Экзамен зачет учебный год 2023 / European Condominium Law
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(d) On damage or destruction of the building, the owners may approach the court for an order that the building is ‘deemed to be destroyed’.955 This happens either upon actual physical destruction of the building; when the owners by unanimous resolution so determine and all holders of registered real rights consent thereto in writing; or when the court deems it just and equitable to make an order to that effect (s. 48(1)(a) and (b)). The court appears to have the power to deem a building destroyed not only on the ground of obsolescence, but also for any other sound economic reason. Examples include where the cost of major replacements and renovations would be excessive; where the value of the land has become disproportionately high in relation to the value of the buildings thereon; or where it would be more viable economically to replace a residential project in a particular area with commercial or industrial buildings or offices, or to permit the extensive modernisation of a commercial project.956 Once the building is ‘deemed to be destroyed’, one of the options open to the owners is to decide by unanimous resolution not to rebuild and thus in effect to terminate the scheme (s. 49(1)). The result of such a resolution would be that the sectional title register for the land and building would be closed, and the land returned to the land register. The land would then belong to the owners as co-owners in undivided shares proportionate to their participation quotas (s. 49(3)(a)).
Alternatively, the group may, by unanimous resolution, direct the management body to alienate the whole of the common property on their behalf (s. 17(1) read with s. 17(5)). The owners would then have to surrender their sectional title deeds for cancellation (s. 17(5)), and the land would be reverted to the land register (s. 17(6)). This will effectively terminate the scheme.957
Descriptive formants
(a)The terms ‘maintenance’ of and ‘improvements’ to the common property are not defined expressly in the Act or the model rules, but must be given the meaning attributed to them by the provisions of the Act. This has been done in case law and academic literature.
(b)The model rules distinguish between luxurious and non-luxurious improvements. In the interpretation of these terms, case law and aca-
demic opinion have mostly considered the distinction between
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Van der Merwe, Sectional Titles, pp. 16–5 – 16–10. |
956 Ibid., p. 16–8. |
957 |
Ibid., pp. 11–5 – 11–6. |
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luxurious and necessary improvements carried out by a bona fide possessor as an appropriate analogy. The decision of whether an intended improvement is luxurious or non-luxurious is subjective rather than objective in that it depends on the nature and characteristics of the particular scheme and changing societal perceptions. Where maintenance involves an element of renewal, it becomes very difficult to distinguish between maintenance and non-luxurious improvements.958
(c)The creation of the solarium for the exclusive use of the owners on the top floor is regulated by the provisions of the Act. As the old Sectional Titles Act of 1971 did not make provision for the creation of exclusive use areas it was common practice for developers to reserve such areas for themselves in the rules of the scheme. The fact that the creation and exploitation of exclusive use areas were not regulated in the Act led to several malpractices on the part of developers. Consequently, the new Sectional Titles Act of 1986 only permitted exclusive use areas to be established by delineation on the registered sectional plan. However,
the high cost of surveying and registering exclusive use areas by this method persuaded the legislature in 1997959 to reintroduce the possibility of establishing exclusive use areas in term of the model rules.960
(d)The termination of the scheme is regulated by sections 48 and 17. Since it would be extremely difficult to obtain a unanimous resolution to ‘deem the building destroyed’, the group would have to approach the court for an order that it is just and equitable to ‘deem the building destroyed’. Academic opinion has suggested some instances where the court may come to such a decision. Such instances could be notional destruction as a result of obsolescence or the scheme becoming outmoded. Academic literature has also suggested that the two-step approach of first having to deem whether the building is destroyed, followed by a unanimous resolution to termin-
ate the scheme is unnecessary and a unanimous resolution to terminate a scheme should suffice.961 It is further suggested that the requirement
should be reduced to an 80 per cent majority.
Metalegal formants
(a) Maintaining the building is of crucial importance in the sense that neglect of the buildings and facilities can lead to the scheme deteriorating into a slum, in turn jeopardising the owners’ investment in their units. In up-market schemes the owners would probably feel that
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Ibid., pp. 11–46 – 11–47. |
959 Sectional Titles Amendment Act 44 of 1997 s. 21. |
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Van der Merwe, Sectional Titles, pp. 11–15 – 11–16. |
961 Ibid., p. 16–23. |
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maintenance should not only include repairs, but also updating of materials used in line with technological advances. In low-cost schemes, where owners struggle to make ends meet, the general trend would be to keep maintenance costs as low as possible and even to elect owners who share this point of view as members of the management body. This is dangerous and could lead to eventual collapse of the scheme into a dilapidated condition.962
(b)Changing societal perceptions would consider the upgrading of a scheme by the installation of a lift in the building as a necessary or non-luxurious improvement. A special resolution would still be needed, and the owners would have to consider whether such an improvement is affordable.
