- How is expenditure financed and programmed?

(For example, in France, the system is based on a model which differentiates between two types of expenditure: everyday running costs/ major work)

- Is there any obligation to establish a savings fund in order to finance future major work?

- Are there strict accounting procedures?

- How is the depositing and guarantee of funds managed?

IV. The taking of decisions

- How are decisions concerning the Condominium taken (meetings? who is present? place of meeting?...)

- How often do the Condominium owners (or other parties) meet?

- According to what procedure are decisions taken (vote? other?)

- What documents are needed at such meetings?

- Could you quickly describe schematically the proceedings of such meetings?

- What happens after the meeting? Are the minutes of the meeting or an equivalent document published?

- What happens if a decision or meeting is contested? (how is such an objection made? how is it answered?)

V. Carrying out decisions

- Who executes such decisions? A professional or a group of condominium owners? Is there a system of remuneration? Is there an operational code of practice?

- In what context (annual contract…)?

- Who controls the «management » and how?

VI. Unpaid bills

- What are the measures taken in the case of unpaid bills?

- What are the legal guarantees for the condominium?

- Do the existing systems work?

VII. Recourse

- What types of recourse and objections exist (friendly/legal)?

- Are the legal options free or not?

- Does a framework of mediation exist?

VIII. The Professionals in the domain of the Condominium

- Who are they? (qualifications, guarantees, insured…)?

- How are they «checked»?

IX. The Condominium and the Public Authorities

- Are condominiums represented by one or more associations?

- How do these associations function (subscriptions, subventions)?

- What is their role and their means to achieve this? Their authority?

X. Satisfaction- Wishes-Criticisms

- Does the current system satisfy you?

- If not, what are your main objections?

- What changes would you wish to see?

ARC-July 2006

(Translation Sept 2006

by Dave Neve)