In an apartment building or housing estate subject to condominium ownership, the place where the will concerning management is formed is the assembly of condominium owners. A wide field — from the appointment of the manager to the determination of common expenses, from choices concerning the maintenance and repair of the principal immovable to fundamental decisions bearing on the management structure — comes onto this organ’s agenda and is resolved there.
That the assembly should meet and produce decisions in the manner required by the Act is not merely a formal requirement; it directly determines whether the management activity will stand in law. A procedural error in the notice, or a decision taken without the requisite majority, may subsequently be annulled and become incapable of implementation. A correct grasp of the rules on meetings and decisions is therefore essential for the continuity of the management.
In this briefing note we address the legal position of the assembly, how the notice of meeting is to be issued, the meeting and decision quorums required, the framework of representation by proxy, and the implementation and annulment of the decisions taken, in the light of the provisions of the Condominium Ownership Act No. 634.
Legal Position and Sphere of Competence of the Assembly
The Condominium Ownership Act No. 634 requires the constitution of an organ in which decisions concerning the management of the principal immovable are taken; this organ is the highest decision-making body. The assembly is composed of all the owners of the independent sections subject to condominium ownership. Although it has no legal personality, it is a decision-making organ endowed with powers derived directly from the Act. Decisions produced in conformity with the Act and with the management plan bind all owners, including those who did not attend the assembly.
Matters on Which the Assembly May Decide
The duties and powers of the assembly are regulated in the Act and cover the fundamental choices concerning the management of the principal immovable. The assembly is empowered to appoint the manager or the board of management and, where necessary, to terminate that appointment; to determine the annual operating budget and the amounts of the common expenses; to take decisions on the maintenance, repair and improvement of the principal immovable; to amend the management plan; and to lay down the principles governing how the common areas are to be used. Alongside these, important legal and financial decisions bearing on the management are also taken in this organ.
Types of Meeting and the Procedure for Convening Them
Ordinary Meeting
The Act imposes on the assembly an obligation to hold an ordinary meeting, as a rule, at least once a year. The time of the meeting is for the most part the month and date indicated in the management plan; the purpose is to discuss the fundamental matters concerning the annual management.
In collective structures (housing estates) the position is different. Pursuant to Article 29 of the Condominium Ownership Act No. 634, the assembly of representatives of the collective structure meets at least once every two years unless the management plan provides otherwise.
The power to convene lies, as a rule, with the manager or the board of management. Where there is no manager, or where the manager refrains from issuing the notice, any of the condominium owners may also convene the meeting. The notice must be communicated in writing to all owners, and the date of the meeting and the agenda must be stated so as to leave no room for hesitation. The Act further requires that the notice be given to the owners at least fifteen days before the day of the meeting.
The orderly conduct of the meeting depends on the agenda being fixed at the outset and clearly set out in the notice. As a rule, a matter that has not been placed on the agenda may not be discussed and resolved upon. By contrast, where all the owners are present at the meeting, matters outside the agenda may also be discussed and resolved upon.
Extraordinary Meeting
The assembly may be convened for an extraordinary meeting whenever the need arises. The emergence of a repair need that admits of no delay, high-cost works coming onto the agenda, the replacement of the manager, the emergence of a legal dispute, or unexpected and significant developments bearing on the management may make recourse to this course necessary.
As a rule, the notice for an extraordinary meeting is issued by the manager or the auditor. In addition, at least one third of the owners may request in writing that a meeting be held. If that request is not met, an application to the civil court of peace may come into question.
In an extraordinary meeting too, the notice must be given in writing to all owners, the reason for the meeting and its agenda must be clearly stated, and the notification must be made at least fifteen days before the date of the meeting.
Here as well the agenda is fixed in advance and the meeting is conducted within that framework. As a rule, matters not placed on the agenda may not be discussed and resolved upon. Where all the owners are present, however, or where those present unanimously bring a matter onto the agenda, discussion of and a decision on a matter outside the agenda become possible.
Comparison of Ordinary and Extraordinary Meetings
Although the two types of meeting are subject to the same regime as regards the form and the time limit of the notice, they diverge on the power to convene and on the discussion of matters outside the agenda:
| Criterion | Ordinary Meeting | Extraordinary Meeting |
|---|---|---|
| Frequency | As a rule at least once a year | Whenever the need arises, at any time |
| Persons empowered to convene | The manager or the board of management; where there is no manager or the manager refrains from convening, any of the condominium owners | The manager or the auditor; upon the written request of at least one third of the condominium owners |
| Form of the notice | Written notification to all owners, with the date and the agenda clearly stated | Written notification to all owners, with the reason for the meeting and the agenda clearly stated |
| Notice period | At least fifteen days before the meeting | At least fifteen days before the meeting |
| Matters outside the agenda | May be discussed if all the owners are present | May be discussed if all the owners are present, or if those present unanimously place the matter on the agenda |
Manner of Notification and the Service Regime
That the notice be delivered in due form is decisive for the survival of the decisions to be taken. Indeed, the principal reason for the annulment of assembly decisions in practice is procedural shortcomings in the notice of meeting.
