In the next January article in the "Tuesday Mornings for Construction" series, concerning the institution of co-ownership, we will take a particularly crucial look at the institution of ownership of a share in the common property in development investments. This is because in investments where individual units are separated, this particular type of co-ownership is mandatory. As stated in Article 3 sentence 1 of the Act of 24 June 1994 on Ownership of Premises ("UWL"), "In the event of separation of ownership of the premises, the owner of the premises is entitled to a share in the common property as a right related to the ownership of the premises."
There is no doubt, therefore, that the creation of a share in the common property requires the simultaneous acquisition of a separate premises. The legislature inextricably links the fact of being an owner of a premises with being a co-owner of the common property . Therefore, this is a related right – entirely dependent on being an owner of the premises and can only exist in connection with it. The accessory nature of this right is determined by the fact that one cannot acquire only a share in the co-ownership of the common property without also acquiring the premises.
This is also related to the fact that although the premises are "separate," as the Court of Appeal in Łódź rightly stated in its judgment of 25 May 2018 (ref. I ACa 1216/17), "this only means that the premises constitute an object of ownership separate from the land and building. However, this property cannot exist independently, as it is associated with rights to parts of the building and rights to the land underneath the building, as well as other facilities that are not for the exclusive use of the premises' owners (Art. 3 sec. 1 and 2 of the Building and Property Act), such as, for example, the attic, staircase, sidewalk, elevator, gas or sewage system . The owner of a premises located in a multi-unit building is therefore both the owner of the premises and a co-owner of the land on which the building stands, as well as those parts of the property that are for the common use of all the premises' owners."
The sale of the purchaser's share in the common property is therefore mandatory and occurs simultaneously with the sale of the ownership title . Therefore, this type of co-ownership is often referred to as "compulsory co-ownership" or "necessary co-ownership ," as the purchaser has no control over its scope, existence, or the time of termination of this particular type of co-ownership. It should also be emphasized that, in addition to a share in the common area of the building, a share in the land on which it is situated also comprises a share in the perpetual usufruct of the land. Furthermore, if the building constitutes a separate property, this share also includes a share in the perpetual usufruct of the land.
The Act on Ownership of Premises also defines what common property is, and therefore what property this specific joint ownership concerns – in accordance with Article 3, Section 2 of the Act on Ownership of Premises, common property comprises land and parts of the building and facilities that are not exclusively for the use of the owners of the premises.
This includes elements such as elevator lobbies, stairwells, common areas between floors, roof terraces, loggias, pipes, and ducts. There is no exhaustive list that would list all building parts and facilities; however, it is important to classify, in accordance with the regulations, only those parts that are not exclusively for the use of the unit owner. Common areas also include garages, parking lots, external passageways, playgrounds, and green spaces.
Importantly, any attempt to modify this legal definition by a housing community managing a given common property must be rejected as unlawful. This position was presented by the Supreme Administrative Court, which, in its judgment of March 30, 2022 (ref. II OSK 807/19), stated that "owners of residential premises forming a housing community do not have the statutory authority to 'clarify' the concept of common property within the meaning of Art. 3, sec. 2 of the Land and Mortgage Act, by means of a resolution they adopt, and thus influence the qualification of this concept for the purposes of specific decisions of bodies applying the above provision."
When assessing whether a given item should be considered part of the common property, functional criteria should be taken into account and each case should be decided individually and specifically, taking into account the given case , which is also confirmed by case law.
In the judgment of the Supreme Administrative Court of 15 February 2022 (ref. II OSK 724/21), it was stated that "the category of common parts of real estate is functional in nature and therefore the legal status of a specific element of the common property depends on the circumstances of the actual case." It should therefore be stated that what falls within the scope of the common property is assessed individually and is related to the nature of the building to which it relates.
Most developments establish exclusive rights to use common property, known as quad usum . Granting such a right means that a given unit owner can use a given portion of the common property to the exclusion of other co-owners—as if they were the sole owner. Such rights are established for parking spaces, balconies, loggias, terraces, and gardens. The unit owner is obligated to bear the costs of maintaining such a portion and may also derive benefits from it solely for themselves.
Criteria and definitional considerations are all the more important because a share in common property carries with it the rights of co-owners to collect benefits and the obligations to bear the costs of maintaining the common property . Co-owners' benefits may include, for example, income from renting out parts of the facade or roof for advertising purposes, or collected fees for periodic easements. Depending on the decision of the management board and co-owners, these revenues may reduce the amount of common property maintenance fees or may be considered additional income for the housing community budget and allocated, for example, for renovations or the construction of bicycle racks.
It is natural to maintain stairwells, common areas, and elevators in a non-deteriorated condition, to carry out repairs, as well as to carry out repairs and periodic cleaning – which stems directly from Article 12 of the Land and Mortgage Act, which states that "profits and other income from the common property are used to cover expenses related to its maintenance, and in the portion exceeding these needs, they accrue to the owners of the premises in proportion to their shares. In the same proportion, the owners of the premises bear the expenses and burdens related to the maintenance of the common property in the portion not covered by benefits and other income."
This principle is expressly stated in the Act, and by its very nature, every property owner is obligated to bear the costs. However, it is good practice for developers to reiterate this principle in agreements with their clients, as it essentially fulfills the seller's obligation to provide information in this regard.
In Article 14 of the Land and Mortgage Act, the legislator presents a non-exhaustive list of fees that may become subject to such financial burdens. These include expenses for repairs and ongoing maintenance; fees for the supply of electricity, heat, gas, and water (in the part concerning the common property); and fees for the community antenna and elevator; insurance, taxes, and other public fees, unless they are covered directly by the owners of individual units; expenses for maintaining order and cleanliness; and remuneration for management board members or administrators. It is worth remembering that if it is necessary to "create" a new fixed fee, a resolution of the unit owners consenting to its collection is required for it to become due. It is also worth remembering that regardless of whether a given co-owner uses the common property or not, they must pay these fees.
In summary , each owner of a unit constituting a separate property in a multi-unit building is also a co-owner of the common property. Although not exhaustively defined, common property should be understood as those elements of the building and real estate that do not exclusively serve a given unit owner. Furthermore, an inextricable part of a share in the common property entails both the right to collect benefits and the obligation to bear the associated maintenance burdens.
Next week, we will continue our discussion of common property, including the principles of determining the share in common property and its management.
This article is for informational purposes only and does not constitute legal advice.
Legal status as of January 15, 2024
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