Экзамен зачет учебный год 2023 / European Condominium Law

creditor, once he obtained execution against the owners’ association, could seize the claim of the association itself against B–E based on their failure to supply the association with sufficient assets to meet its debts. The legislator in 2007 decreased such a risk of liability for solvent owners by limiting the liability for insufficient supply of money to the association to the percentage corresponding with their co-ownership share (Law on Apartment Ownership § 10 par. 8 sent. 4). However, this amendment does not in reality offer much protection,547 because creditors have the power to attach monthly assessments owed by unit owners in execution. As long as solvent owners want to keep the condominium scheme alive, they will have to avoid any such execution by paying off the scheme creditors.

The concept of a special ‘right of first service’ regarding assessment claims was introduced in 2007 as a reaction to the fact that in most foreclosures, the owners’ association could well receive nothing, as a result of higher ranking bank mortgages.

Greece

The apportionment of common expenses among the condominium members is usually based on an agreement reflected in the by-laws of the scheme. In the absence of such an agreement, common expenses are apportioned according to the value of the unit in proportion to the total value of all the units in the scheme at the time of the establishment of the condominium (Law on Ownership of Storeys, art. 5b),548 which is closely correlated to CC art. 794 on the distribution of expenses among ordinary co-owners.549

(a) Consequently, the management body has a claim against Edmund for his or her proportionate contribution to the common expenses of the condominium. The Greek Code of Civil Procedure does not make provision for summary proceedings to facilitate the collection of assessments (arts. 648–657). Furthermore, neither the Law on Ownership of Storeys nor the Greek CC contains any sanctions by which Edmund can be forced to pay his contributions. The only way in which Edmund can

547See also Hager, ‘Die Haftung des Mitglieds einer Wohnungseigentu¨ mergemeinschaft’ (2009), p. 1213.

548Areios Pagos 731/1991 (EllDik 37.583); Areios Pagos 377/2003 (ChrID 2003, 530)

549Areios Pagos 1501/1984 (NoV 33.1013); Areios Pagos 702/1987 (EDP 1989.97); Areios Pagos 731/1991 (EDP 1995.11), as cited in Spyridakis, Condominium, p. 297.

certain enforcement measures should be inserted in the by-laws or that the legislation should be amended to provide sanctions that have teeth in order to ensure that the management body has the necessary funds to maintain the building in a good state of repair. One way to do this would be to hold the defaulter and the purchaser jointly and severally liable for the debt of the defaulter on sale of the apartment. Another way would be to give the management body some kind of priority charge on the apartment of the defaulter so that if the apartment is sold in a forced sale it would be given priority on the proceeds of the sale.

Ireland

Operative rules

If Edmund can still easily pay off the arrears, the OMC would probably first try friendly persuasion to secure payment of the money. If this fails, they may bring a personal action for unpaid rent against him. In the course of this, they may first try mediation and will have to inform the court whether this has been done (Multi-Unit Developments Act 2011, s. 24(2)). If the directors think this is the best way to secure payment, they could commence forfeiture proceedings, provided the lease entitles them to do this and service charges are reserved as additional rent. The threat of loss of his lease should persuade Edmund to pay off his arrears. Provided Edmund repays all service charge arrears and costs of the OMC he will be ordinarily entitled to relief – but relief is not automatic, especially if the refusal to pay service charges is wilful.550

If Edmund is in arrears with his assessments and his mortgage instalments, and his mortgage creditor has not proceeded to take enforcement action, the OMC can still bring forfeiture proceedings, leaving it to Edmund to apply for relief in the action pursuant to equity’s inherent jurisdiction by inference from Conveyancing Act 1881 s. 14(8). It is presumed that the court would normally grant relief to applicants, on terms that all outstanding service charges, costs and interest were repaid by them.

On the formal assignment (or sale) of Edmund’s lease of his unit to Kenneth, liability to pay future service charges passes to Kenneth.

550Campus and Stadium Development v Dublin Waterworld [2006] IEHC 200; Cannon, ‘Forfeiture’, p. 9.

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Kenneth is not liable to the OMC for Edmund’s arrears.551 This is because the burden of lease covenants binds Kenneth for breaches taking effect after the assignment from Edmund.

Descriptive formants

Conveyancing Act 1881 and Multi-Unit Developments Act 2011.

Metalegal formants

The Multi-Unit Developments Act 2011 requires OMCs to disclose whether mediation has been attempted, and the court has power, following the application for forfeiture, to order mediation to take place at any stage in the proceedings (s. 27(1). Forfeiture is thus treated as a remedy of last resort and ordinarily Edmund would be able to avert forfeiture by undertaking to repay the arrears in full on an agreed timescale. In view of the preference of the 2011 Act for informal dispute resolution, one would expect the courts to countenance recourse to forfeiture by an OMC only where a unit holder is recalcitrant or hopelessly in arrears. In that case relief could even be granted if Edmund produced, albeit late, with the relevant sums and any interest owed.

Fines in the form of interest penalties for delay in payment of service charges could form part of a scheme’s house rules (2011 Act s. 23). The ‘effective operation’ of the development could hardly be said to be advanced by serious unremedied defaults by any one unit holder – because of the risk of casting the burden of the unpaid assessments on other members of the community who might feel they had no option but to pay up to protect the finances of the scheme.

Italy

Operative rules

One of the primary functions of a professional manager is to collect maintenance and administration contributions on behalf of the management body from unit owners (CC art. 1130 par. 3). The contributions are effectively service charges approved in the annual budget of the general meeting. They constitute obligations propter rem of every unit owner and cannot be considered optional.552 In accordance with the

551Landlord and Tenant Law Amendment Act 1860 (Deasy’s Act) s. 12.