(c)The establishment of exclusive use areas in favour of the owners of more than one unit in a scheme has, to my knowledge, never occurred in South African practice. The reason for this is presumably because it would be difficult to obtain a unanimous, or even a special, resolution for its creation from owners who do not benefit directly from such creation.
(d)There are two conflicting notions concerning the termination of sectional title schemes. One school of thought is that a scheme should be as permanent as possible in order to give apartment owners a societal status that approximates home-ownership. The other notion is that because we are dealing with real estate units carved out of the physical features (walls, floors and ceilings) of a destructible building it should be recognised that the building might become no longer economically viable as a result of disintegration or obsolescence. Proponents of this argument would suggest the requirements for the termination of the scheme should be lowered.
Spain
Operative rules
(a) The 2013 amendment of the Law on Horizontal Property has completely modified art. 10 in order to facilitate maintenance, repair and works improving accessibility, subdivision and consolidation, including the addition of new storeys. These works may now be carried out without the approval of the general meeting if requested by the Public Administration or the owners (art. 10.1). If not so requested, a three-
962Body Corporate, Geovy Villa v Sheriff, Pretoria Central Magistrates’ Court 2003 1 SA 69 (T) pars. 6–7.
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fifths majority is sufficient to authorise such works (art. 10.3).Therefore, it may be assumed that the owners may request the manager, who is responsible for the conservation of the building (art. 20(a) and (c)), to repaint the building with paint of a comparable quality but not with expensive gloss paint. Nonetheless, the owners can request the manager to repaint the building with gloss paint if they obtain a three-fifths majority resolution at the general meeting (art. 10.3). It is also interesting to note that the Law provides that in the case of disagreement over the nature of the works that have to be carried out the owners’ meeting (and not the manager) will decide on the matter (art. 10.3 last par.). The provision also allows the interested parties to request arbitration or to obtain a technical report to settle a dispute.
(b)The installation of the lift would probably be considered an improvement. However, regardless of its nature, the rule discussed in the previous paragraph provides expressly that an absolute majority is necessary to adopt a resolution for the installation of a lift (art. 17.2). Note that the Law provides that on adoption of such a resolution, the community is bound to pay the expenses even if the cost of installation (spread over one or more years) exceeds twelve months of community expenses (art. 17.2 par. 2).
(c)The law on Horizontal Property provides that the construction of a new storey and any other alterations to the structure of the building or the common elements could be approved passed by a three-fifths majority. Installing a solarium on the top storey may be considered an alteration, which would also require a three-fifths majority (art. 10.3.b). It is accepted that certain common elements may be designated for the exclusive use of one or more owners,963 but granting this exclusive use to one or more owners must also be approved by a unanimous resolution, as it affects the common elements (the top storey where the solarium is built is considered common) and would require a change of the by-laws, which requires a unanimous resolution.
(d)The condominium scheme can be dissolved on destruction of the building; conversion into ordinary property (i.e. one owner purchases all of the units); or conversion into traditional co-ownership (by unanimous resolution to cancel the title deeds of the condominium and subjecting the building to the provisions of the CC on ordinary coownership) (art. 23). The Law provides that the condominium is
963 Lacruz Berdejo et al., Elementos, p. 414.
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terminated by destruction of the building unless otherwise agreed in the constitutive title or the by-laws (art. 23.1). It could be said that this provision takes into account the obsolescence of the building, as it considers that destruction occurs when the re-construction of the building would cost more than 50 per cent of the value of the building (unless there is an insurance policy covering such a case). Some commentators argue that there is a need for a more detailed regulation of the termination of schemes964 as it is not clear whether the scheme ends automatically in the event of destruction, or merely when major repairs are needed. The only clear provision is that in the case of destruction owners may decide, by a unanimous decision, to continue with the scheme.965
Descriptive formants
(a)The Law on Horizontal Property does not define the terms ‘maintenance’ and ‘improvements’ expressly and their meaning must be deduced from the provisions of the Law as interpreted by case law and academic literature.
(b)Installation of a lift and some other common equipment in order to remove architectural barriers that are considered to benefit the community of owners as a whole is expressly regulated in the Law on Horizontal Property (art 17.2). The 1999 amendment of the Law reduced the majority needed for these kinds of improvements from unanimity to a 60 per cent majority in number and share value, while the 2013 amendment reduced the required majority to install a lift to an overall majority in number and value by quota. A court decision before 1999 has shown that the installation of a lift frequently requested by elderly or disabled people could be vetoed by only one person because of the unanimity requirement. It is perhaps in the interests of fairness that the 1999 and 2013 amendments have changed this position.
