Management of the common property is one of the main problems faced by owners of residential premises. Towards the end of last year, there appeared a problem on the judicial agenda of seeking compensation by a condominium and its right of action in such matters. What conclusions follow from that case?
When analysing the existing – still unstable – case-law regarding a condominium, one can reach the conclusion that its rights are practically identical with the claims held by its individual members. This thesis may seem wide-ranging, but it is a logical consequence of the judicial practice concerning operation of condominiums.
Method of management of the common property
In the first place, it should be noted that according to the Apartment Ownership Act, in a contract establishing separate ownership of premises or in an agreement concluded later in the form of a notarial deed, co-owners may determine the method of management of the common property, especially by entrusting the same to a natural or legal person. The method of management of the property established in such way is effective also vis-a-vis each acquirer of subsequently separated premises. However, if the number of separated and non-separated premises is higher than seven, their owners are obliged to adopt a resolution electing a single- or several-person management. Its task is to manage the affairs of the condominium, to represent it both outside and in matters between the condominium and its individual residents.
The acts undertaken by such management were divided by the legislator into acts of ordinary management and acts beyond ordinary management. In the latter group – requiring a resolution by apartment owners – the legislator listed, among others:
- fixing the fees covering the costs of management,
- division of the common property,
- change of use of a part of the common property,
- acquisition of a new property.
As a rule, resolutions are passed by a majority of votes, taking into consideration the volume of shares. They can bee adopted at a meeting or by correspondence.
Right of action of the condominium and its individual members
The Voivodeship Administrative Court in Warsaw, in the judgment of 2 August 2017 (file reference VII SA/Wa 2160/16), referring to well-established administrative court practice, concluded that in matters concerning the common property interests of an individual co-owner are protected by the condominium acting through its management or a court-appointed administrator. At the same time, the Court held that the above does not preclude independent participation in such proceedings of particular members of the condominium (although this makes an exceptional situation depending on substantiation of one’s own individual legal interest). That is why the interests of members should be considered from the point of view of the interest of the entire condominium. In consequence, according to the Voivodeship Administrative Court in Warsaw, legal and factual acts, matters handled before offices, courts which relate to the common property are a competence of the condominium representing the interests of apartment owners. In the context of administrative litigation, this is not an isolated opinion, which is manifested, for instance, by the judgment of the Supreme Administrative Court in Warsaw of 13 April 2016 (file reference II OSK 1325/15). The Court pointed out that challenging a decision setting out development conditions for an adjacent property precludes the conclusion that such decision may refer to individual interests of apartment owners. In this connection, in matters relating to the common property, the party to administrative proceedings should be the condominium, and not its individual members.
A similar logic, although not entirely consequently, was followed by the Court of Appeal in Białystok, which, on 20 December 2017, decided a case (file reference I ACa 663/17) concerning legality of a housing cooperative ordering its members to pay contributions for a court fee on the suit initiating proceedings against a developer. The action was to be brought for compensation for defects in a building, such as unduly performed elevator shafts or lack of heat and water insulation. The plaintiffs who did not wish to participate in the proceedings for compensation requested that the resolution be set aside. The I instance court concluded that such resolution does not fall within the scope of management of a common property and interferes with rights of individual members and, as such, violates the Apartment Ownership Act. In the opinion of the court, the situation would be different if the plaintiffs assigned their rights to the condominium. Such view was not shared by the Court of Appeal, which remarked that in a situation when most of the creditors assign their receivables against the developer to the condominium, the acquisition relates to management of the common property. Although the resolution, as noted by the court examining the case, compromised the interests of its opponents, such interests could be taken into consideration only in a situation of a gross disproportion between the interest of the condominium and its individual members. At the same time, the Court pointed out that success in such litigation would bring about an actual improvement in the position of all the co-owners and, as a result, such process should not take place at the expense of only some of the co-owners. However, in the cited judgment, the Court held that the condominium’s right of action was contingent on the condominium being assigned the receivables of its members.
Is assignment necessary?
In the context of the decision discussed above, one may consider if it is necessary for the initiation of such proceedings by the condominium that its members assign to it their receivables. It is worth reminding that the Supreme Court in some of its rulings (e.g. in the judgment of 15 October 2008, file reference I CSK 118/08) held that assertion of claims relating to physical or legal defects of a property falls beyond the scope of the property’s management, and only assignment of receivables by individual owners authorizes the condominium to sue. At the same time, the Supreme Court found that the situation is different with regard to claims for removal of a defect of a common thing, which can bee asserted independently by each co-owner. This means that assignment of such receivable even by a single member of the condominium is sufficient to substantiate the condominium’s locus standi in the proceedings.
However, such views should be considered incorrect. If the condominium is to manage the common property, its obligations comprise not only ongoing “servicing” of the property but also remedying all its defects. As a result, upon adoption of proper resolutions, the condominium has the locus standi both regarding an action for compensation and for removal of defects. As justly concluded by the Voivodeship Administrative Court in Gdańsk in its judgment of 12 April 2005 (file reference II SA/Gd 155/05), a condominium should be regarded as the total of apartment owners acting jointly, by operation of law, in respect of acts pertaining to statutory co-ownership of the common property. And since, under statutory provisions, a condominium acts by passing resolutions by majority vote, in the event of their adoption, the condominium gains the right of action concerning all claims relating to the common property. Such conclusion also seems to follow from the case-law of administrative courts cited in this article.