552Cass 9.7.1964 no.1814; Cass 14.3.1987 no. 2658; Visco and Terzago, Il condominium nella prassi giudiziale e nella revsione critica (1971), pp. 603 ff.

provisions on the payment of debts, the professional manager has the power to obtain an immediately enforceable, qualified writ of execution even in the face of a challenge by a unit owner (CC disp. art. 63 par 1). Moreover, where the assessment arrears date back six months or more, the above provision allows the professional manager to cut off services to Edmund’s apartment, provided that such action is permitted in the by-laws of the condominium.

Because the obligation to share in the expenses of the condominium is classified as a propter rem liability on the part of every unit owner, Edmund’s successor in title is liable for the outstanding contributions of the current and the previous year (CC art. 63 par. 2). The obligation to contribute towards maintenance attaches to the property itself and not the individual unit owner. Kenneth will, however, have a right of recourse against Edmund for payments made on his behalf, as his liability with Edmund is joint and several. Jurisprudence has interpreted the terms ‘current year’ and ‘previous year’ to mean the financial year of the condominium and not a calendar year. Hence, Kenneth is only jointly and severally liable for unpaid contributions becoming due in the previous or current financial year of the condominium.

There is nothing in the Civil Code or any other relevant legislation to suggest that condominium debts are given priority over debts owed to secured creditors such as Bank A in the given scenario. In the event that the mortgage creditor enforces its mortgage and sells the mortgaged unit in execution, the professional manager will simply rank as a concurrent creditor of the defaulter after the mortgage creditor has been satisfied in full from the proceeds of the sale.

Netherlands

Operative rules

CC art. 5:113 provides that the apartment owners must, among themselves and vis-a`-vis the association of owners, contribute equally to the charges and expenses incurred in the maintenance and management of the scheme unless a different proportion is provided for in the bylaws. The same applies to a claim by creditors against the owners’ association for which the owners are jointly liable. Non-payment of contributions may seriously compromise the financial position of the owners’ association.

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(a)The owners’ association has a privilege over the apartment right of a defaulting apartment owner in respect of the contributions that he or the usufructuary of the apartment right owes the co-owners of the scheme or the association. The privilege pertains to all contributions that have become payable upon demand during the current or preceding calendar year (CC art. 3:286) and consists of the defaulting owner’s share of the maintenance and management charges to be borne by all the owners and of the debts and expenses of the owners’ association (Model By-laws art. 9). Most of these charges, even those that must be borne by all owners jointly, are collected by the owner’s association (Model By-laws art. 11). Some charges may have to be borne by one specific owner directly pro rata parte, such as the part of the ground rent he is liable for in the case of the particular apartment ownership having been structured on the basis of a hereditary land lease (erfpacht).

Furthermore, the Model By-laws stipulate that an owner or occupier of an apartment may be denied further use of the apartment if he does not fulfil his financial obligations towards the association (art. 30). Naturally, the association of owners may resort to legal proceedings to demand payment, and, if necessary, the association can attach the apartment right and sell it.

Moreover, the Model By-laws provide that an owner who is in default with timely payment of his contributions, is automatically in default and must pay legal interest on the amount due, from the date that it is due, calculated in terms of CC article 6:119, at a minimum interest payment of €10, or such other amount as determined by the general meeting (art. 13). The owner is also obliged to reimburse any expense incurred by the association in the collection of unpaid contributions, including the cost of legal advice (arts. 13.1 and 13.3). The costs of any subsequent court action are subject to a system that has been agreed between the Dutch Bar Association and Dutch Courts. These costs will be awarded to the winning litigant based on a fixed rate (liquidatietarief), which the courts will apply automatically, even if parties have agreed otherwise.

(b)In the event that Edmund is not only in arrears with the payment of his assessments but also with the instalments on the mortgage bond with Bank A, both the owners’ association and the Bank may decide to attach the apartment right and sell it in a forced sale. It should be noted that while the mortgage creditor can initiate the forced sale on the notarial deed of mortgage, the owners’ association can only initiate a forced sale through a court order. In such a case, the mortgage creditor

will then have to be paid first from the proceeds of the sale followed by the association of owners, on the ground of their privilege, before the ordinary concurrent creditors are paid (CC art. 3:279).

If Edmund sells and transfers his apartment to Kenneth, the new owner (Kenneth) and the former owner (Edmund) are jointly and severally liable for the contributions due in respect of the acquired apartment right, and which have or will become due on demand in the current or preceding financial year (CC art. 5:122 no. 3 and Model Bylaws art. 40 par. 4). The transferee (Kenneth) is, however, protected to such an extent that the public notary who is instructed to handle the conveyance of the apartment right must record a statement that lists the contributions for which the new owner will be liable on the deed of transfer of the apartment right (CC art. 5:122 no. 5). In this way, the new owner is informed about the amount for which he will be held liable after the apartment right has been conveyed to him. Before conveyance the seller and purchaser may make arrangements as to who will be liable for all or some of the contributions and adjust the purchase price accordingly.

As an alternative to the above, the by-laws may determine the extent to which the former or the new owner will be liable for the contributions mentioned. The by-laws may, for instance, provide that the seller instead of the purchaser shall be liable for certain contributions that become payable on demand at a later date. If a purchaser is confronted with a claim by the association of owners, it will depend on what was contractually agreed between the parties whether or not he will have recourse against the seller.

Descriptive formants

The above answers are based on the Dutch Civil Code and the Model Bylaws of 2006.

Metalegal formants

Although the law is clear and does not leave much room for interpretation, it must be noted that, in practice, the options available to the owners’ association to attach an apartment right and effect a forced sale are limited.

In practice, a mortgage creditor will enforce the mortgage by a forced sale of the apartment right, and will recover from the proceeds of the sale any amount due to it, as well as the expenses incurred in carrying out the forced sale. This will frequently leave only limited