(c)The Law does not expressly regulate the creation of a solarium for the exclusive use of the owners on the top floor. The addition of new storeys or the alteration of the building or the common elements (such as the roof) is treated by the Law on Horizontal Property as being a matter needing unanimity because it affects the constitutive title of the scheme. The common practice rife among developers to reserve the right of adding new storeys to the top storey (derecho de sobreelevacio´n)
964 Dı´az Martı´nez, ‘Comment art 23’, p. 904 note 7. |
965 Ibid., p. 905. |
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has been criticised by commentators. Granting to one or some owners the exclusive use of a common element such as the solarium needs a unanimous resolution of the general meeting (art. 17.6).
(d) The termination of the scheme is poorly regulated by art. 23. No procedure by which the scheme may be terminated is prescribed. Instead, it allows the owners to agree that, even if the building is destroyed, the scheme can continue.
Metalegal formants
(a)Maintenance is of considerable importance to prevent the deterioration of the buildings and common facilities. The poor regulation on this topic in the Law on Horizontal Property led to the inclusion of a new article in the 1999 amendment of the Law, which sanctions owners who oppose or delay necessary repairs by subjecting them to possible administrative sanctions, as well as liability for any damages caused. However, art. 10 of the Law has been extensively modified by the 2013 amendment of the Law to facilitate works of maintenance and repairs, which can now be carried out even without a resolution adopted by the general meeting on the instance of the Public Administration or the request of an owner. This facilitation was not only prompted by a recognition of the importance of maintenance and repairs but also by the legislature’s intention to put the distressed Spanish building industry back on its feet.
(b)The 1999 amendment of the Law reflected changing perceptions in society. The growing concern for the elderly and the disabled led thereto that the installation of a lift and other useful equipment in the building was no longer regarded as a luxurious improvement needing a unanimous resolution. Instead it is considered a useful improvement for which a special majority of 60 per cent in share values would be sufficient. The 2013 amendment reduced such majority to an absolute majority for the installation of a lift. This sympathetic attitude towards the elderly and disabled is also reflected in art. 17.2 par. 2, which provides that on the adoption of such resolutions the community of owners is bound to pay the expenses even if the cost of installation (spread over one or more years) exceeds twelve months of community expenses.
(c)In theory, the creation of exclusive use areas in favour of the owners of one or more unit(s) in the scheme is allowed. However, this would require a unanimous decision adopted by the owners’ meeting, or (and this is more likely to happen) the developer has reserved specific common elements for his own and exclusive use (as where he or she
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retains one or more units in the scheme) in the constitutive title, before he or she starts selling the units.
(d) It is recognised that the building might cease to be economically viable as a result of dilapidation or obsolescence, and that this situation will cause the termination of the scheme if the costs of repair exceed 50 per cent of the value of the building. It is also provided that the scheme ends on destruction of the building. The problem is that the legislative requirements for the termination of the scheme are not clear on account of the possible application of town planning regulations enacted by the different Autonomous Communities. Some of these regional Laws allow a declaration that the building is destroyed or partially destroyed but state clearly whether the condominium will subsist or not. This unclear combination of administrative and civil rules has led some commentators to call for better regulation of this topic.966
Sweden
Operative rules
(a)The association is under a contractual obligation towards its members to keep the building in good condition. The daily management of the real estate cooperative (bostadsra¨tt) is entrusted to a management board. The group of owners who wish to insist upon a repainted building can discuss the matter with the management board. If this is unsuccessful, then the group can raise the issue at a general meeting. They will succeed if the proposal is adopted by a majority of the members present at the meeting and voting, provided that the decision can be seen as in line with the intended purpose of the real estate cooperative (Law on Real Estate Cooperatives Ch. 9 s. 14). There are no limits on the amount of money expended on the proposed measures (ordinary paint or gloss paint), provided that the expense is economically justifiable in view of the financial statutes (provisions) of the association.
(b)This group may also raise the issue at a general meeting. A special
majority is required because the installation of a lift will lead to reconstruction of the building and an addition to the property of the real estate cooperative association, and can affect a member’s right to his or her apartment. A lift can be installed if the members whose units will be affected by the installation give their consent, or if
966 Ibid., (2007 ed.) pp. 752–3.
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the matter is approved by a two-thirds majority of members voting at a general meeting and is accompanied by the approval of the Rent Tribunal (Law on Real Estate Cooperatives Ch. 9 s. 16 par. 2).
(c)As the roof is common property, the group must try to change the by-laws, which requires either unanimity or a two-thirds majority at two successive general meetings. Even if the group is successful one may question whether the decision is in accordance with generally accepted principles of company law. The association has to treat all members equally and a decision that results in an inappropriate advantage to a member or a disadvantage to the association or another member is prohibited and can be set aside by the courts. If the aim of the association is to provide residences for its members, one may also question whether provision of a solarium for some of the members is in line with the association’s aim.
