Co-ownership: powers and limits of the trustee in respect of advances and charges
One of the main tasks of a trustee is the financial management of the condominium. This is an important and delicate task both because the trustee is called upon to manage funds that do not belong to him. Today, we will examine the scope and limits of the trustee's power over co-owners' advances and expenses, while as manager of the immovable, the trustee receives these funds on behalf of the co-owners. and must recover outstanding debts.
I. The scheme of advances and provisions
A. Provisions under the jurisdiction of the trustee
The Grand-Ducal Regulation of 13 June 1975 laying down implementing measures for the amended law of 16 May 1975 on the status of co-ownership of immovables empowers the liquidator, under specific circumstances, to ask the co-owners for certain advances from which he may even fix the amount - if any, subject to a ceiling - and which are as follows.
- Provision at the beginning of the year
At the beginning of each fiscal year the trustee may require from the co-owners a provision which, subject to the provisions of the co-ownership by-law or, failing that, of the decisions of the general meeting, may not exceed one quarter of the estimated budget voted for the fiscal year considered, half of this budget if the co-ownership regulation does not provide for the payment of an advance to the reserve fund.
- Reimbursement of in-year expenses
During the financial year, the trustee may demand the payment of an amount corresponding to the reimbursement of expenses regularly incurred and actually paid, ie quarterly provisions which may not exceed one-quarter of the budget for the financial year in question.
- Special provisions
The trustee may also require special provisions to enable the execution of decisions of the general meeting, such as to carry out the work provided for in articles 26 to 32 of the law of May 16, 1975 on the co-ownership, in the conditions laid down by the decisions of that assembly. This is p. ex. improvement work on the building, or reconstruction of the building after partial or total destruction.
- Provision in case of emergency for the safeguarding of the building
Finally, when in case of urgency the trustee has the necessary work done to safeguard the building, he can ask immediately and without prior decision of the general meeting, but asking the opinion - and not the authorization - the union council, if there is one, the payment of a provision which may not exceed one third of the amount of the estimate of the work, this for the opening of the site and its first supply.
B. Advances to be set by the General Assembly
- Monthly advances on charges
Each co-owner is required to pay a share of the costs of the condominium. This is usually done by means of monthly advances, with the balance to be paid later when the final statement is drawn up.
It is the only general meeting of co-owners and not the trustee that sets the amount of these advances. The trustee is in principle only responsible for their collection and accounting.
Sometimes a trustee determines the amount of monthly advances against expenses or increases the amount decided by the general meeting. Such a practice is illegal and has no effect. A co-owner to whom a trustee claims an advance on charges different from that voted by the general meeting is entitled to oppose paying the surplus requested by the trustee and the trustee can not proceed to a judicial recovery against the co-owner in question.
It would be otherwise only if a delegation of powers to fix the amount of the monthly advances had been granted by the general meeting of the co-owners to the syndic. It should be noted that the general meeting may indirectly modify the amount of the advances by the adoption of the provisional budget, without a special vote on the advances.
- Advances for the reserve fund
The trustee may request a permanent cash advance, if this is provided for in the co-ownership by-law. These are co-owners' contributions to the reserve fund. In case of silence of the co-ownership regulations, such an advance may be requested by the trustee only on the basis of a decision of the general meeting.
II. Collection and collection of debts
A. Collection of advances and balances
The collection of advances on charges and the balance after the adoption of the statement is the sole competence of the trustee.
Since the contributions of the co-owners are the only financial resources of the co-ownership, the trustee will have to take special care that the co-owners pay their advances, so that the cash of the co-ownership is always as it can to face current expenses so as not to risk one day being exposed to legal actions.
Advance payments are due even if prior years' accounts have not yet been approved, or if an appeal has been lodged against the approval decision. The same must apply in the event of an appeal against the decision which fixed the advance itself.
Unless the co-ownership regulations provide otherwise, the sums due in respect of the above payments that the trustee may require bear interest for the benefit of the syndicate. This interest is fixed at the legal rate in civil matters and is due from the notice sent by the trustee to the defaulting co-owner.
The general meeting decides, if applicable, how to invest the funds collected from the co-owners by the trustee.
The co-ownership by-law or a decision of the general meeting may set a maximum amount of funds that the trustee may be exempted from paying into the syndicate account and may keep for current expenses. Obviously he will have to give an account of it.