The Act confines itself to saying that the notice shall be in writing; as to the method by which the notification is to be effected, the provisions of the Notification Act give guidance. In notifications made to owners who do not actually live in their independent section in particular, it must be possible to prove subsequently that service was effected.
For ease of proof and for legal certainty, recourse to the following methods is important:
- For owners actually residing in the building, handing the notice over against signature,
- Where the management plan lays down a particular method for service, separately complying with that method as well,
- For owners who do not live in their flat, sending the notification through a notary or by registered letter with return receipt,
- Where the owner’s address is unknown or service has been fruitless, proceeding to service by public announcement within the framework of the Notification Act.
Where the owner does not live in the independent section, or has not notified the management of a change of address, proof that the notice was issued in due form takes on a particular importance. Otherwise, even if the meeting was in fact held and decisions taken, the shortcoming in the notice may lead to the annulment of the assembly decisions.
The Numbers Required for Meeting and Decision
The valid convening of the assembly depends on the attainment of the meeting quorum laid down in the Act. Under the Condominium Ownership Act No. 634, the assembly meets with the participation of more than half of the owners both in number and in land share. If that majority cannot be reached at the first meeting, a second meeting is arranged within fifteen days at the latest; on that occasion decisions may be taken by a majority of those attending.
The Act has nevertheless laid down qualified and special majorities for certain decisions; on those matters the relevant special conditions are additionally required.
Attendance at the Meeting Through a Proxy
Attendance at assembly meetings takes place, as a rule, through the owner being present in person. The Condominium Ownership Act No. 634 additionally permits attendance through a proxy in express terms. Because it facilitates the holding of the meeting and the production of decisions in apartment buildings and housing estates with a high number of independent sections, representation by proxy performs an important function in practice.
The operation and the limits of this institution are addressed below.
Who May Act as Proxy?
An owner may appoint as proxy another owner holding an independent section in the same building, and may equally authorise a third person who does not hold the capacity of condominium owner. There is no obstacle to the same person being chosen as proxy by several owners. The proxy exercises the powers of the owner represented to attend the meeting and to vote exactly as they stand.
Form of the Power of Attorney and Its Required Elements
It is sufficient that the authority be in writing; its execution before a notary has not been made obligatory. The document must contain the following information:
- The name and surname of the owner represented
- The name and surname of the proxy authorised
- Information concerning the independent section in question
- The scope of the authority conferred (such as attending the meeting and voting)
Number of Owners a Single Person May Represent
The number of independent sections that one person may represent by proxy may not exceed 5% of the total number of independent sections in the principal immovable. This limit is mandatory in character and cannot be raised by the management plan. The purpose of the provision is to prevent voting power from accumulating in a single pair of hands and to preserve the balance of representation in the assembly.
In concrete terms the limit works out as follows:
| Total independent sections in the principal immovable | Maximum owners one person may represent |
|---|---|
| An apartment building of 20 sections | 1 condominium owner |
| A housing estate of 60 sections | 3 condominium owners |
| A housing estate of 120 sections | 6 condominium owners |
Independent Sections Held in Co-Ownership
Where an independent section has more than one owner, those persons must designate a representative from among themselves. It is not possible for the co-owners of a single section to vote separately. If no representative has been designated, no vote may be cast at all on behalf of that section.
Effect of Attendance by Proxy on the Quorums
Owners represented through a proxy are taken into account when the meeting quorum is calculated. Votes cast through a proxy are likewise fully valid in determining the decision quorum.
From a practical standpoint, it is important that the minutes clearly show which owners are represented by proxy and the identity of the proxy, and that the powers of attorney be kept by being annexed to the minutes.
Operation of the Decision-Making Process
The validity of the decisions taken in the assembly depends on compliance with the procedural and majority conditions required by the Act. The process consists of the stages of holding the meeting in due form, attaining the requisite meeting and decision quorums, and entering the decisions in the minutes. Where these rules are not observed, the decisions taken become unlawful and their annulment may come into question.
The fundamental principles of the process are addressed below.
Quorums
As regards the first meeting
The assembly holds its first meeting with the participation of more than half of the owners both in number and in land share, and decisions are taken by a majority of votes. In other words, for the first meeting to be held, a majority of the owners must be present both in terms of the number of persons and in terms of the land shares they hold.
As regards the second meeting
If the first meeting could not be held because the quorum was not attained, the second meeting is held within fifteen days at the latest. The number required for a decision at that meeting is an absolute majority of the owners attending.
At the second meeting the condition of a majority in number and in land share is no longer required. By contrast, the special majority provisions laid down by the Act for particular matters continue to apply in every case.
The Right to Vote and the Conduct of Voting
Every owner has one vote for the independent section he or she holds. If the same person holds several sections, each section earns him or her a separate vote. By contrast, the total of the votes cast by an owner, whether in person or by proxy, may not exceed one third of all the votes.
Voting is conducted openly as a rule. Where the assembly so decides, a secret ballot may also be held. The decisions emerging from the vote must be written into the minutes in clear and intelligible language.
Decisions Requiring a Qualified Majority
The Condominium Ownership Act No. 634 lays down conditions more onerous than the general majority on certain matters of importance. The validity of decisions of this kind depends on the attainment of the special majority indicated in the Act.
