New act on building management and maintenance

The new Act on Building Management and Maintenance introduces a range of measures aimed at improving the condition of multi-apartment buildings in Croatia, many of which are poorly maintained, causing numerous problems for co-owners, including financial difficulties.

Since the Act on Ownership and Other Real Rights came into force in 1997, there have been no detailed legal regulations for building maintenance. Instead, its rules were supplemented by the Regulation on Building Maintenance, which addressed only some aspects of maintenance.

These previous provisions have proven legally inadequate and unsuitable for the complex issues of building management. The new act aims to establish more clear rules and procedures to facilitate the maintenance and improvement of multi-apartment buildings.

It will take effect on January 1, 2025.

Key changes

The new act will regulate the management and maintenance of multi-apartment buildings, residential-commercial buildings, and commercial buildings, as well as the relationships between stakeholders in this field.

It provides clear definitions of common parts of buildings, the minimum amount and method of payment for shared reserves, maintenance of common parts, building management, and the rights, obligations, and responsibilities of building managers, co-owner representatives, and co-owners.

The concept of a “Co-owners’ Community” is introduced, consisting of all owners of condominium ownership withing the building.

This community will have its own personal identification number (OIB) and legal personality and will be registered in the Register of Co-owners’ Communities. The goal of this is to speed up administrative and legal processes and make it easier to apply for various funds (e.g., facade renovation, energy efficiency funds, etc.).

To address observed shortcomings regarding the required majority for certain decisions and works in building management and maintenance, the act reduces the required majority for specific decisions:

• · Emergency repairs: Approval of the co-owner representative and co-owners owning more than 20% of the building’s total usable area or more than 20% of co-ownership shares recorded in the land register.
• · Necessary repairs: Approval of the co-owner representative and co-owners owning more than 33% of the building’s total usable area or more than 33% of co-ownership shares recorded in the land register.
• Selection of co-owner representatives: A simple majority.

The act also introduces a series of penalties for violations committed by buildingmanagers, contractors, and co-owners:

• Building managers may be fined for failing to register the Co-owners’Community, failing to open a dedicated account, or failing to ensureemergency repairs within three hours of notification.
• Co-owners may be fined for unauthorized works, such as covering orenclosing balconies, loggias, and terraces, or installing cooling, heating, orantenna systems on building facades.
• Contractors may also be fined for unauthorized works, such as enclosingbalconies or installing systems on facades.

Buildings with at least three floors will be eligible for a special program to installelevators, with the state covering 33% of the installation costs. Additionally, due tothe poor condition of building facades in city centers, a special facade renovationprogram will also receive 33% state co-funding.

However, one of the most talked-about changes is the restriction on convertingapartments into tourist accommodations or other forms of short-term rentals,including renting to workers.

Written consent from a qualified majority of co-owners(80%) will now be required for such activities.

Additionally, consent must also beobtained from owners of apartments whose walls, floors, or ceilings are directlyadjacent to the unit in question.

Furthermore, any co-owner renting their apartment for short-term purposes or toworkers will be required to pay double the reserve fund contribution.

The rationale forthis provision is that such uses negatively impact the living quality of all co-ownersand tenants and reduce the housing stock that is available for long-term residentialpurposes, which is a fundamental human need. By enforcing this measure, the actaims to increase housing availability and reduce the consumption of the existinghousing stock for non-residential purposes.