(d)A cooperative association can be liquidated (Law on Real Estate Cooperatives Ch. 9 s. 29 read with the Law on Cooperative Associations, Ch. 11). In order for this to be effected, the members must vote unanimously in favour of the resolution at the first general meeting or the resolution must be adopted by two consecutive general meetings with a simple majority at the first meeting and a two-thirds majority at the second meeting. It is probably simpler for the group just to sell their shares on the open market than to start a process of liquidating the association.
Descriptive formants
The above answers are mainly based on the provisions of the Law on Real Estate Cooperative Associations.
Metalegal formants
It has been mentioned that villas and townhouses structured as part of a real estate cooperative received more financial assistance from the government than villas and townhouses structured as private real estate. These government funds have now dried up and there is little incentive for developers to develop these schemes as real estate cooperatives. Members are therefore eager to liquidate the real estate cooperative in order to obtain single ownership of the villa or townhouse to which they were entitled. On conversion into separate private property, each member has a right to purchase the villa or townhouse that he occupied previously.
part iii
Recent developments in condominium law
1. Introduction
The past few years have witnessed significant reform in the sphere of condominium law in four jurisdictions. A prime example is the condominium provisions contained in book 5 of the Catalan Civil Code, in force since 10 May 2006. Equally significant is the Italian reform contained in the Law of 11 December 2012 to take account of rapid social and technological changes in recent years.1 Another example is the revision of the Belgian Civil Code in 2010 in order to introduce a two-tier governance system for larger condominiums and to give fuller recognition to the principles of good internal corporate governance.2 Finally, the South African Community Service Ombud Service Act revolutionised dispute resolution in condominium schemes.3 This part will highlight the most important innovations pioneered by these jurisdictions.
2. Catalan condominium provisions
The Catalan condominium provisions, although greatly influenced by the Spanish legislation, contain the following interesting innovations aimed at a more flexible application of condominium rules:
(a) a reduction in the number of situations that require a unanimous resolution: for example, an amendment of the constitutive title and
1The Law came into effect on 18 June 2013.
2See Timmermans, ‘Verniewde Apartementswet Een eerste verkenning’, (2012) pp. 430–54; Carette and Swinnen, ‘(Bijna) 3 jaar nieuwe Appartementswet: Een
rechtspraak overzicht en de wet van 15 Mei 2012’ (2013), pp. 1–27; Vansteene, ‘De nieuwe wet mede-eigendom treedt in werking op 1 September 2010’ (2010) pp. 1–3.
3Act 9 of 2011.
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the by-laws (statutes) of a condominium now requires only an 80 per cent majority, unless provided otherwise in these documents;4
(b)a more detailed regulation of super condominiums consisting of
several independent multi-unit condominiums that share common areas such as swimming pools or sporting facilities;5
(c)specific regulation of common areas allocated for private use and private areas allocated for common use;
(d)a clear provision that not only the physical features of the apartment (such as its size, use and purpose according to CCC art. 553-3) must be taken into account in determining the share value of an apartment, but also some legal features such as the presence of the burden of a servitude on the apartment that benefits the other owners
or by-laws providing that the owner of a particular apartment will not be able to use some of the common elements;6
(e)a simplification of the list of common elements (CCC art. 553-41) and of the concept of an ‘apartment’ or ‘unit’ in that the requirement of functional autonomy means that it must have access to a public road, either directly or indirectly through the common areas;
(f)the requirement that the constitutive title of a Catalan condominium must be notarially executed and registered in the Land Register in order to be enforceable against third parties (CCC art. 553-9);
4Note that the new Italian CC (art. 1117-ter) requires an 80 per cent majority (in number and value) at a general meeting instead of a unanimous resolution to change the intended use of the common parts. The notice of the general meeting must clearly indicate the common parts affected, the proposed change and how it will be implemented. Alterations may not may cause harm to the stability or safety of the building, or alter its architectural structure.
5See also the new art. 1117-bis and art. 1129 last par. of the Italian CC which extends the condominium concept to include horizontal condominiums such as residential estates and gated communities consisting of low-rise housing units and super condominiums made up of several multi-unit buildings. See further ‘mega multi-building schemes’ which comprise a variety of multi-unit schemes such as sectional title schemes, real estate cooperatives (share block schemes) and planned unit developments where the common parts of the scheme are owned, and the scheme is managed by an owners’ association discussed by Van der Merwe, Sectional Titles p. 1–30(2).
6The revised Belgian CC art. 577-4 § 1par. 2 now requires an architect, land surveyor, notary or a real estate broker to prepare a report which explains the formula used for arriving at the share values of units. The report may for instance mention that a nettofloor area formula was exclusively used and was applied for each unit in the same manner. This report must be incorporated in the constitutive deed of the condominium (basisakte). In similar manner art. 577-4 § 1 par. 4 no. 2 requires that the by-laws of the condominium must contain carefully explained criteria for the manner in which the financial obligations are allocated to unit owners.