New major amendments have taken place in the Condominium Management Act. If one reads them carefully it is obvious the the lobby of the property developers has passed regulations in their favour. Here is a brief description of the major changes (not a complete list):
1. Previous wording of “closed complexes article” didn’t provide who is responsible for filing the registration of the management contract to the Land registry. The new wording is clear: the developer is responsible for this. The lobbing is crystal clear. The so called “closed complexes” are basically a tool for blackmailing and “milking” the buyers. Basically if you buy apartment in such complex, you are bonded to the developer forever. He can charge you whatever maintenance fees he likes. Be careful with this. (Art. 2 Para 2 )
2. A new regulation about small buildings has been introduced. If the building has up to 3 separate premises, owned by different people, the relations between the owners is regulated by the Ownership Act and not by the Condominium Management Act.
3. The new amendments create some new rights to the lessees of the premises(residents), which we won’t discuss in details now.
4. Owners have to pay for repairs of the common parts, but only from what is collected into the “Repair and Renovation fund”. Our interpretation on this is that owners are required to pay only from their installments made to the “Repair and Renovation fund”, and can refuse to pay interim expenses, which exceed their installments to this fund. (Art. 6 para 1 point 9)
5. There’s a slight change in wording about what expenses are paid by owners. According to the new amendments, owners pay for management costs of the common parts. The previous wording used to be “owners pay for for utilities costs“. It’s clear that a new expense is created here – the management of the condominium. It used to be in the law implicitly but now it is defined more clearly that it’s owners responsibility and is equal to the utility expenses. (Art 6 para 1 point 10)
6. Now every owner/resident of the premises in the building has to subscribe themselves into the Condominium book. Our interpretation is that the owner/resident has to ask the manager (who holds the book by law) to enter them in the book.Before the amendment, it was not specified who is responsible for subscribing the new owners/residents into the book.(art. 7 para 3 )
7. For all dog owners, a specification of what should be entered in to condominium book regarding dogs in the building – the book should include their veterinarian passport details(Art 7 para 6 )
8. Various amendments has taken place in the General Meeting rights and obligations (Art 11):
- The right for GM to distribute the utilities expenses for the common parts is removed (point 1 para 1 )
- The act of renovation of the building is no longer registered to the municipality register (point 10, letter “v”)
- The GM no longer sanctions an owner pursuant to the condominium act. (point 10, letter “k” is removed). This is removed because it has to do with simple majority resolutions (50%+1). The sanctions right still stays, but can be exercised with increased 75% majority.
- GM decides on connecting or disconnecting the building to gas and heating supplier (point 10, new letter “l”)
9. The owners don’t need to convene GM through the local mayor anymore. The previous wording is removed. The new wording is rather generic. Owners can convene General Meeting according to the provision of the law herein. We, however need to point out that owners cannot convene GM directly, but they first need to ask the manager to do it. If the manager don’t do it, then owners can convene a GM themselves, following the procedure in the law (sending invitations etc.). In short, the mayor is no longer involved.
- Each owner can convene GM in urgent cases OR at least if one year has passed from the last ordinary GM. ( new para 5). Now here the minimum % of owners for convening a GM has been removed. Each owner can now convene the GM without first asking the manager, but only in the aforesaid cases.
- A new paragraph has been added for newly established condominiums. Each owner can convene the first General meeting! There are no more requirement for 20% common parts owners. This clears out a big hole in the legislation. nobody knew before how the first GM can be convened without existing manager (elected by the GM). Now the law is clear enough. (new para 6 (old 5))
10. A new Art 13 has been created:
- GM is convened by sticking the invitation on visible and public accessible place in the building not earlier than 7 days before the meeting. In urgent matters the term is not earlier than 24 before the meeting. (new para 1)
- Owner/resident who is absent for more than 1 month, has to notify in writing the manager of the condominium and has to leave an email address or postal address on which invitations for GM to be send, as well as a phone number. (para 2 ). That’s a great improvement and making the convening procedure very light. Now we finally enter 21 century by using emails. However the regulation is creating controversy. The person who sends the email may not send them at all and still states that he has send them!! Now how an owner can prove in court that he has ( or not) received an email. That’s a situation we don’t want to be in. (para 2)
- Notification about GM convening can be done verbally (explaining the invitation text), which notification is certified in writing by the persons who are sending the invitations OR by sending the invitation by post or email if such are provided. We now see that only phone notifications has to be confirmed by second person in writing. Sending emails don’t need to be confirmed. This is huge ground for speculations by the managers who convene GMs (para 3 new)
- If the owner hasn’t provided email or postal address for receiving invitations, the owner is considered as legally invited for GM pursuant para 1 above. This means that if the owner hasn’t provided email ot postal address, the convening is considered as legal for this owner by only putting a note in a visible public place in the building. (para 4)
- A major change is removing the ban for convening GMs between 15 July and 15 September. The ban stays only for convening GMs on public holidays (para 8 )
11. Major changes in Art. 14:
- New amendment has been introduced in connection to representation of owners on GM by their relatives. The relatives need to be registered in the condominium book in order to represent the owner. (new para 1)
- A pleasant surprise is that lawyers, registered in Bar can represent owners on GM only by using normal power of attorney in writing. No notarization required! (para 3)
12. Changes in Art. 15
- A 67% quorum is not required in cases of art.17, para 2 point 1-4. This means that most of the important resolutions a quorum is not required. This doesn’t makes sense, but it’s in the law. (para one)
- If there’s no quorum, the GM is postponed by one hour and can continue only if 33% of the common parts are present. It used to continue with no matter what % is present, now 33% has to be present (para 2)
- If there’s no 33% on the postponed GM, the GM is convened on the next day. If it is non-working day, the GM is convened on the first working day after that. (para 3 new). On the next day (second postponing), the GM can continue no matter how many owners have attended.
