Law on the Management and Maintenance of Buildings: According to the new proposal, the representative of the tenants does not have to be a co-owner

The government submitted the Proposal for the Law on the Management and Maintenance of Buildings to the first reading in the Parliament in August, after receiving as many as 980 comments during the consultation on this proposal. The legislator emphasized that the main reason for adopting this law is the imprecision of the existing legislative framework regulating this matter, which has resulted in difficult and ineffective management of buildings and hindered or prevented the fulfillment of owners’ obligations to maintain them in accordance with construction regulations. It was emphasized that the consequence of such a situation is a decrease in the quality and safety of housing, and thus the value of the individual parts of the building. All of this should now be eliminated or at least improved by adopting a new law. Although the media focus has mainly been on the topic of limiting the conversion of apartments into tourist apartments and other forms of short-term rentals, an important segment of the law is also the regulation of relations between co-owners of real estate and their representative.

How it is elected

The proposal stipulates that the representative of the co-owners can be one of the co-owners or a spouse or partner or a relative in a direct line of the co-owner living in the same building. The decision on their election is made by the co-owners by a majority vote. If the co-owners cannot agree that the representative of the co-owners be one of the previously mentioned persons, they can also elect a third legally capable person who has a residence or domicile in the city or municipality where the building is located. In that case, the decision on their election is made by the co-owners by a qualified majority.

In this way, compared to the previous solution where the representative of the tenants could only be a co-owner, the circle of persons who can be representatives of the co-owners has been expanded, and the possibility of electing a ‘professional’ representative of the co-owners in the form of a third person has also been introduced. The law prescribes the rights and obligations of the representative of the co-owners, but also the possibility of prescribing additional obligations and expanding existing rights through a co-ownership agreement. The mandate of the representative of the co-owners ends with their dismissal, resignation, or death. There is no prescribed term for which the representative can be appointed. If the co-owners do not choose their representative within sixty days of receiving a written warning from the manager, then the manager assumes the rights and obligations of the representative of the co-owners until the co-owners notify about the election of the representative of the co-owners.

Compensation for work

The law stipulates that a co-ownership agreement may provide for a monthly compensation for work and reimbursement of material costs for the representative of the co-owners. Such compensation may also be adopted by a decision of a majority of the co-owners. The law states that a representative who receives compensation for their work and grossly neglects their obligations is obliged to pay into the common reserve an amount ranging from one to a maximum of twelve monthly compensations received for their work and may be dismissed, or will be obliged to pay a higher amount if the damage caused by the negligence of the representative of the co-owners exceeds twelve monthly compensations. Such a provision may lead to the erroneous conclusion that a representative who does not receive compensation is not obliged to compensate for the damage. This representative of the co-owners would only not be able to assess the amount of damage as previously stated, but they remain responsible for the damage caused to the co-owners by their (non)action.

How to dismiss

The law prescribes the procedure for dismissing the representative of the co-owners in case of their gross neglect of obligations. To avoid any doubt, the law prescribes some examples of gross neglect of obligations. In these cases, co-owners who own more than 33 percent of the total value of the building are obliged to send a warning to the representative of the co-owners, specifying a deadline, which cannot be shorter than eight days, to act in accordance with their obligations. If the representative of the co-owners does not act in accordance with this warning, the co-owners may, but now by a majority vote, make a decision determining the gross neglect of the obligation by the representative of the co-owners and determine the amount of monthly compensations that they are obliged to pay into the common reserve according to the law.

Such a decision is, of course, not mandatory, and if the representative of the co-owners does not comply with it, the co-owners are authorized to initiate legal proceedings for collection against the former representative of the co-owners. In it, they will have to prove the basis and amount of the ‘penalty’ determined for the representative of the co-owners. It should also be noted that such a provision contradicts the right of the co-owners to immediately dismiss the representative by a majority vote without sending them a prior warning. It is also unclear why only 33 percent of the co-owners can send a warning. Does the warning from one co-owner have no power?