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MANAGING A CO-OWNERSHIP BUILDING

When a building is consisted of more than one apartment and of other separate units (e.g. commercial area, garages) and the allocation to condominium units has been conducted, every owner of certain apartment or other separate unit of the building, is also a co-owner of the shared areas of the building (staircase, elevator, roof, yard…). Each owner has the right, but more so, the obligation to keep their unit up to date and to maintain it in such a manner that it brings no harm to other units within the building.

Regarding the shared area, it is laid down by law that co-owners of buildings consisting of three or more apartments or other separate units are obligated to organize management of the building, i.e. to appoint the manager of the building and to set up shared expense fond.

In case the co owners didn’t appoint the manager, the governing body of the municipality will appoint a physical or legal entity to manage the building (Constraint manager).

Manager of the building can be a physical or legal entity licensed for such activities. He is appointed by the co-owners who hold more than 51% of proportional co-owner shares, through a co-ownership agreement. Detailed description of his duties is set by the management contract that is entered into by the majority of co-owners or by the tenant’s representative.

Tenant’s representative is a co-owner authorized to represent co-owners in front of the manager of the building, i.e. third parties and is appointed by the co-ownership agreement.

The manager manages the real-estate representing all co-owners within the limits set by the co-ownership agreement; he also represents co-owners in court procedures and in front of other legal entities. Since the manager of the building is a mandatary, the regulations governing mandate contract are applicable on the relation between co-owners and the manager as well.

Co-ownership agreement is an agreement entered into by co-owners by which they regulate all mutual relations regarding usage and management of the real estate. This agreement is signed by the majority of co-owners and it is binding for all co-owners, even those who are yet to become co-owners (e.g. by buying an apartment). This agreement serves to:

– appoint the tenant’s representative and set the limits on his powers

– appoint the manager of the building and define the perimeters of his duties

– set terms for collecting and managing the shared expenses fond

– determine other relative factors e.g. proportion of co-owner shares, terms and conditions of usage of common areas

It is well advised to precisely establish jurisdiction and duties of tenant’s representative in this agreement, while the powers and duties of the manager of the building should be comprehensively elaborated in the management agreement.