B. Recovery of debts
- Extent of the trustee's jurisdiction
On pain of jeopardizing his contractual liability to the syndicate of co-owners, the trustee must proceed to the recovery of the co-owners' debts in the event that the co-owners who are in debt do not pay their debts.
The law of May 16, 1975 on the co-ownership exempts the trustee in this matter from any obligation of authorization of the general meeting, even if it proceeds by way of forced execution. He proceeds in his own right, in his own right, on his own initiative.
- Common law means of recovery
To recover the claims of the co-ownership, the trustee may use all the arsenal provided for in this matter by the ordinary law: the action for recovery itself by judicial action before the courts, enforcement proceedings (payment order, attachment, execution, foreclosure, furniture distress, etc.) and provisional measures pending the outcome of the action on the merits.
- Registration of the legal hypothec
The union's claims of any kind against each co-owner are guaranteed by a legal hypothec on his lot, whether for advances or final settlement. In order for the mortgage to be registered, the debt must be due and the trustee must first have put the co-owner debtor on notice, without result, to pay it. If these conditions are met, the trustee is entitled to have the mortgage registered on behalf of the syndicate.
This is the case even if the co-owner disputes these advances or this count; however the protesting co-owner as well as any defaulting co-owner has the possibility, even in the case of a suit in the main proceedings, and on the condition of making an offer of payment or offering an equivalent guarantee, to request the total or partial release of this legal hypothec at president of the district court ruling as in matters of interim relief. It should be noted that no additional registration or registration under this legal hypothec can be requested for claims that have been due for more than 5 years.
The trustee also has after quality - alone and without the need for prior authorization - to release the mortgage or ask the cancellation in case the debt is paid; according to the civil code the latter must also be done in a notarial act, respectively an authentic deed so that the trustee can not consent in a simple act under private seal.
The mortgage in question ranks from the day of its registration. It is important for the trustee to register it in due course. A late registration could, if necessary, expose the trustee to a claim for damages from the co-ownership.
- Privilege of the lessor
The syndicate's claims in respect of a co-owner also benefit from the lessor's privilege provided for in Article 2102 (1) of the Civil Code. Recall that the privilege is the right to be paid first in case of sale; it does not allow the creditor who benefits from it to appropriate these objects without going through the enforcement procedure. The privilege relates to "all that garnishes the premises, that is to say the furniture, except in case the apartment has been rented out unfurnished. It is the trustee who exercises the rights attached to the lessor's lien on behalf of the syndicate of co-owners. If the furniture is removed, the trustee has 15 days to claim it for the union, or the union loses its privilege.
On the other hand, if the co-owner's lot is rented "unfurnished", the union's privilege is deferred to the rents owed by the tenant, contrary to what is the case for a furnished rental.
However nothing would prevent the trustee to practice a garnishment in the hands of the tenant even in case of lease of a furnished apartment.
- Opposition in case of sale of a lot
Finally, in the event of the sale of his share by a co-owner, the law of May 16, 1975 requires the seller to request from the trustee a certificate in which the trustee certifies that the seller is free from any obligation towards the trustee; otherwise, the trustee must be notified by the purchaser of the transfer by sending a registered letter with acknowledgment of receipt.
In practice the requisition of the certificate or the sending of the notice are often executed by the notary in charge of the sale. The purpose of this measure is to give the trustee the possibility of forming an opposition to the payment of the price in the hands of the notary for the sums of which the seller is still indebted to the co-ownership; the relevant amount will thus be blocked and the trustee may bring a legal action for the sum to be attributed to the co-ownership, unless the co-owner seller himself agrees that the sum in question be paid to the condominium for settlement of his debt.
It is important to know that the purchaser of a lot is jointly and severally liable with the seller for the charges remaining due for the fiscal year closed and the months of the current fiscal year, and therefore for all the expenses of the year in course as well as fees from the previous year! For the recovery of these expenses, the trustee can indistinctly ask for payment either to the seller or to the purchaser.
If the trustee has filed an objection within the time limit, or if the transfer notice has not been given to the trustee, no payment or amicable or judicial transfer of all or part of the sale price will be binding on the trustee who must request then in court the validation of the opposition. It should be noted that the obligation of the certificate, or of the notice in question, is only provided for ordinary sales and not in the case of a judicial sale.
By Lex Thielen, Attorney at the Court.