This Tuesday morning, we continue our analysis of the regulations related to the ownership of common property, regulated primarily by the Act of June 24, 1994, on Ownership of Premises (hereinafter "APL"). As announced, today we will discuss the principles for determining the ownership of common property and the principles of its management.
The method of calculating the share in the common property is clearly defined by the Act on Ownership of Premises – in accordance with its Article 3, paragraph 3:
- The share of the owner of a separate premises in the common property corresponds to the ratio of the usable area of the premises together with the area of the accompanying to the total usable area of all the premises together with their accompanying rooms.
- The share of the owner of independent, non-separated premises in the common property corresponds to the ratio of the usable area of these premises together with the area of the accompanying rooms to the total usable area of all the premises together with the accompanying rooms.
Shares are defined as fractions. The numerator represents the usable floor area of the unit plus the area of any adjacent rooms (usually storage units or other rooms). The denominator represents the sum of the usable floor areas of all units in the building (or buildings, if the housing community comprises more than one building) and all adjacent rooms.
To illustrate this with a specific (very simplified) example: a person owns a premises with a usable area of 48 m²and a storage unit with an area of 2 m²,thus owning a total of 50 m².The usable area of all premises and adjacent rooms is 1,000 m².In such a case, this person will be a co-owner of the common property in the amount of 50/1,000 of the share. There is also nothing to prevent this share from being 5/100, as the proportion of the share in the common property is maintained. Therefore, mathematical operations on fractions are permissible, as long as they correspond to the proportions resulting from the provisions of the Act.
When selling premises in developments where new premises are separated in a building, each agreement involving the separated premises must designate the share allocated to the owner of the premises in a notarial deed. This share is then subject to mandatory entry in the I-SP section of the land and mortgage register maintained for the separated premises. In practice, however, we encounter properties where the shares in the joint property are defined differently. This primarily applies to buildings constructed before the Act came into force, and to bring this into compliance with the current legal status, the consent of all co-owners would be required.
There is no legal way to terminate a share in joint ownership of a common property as long as a person remains the owner of the unit. A share in the common property is also important in light of any liabilities associated with the common property. The homeowners' association is liable for liabilities related to the common property without limitation, and each unit owner is liable for a portion corresponding to their share in the property (Article 17 of the Land and Mortgage Act).
A housing community is generally managed by a management board appointed under Article 18 of the Act on Ownership of Premises, which specifies the method of managing the common property. The method of management is generally specified in the agreement establishing separate ownership of the first unit in the building. A change in the management method established in this procedure may be made based on a resolution of the unit owners, recorded by a notary. Management can be entrusted to a natural or legal person. It should be noted that specifying the management method is mandatory when the number of separate and non-separate units exceeds three. Furthermore, in such a case, only a natural person can serve as a member of the management board, which in practice protects the guarantee and direct fiduciary relationship that exists between the community and the board member. Community members also have strong supervisory powers, as Article 20, Section 2 of the Act on Ownership of Premises allows for the management board or its individual members to be suspended or dismissed at any time by a resolution of the unit owners.
According to Article 21, Section 1 of the Ownership Act, the primary responsibility of the management board is to manage the affairs of the housing community and represent it externally, as well as in relations between the community and individual unit owners. In the case of a multi-member management board, at least two members of the management board are required to cooperate jointly. The management board is authorized to undertake ordinary management activities, meaning independent decision-making. However, if the management board wishes to undertake activities beyond the scope of ordinary management, a resolution of the unit owners is required, expressing consent to such activities and granting the management board the power of attorney to enter into agreements exceeding the scope of ordinary management in the form prescribed by law. While Article 22, Section 3 of the Act only contains a non-exhaustive list of activities exceeding ordinary management of the common property, even these dozen or so activities demonstrate the scope of the management board's independence.
From the point of view of the subject of our articles, it is worth pointing out that activities exceeding ordinary management include, among others:.
- change of purpose of part of the common property (Article 22, paragraph 3, point 4 of the Land and Mortgage Act),
- changing the intended use of part of the common property, granting consent to the construction or reconstruction of the common property, establishing separate ownership of the premises created as a result of the construction or reconstruction and disposing of this premises, and changing the amount of shares as a result of the creation of separate ownership of the premises created as a result of the construction or reconstruction (Article 22, paragraph 3, item 5 of the Land and Mortgage Act),
- division of common property (Article 22, paragraph 3, point 6 of the Property Law),
- granting consent to the division of a land property developed with more than one residential building and related changes in shares in the common property and determining the amount of shares in newly created, separate common properties (Article 22, paragraph 3, point 9 of the Land and Mortgage Act),
- The consolidation of two premises constituting separate real estate into one property or the division of a premises requires the consent of the premises owners expressed in a resolution. In the event of refusal, the affected owner may request a court ruling (Article 22, Section 4 of the Land and Mortgage Act).
The Act specifies the rules for adopting resolutions, which require a majority vote of unit owners, calculated according to their shareholding, to be valid, unless the agreement or resolution adopted in this manner stipulates that each owner has one vote on a specific matter. Pursuant to Article 23 of the Act on the Ownership and Housing Cooperatives, unit owners adopt resolutions at a meeting or through individual vote collection by the management board. The Act also allows for a so-called mixed method, meaning that votes may be cast partly at the meeting and partly through individual vote collection. This third method is of great practical importance, as it significantly facilitates the adoption of a position by a co-owner absent from the meeting.
The legislature also introduces a strong supervisory role for co-owners, allowing them to challenge the validity of a resolution in court, both in light of their interests and in terms of legality. Article 25 of the Residential Property Law allows a unit owner to appeal a resolution to court for non-compliance with the law or the unit owners' agreement, or if it violates the principles of proper management of the common property or otherwise violates their interests. The Supreme Administrative Court's judgment of October 13, 2022, file reference II OSK 2369/19, stated, among other things, that "the legal framework within which a legitimate complainant may actively exercise their right to co-decide on the common property [...] is linked to a violation of the principles of proper management." Importantly, a resolution is binding until it is annulled by the court.
Finally, it's worth mentioning that property management and property manager are not synonymous. In most cases, the management board, under a separate agreement, entrusts a property management company with the day-to-day operations of the housing community, such as matters related to the execution of cleaning, security, maintenance, and gardening contracts. Management companies typically identify entities capable of providing services to the housing community and ensure their proper execution, but it is the management board that makes the decision to sign such an agreement and is accountable to the other co-owners.
This article is for informational purposes only and does not constitute legal advice.
Legal status as of January 22, 2024.
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