By way of example:
- Carrying out significant repairs and improvements in the principal immovable → a majority in number and in land share
- Amending the management plan → four-fifths (4/5) of the owners
- Transactions producing the effect of a disposition over the principal immovable as a whole → unanimity
- Allocating a common area to another purpose or converting it into an independent section → unanimity
Minutes and the Decision Book
The validity of the decisions depends on their being entered in the minutes and recorded in the decision book. That book serves as the fundamental document in which the will of the assembly is officially placed on record.
The book must contain the following elements:
- The date on which the meeting was held
- The items placed on the agenda
- The list of owners attending the meeting
- The decisions taken and the results of the voting
The decisions must be signed by the owners present at the meeting or by their proxies. Decisions that have not been signed become difficult to prove and are a source of dispute in practice.
Giving Effect to the Decisions
Decisions taken in conformity with the Act and with the management plan are binding on all owners. The implementation of those decisions is essential if the management is to proceed without interruption and in an orderly manner. Carrying the decision into effect is, as a rule, the manager’s task.
Where decisions are not implemented, or their implementation is obstructed, legal sanctions may come into play. The implementation stage is accordingly not merely an administrative operation but a process producing legal effects.
The Manager’s Obligation to Implement
The person responsible for carrying out the assembly’s decisions is, as a rule, the manager. The manager is obliged to implement the decisions taken, to conduct the transactions required for that purpose and to ensure that implementation is achieved.
Within this framework the manager is obliged to give effect to the assembly’s decisions, to organise the collection of common expenses, to carry out maintenance, repair and renewal works, and to complete the duties entrusted to him or her by the assembly.
The manager is bound to implement these decisions; he or she has no power to alter them or to refrain from implementing them. Where the decisions are not carried out by the manager, the assembly may remove the manager from office and may also pursue his or her liability.
Carrying Out the Decisions by Way of Enforcement
Assembly decisions formed in conformity with the Act and with the management plan are binding and it is compulsory that they be complied with. These claims — chiefly decisions concerning the payment of common expenses and the service-charge debts fixed in the operating budget — may be collected through enforcement proceedings.
On the basis of assembly decisions:
- Enforcement proceedings may be commenced for common expense and service-charge claims,
- Legal proceedings may be taken against an owner who does not pay the debt,
- Default compensation may be sought.
Claims of this nature are for the most part collected in practice by way of enforcement without judgment. The fundamental documents forming the basis of the proceedings are the decision book and the operating budget.
Remedies Available Against an Owner Who Does Not Comply with a Decision
Compliance with the assembly’s decisions is an obligation for all owners without exception. Where an owner acts contrary to the decisions or obstructs their implementation, there are various legal remedies available both to the other owners and to the manager:
- An end to the conduct contrary to the decision may be sought,
- Unpaid common expense claims may be made the subject of enforcement proceedings,
- An action may be brought to halt a use contrary to the assembly’s decisions or to the management plan,
- Where the breach reaches a continuous and serious level, the transfer of the independent section may even be requested under the Condominium Ownership Act No. 634.
Among the causes of dispute most frequently encountered in practice, non-payment of common expenses, the unlawful use of common areas and the continuous breach of assembly decisions stand out.
Annulment of Assembly Decisions
An assembly decision may be annulled where it is contrary to procedure, to the law or to equity. The annulment of decisions is a technical judicial process bound by particular time limits and rules of procedure.
The grounds of annulment, the period within which the action must be brought, the court to be applied to in terms of subject-matter and territorial jurisdiction, and the procedure to be followed are addressed in a separate study of ours entitled The Action for Annulment of Decisions of the Assembly of Condominium Owners.
Independent Legal Assessment
In disputes concerning the assembly of condominium owners, the argument most often arises not from the content of the decision but from the way in which it was taken. A vote on a matter that was not on the agenda, a failure to observe the fifteen-day notice period, or an inability to prove the notification made to an owner who does not live in the independent section may render even a decision that is sound on the merits indefensible. The most productive investment a management can make is therefore the procedural care expended before the meeting.
The practice of proxies calls for similar attention. Overlooking the five per cent limit on representation, or the rule that no owner may exceed one third of the total votes, may not invalidate the meeting, but it upsets the majority calculation for the decision taken and thereby creates a risk of annulment.
In a concrete matter we recommend that the following headings in particular be observed:
- Documenting that the notice was issued in accordance with the fifteen-day statutory period and that it reached every owner
- Setting the agenda out in full in the notice, and reflecting in the minutes the condition required for matters outside the agenda
- Clarifying before the vote whether the subject of the decision calls for a general majority or a qualified majority
- Checking the powers of attorney before the meeting and calculating the limits of representation and the ceiling on votes
- Ensuring that the decisions are recorded in full in the decision book and signed by those present
- In respect of common expense claims, preparing the operating budget and the decision book so as to form a basis for enforcement proceedings
Independent Legal provides advisory and litigation services throughout the whole process in disputes arising from condominium ownership law, from the legal review of the meeting process to the annulment of assembly decisions and the pursuit of common expense claims.