13. Changes to Art. 16:
- The notice that the GM minutes are ready has to be stuck on a public visible place in the building. A protocol is drafted, evidencing the sticking and it is signed by the manager and one resident/owner. The protocol consists of date and time of the sitcking the notice. A copy of the minutes is provided to owners upon request. Here we have a witness of the anouncing the minutes. This is important for appealing GM resolutions, since if no such sticking is done, or no formal protocol for it is signed, there is a formal legal ground for GM to be stopped from enforcing. (para 7)
- New changes has been introduced to the start of the term for contesting the GM resolutions. The procedure for sticking the notice to the door is removed from this regulation. The terms starts from the moment of sticking the minutes on the public place in the building. This clause saves time to the manager. Instead of going to each apartment door, they only make one notice in the building. (para 9)
14. Changes in all points of para 2 of Art 17. This concerns the majority for adoption of resolution on important matter:
- 100% majority is required for construction works for new floors, building attachments or establishing building rights in the common condominium land.
- 75% majority is required for removing an owner from its property for not more than 3 years period. The % of common parts of the removed owners are not added to those 75% and and taken in consideration.
- 75% majority is required for usefull expenses and receiving of credits.
- Few more points are created, specifying majority for resolution on different condominium matters.
15. I’m making this a separate point since the information is important and concerns the common parts calculation – one of the trickiest parts in condominium management. As I wrote before, developers are playing hard with this matter and sometimes lie about what common parts are owned by them and owners. Since a proper credible information about the common areas cannot be obtained from any government or local authority, this issue becomes very serious. The new paragraphs 4 , 5 and 6 try to bring some light to the subject, but in my opinion it is not enough. It’s unofficial translation, so I apologize if there’s nonsense in some sentences. I’m waiting for the official government translation into English.
(4) (New – SG. 57 of 2011) When the ownership documents of the individual objects in buildings in the condominium property are not specifying the respective shares of common areas, for the purposes of this law, the ideal parts for each individual site is defined as the ratio between the sum of the size of the individual object and storerooms, assigned to the object, divided by the sum of the area of ??all individual objects and assigned storage areas, thereby resulting number is converted into percentages.
(5) (new – SG. 57 of 2011) Under paragraph. 4 the established the ideal parts of common areas are based on data submitted by the owners or information under Art. 23, para. 1, p. 10, where:
1. sum of the percentages of undivided shares of the owners in common areas is not equal to 100;
2. management is carried in each input, and the sum of the percentages of undivided shares to the owners of the common parts in the input is equal to 100.
(6) (new – SG. 57 of 2011) all common parts set out under par. 4 and 5 are approved by the General Assembly by a majority of not less than two thirds of independent objects in the building entrance. The General Assembly may refuse to approve certain common parts only if an error in calculation.
Now, we can see that when the deed doesn’t state percentage, the calculation of each owner common parts percentage is calculated as a ratio between the total area of the owners premises (apartment, basement etc), divided to the sum of all areas of all individual premises the building. The ratio is converted to percentage and that is the common parts percentage which owner can use to vote on GM.
Note on the Owners associations
There are various changes in the law regarding the owners associations, registered according to this law. I’m not going in details about them because I think owners associations are rare in practice. This doesn’t concern the Owners Association, registered pursuant the Not For Profit Organizations Act.