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New Laws: Bulgarian Apartments Part Two

Owners of Bulgarian apartment property are informed further on the changes in law regarding condominium ownership and management in part two of our article. In part one on Bulgarian apartment and condominium law changes, which was hopefully interesting, informative and useful to all readers, we introduced the main differences between the new Act on the Management of the Condominium Ownership (the “Act”), applicable as of 1 May 2009, and the old Regulations, where a comparison between the new and the old provisions, regulating the same matters, was made. The article also dealt with some omissions and significant disadvantages of the new regulations, which could be noticed at first glance, without it even being necessary to experience their application before knowing whether they are good changes or not.

Regretfully, just a couple of months later, one major legislative change, which we defined as disadvantageous, already showed its “results”!  As we suspected, the new voting rule, according to which voting rights correspond to the ideal shares of the respective owner, has put all small investors in gated holiday complexes in our resorts in a very unfavourable position. This has been particularly true where the developer has been left with many units unsold and therefore a respectively large percentage of the ideal shares, as they have a greater financial interest in controlling the residential complex. This not only arises from their larger ownership right but also from the business intention to provide maintenance and management of the complex.

So, as promised, here are the main new legal standings, introduced with the new Act:

Explicit rules for preparation of the protocol for the General Assembly

A generally positive new regulation, which was missing in the old Acts and Regulations, is the explicit set of rules for the preparation of the protocols of the meetings of the General Assembly (Art. 16, Par. 4 – 9).

The protocol of the meeting is prepared by a secretary, chosen amongst the owners, attending the meeting by the proposal of the chairman of the meeting, with ordinary majority. The protocol must contain the date and place of the meeting, the set agenda, the attending owners/representatives and the respective ideal shares of the common area which they represent which determine their voting rights, a record of the announcements, the proposals and adopted decisions.

The protocol is to be prepared within seven days of the meeting and is to be signed by the chairman and the secretary. If either of them refuses to sign the protocol, this must be noted in it. The owners must be notified within the same term of the prepared protocol and the notification must be conducted under the same rules regulating the calling of meetings. The notification must be placed in a visible place in the condominium ownership as well. The Manager must provide the protocol or a copy thereof to any owner by demand.

This means obviously that owners must only be notified, but not directly provided with a copy of the protocol, within the term set above. This may in certain cases affect the owners’ ability to object to the content and authenticity of the protocol, because the term of objection is only 7 days as from the notification, but not later than one month from the placing of the notice on the door of his apartment, when the owner is missing. The objection itself must be prepared in writing and addressed to the Manager/Management Council. This new regulation is a good start for putting in order the delicate relations between condominium owners, but features the same deficiency which marks the whole act – that of being incomplete.

The Act does not say what happens if any owner objects to the protocol – is the manager obliged to take notice of the objection and make a decision? if the answer is yes, how is the manager’s decision going to be controlled? What happens if the protocol is amended upon the objection of an owner? Does the manager have to notify all owners again that the protocol is amended and are they in such a case entitled to an additional term of objections of the new protocol? Abuse is possible in both directions – by an unconscientious secretary or by an unconscientious owner. The practice shows that these concerns and suspicions always accompany the management of apartment ownership, therefore the legislator should not have left such unresolved matters, relying on mutual trust and good faith between owners.

Book of owners – the old new rule

The Book of owners is not something new to our regulation of apartment ownership. During the communist period in Bulgaria every separate entrance was obliged to have a “home book”, containing personal details of all owners and habitants, which was controlled by the Police. After the “changes” in 1989 the “home book” was revoked together with many other instruments, defined as “communist” and “police” measures, which violated privacy of personal details. The result of this was that there was no legal way to find out who lived in any apartment and who could be chased to cover common expenses or bear any other responsibility.

Now art. 7 of the Act provides that “a Book of Owners” must be kept in every building or an entrance and must contain the full names of the owners and his family members or other inhabitants, the occupied unit and the starting date of occupation. The entering of the details in the Book is due within 15 days from acquiring ownership or the starting date of occupation for occupants. For protection of personal details, only the Manager/Council of managers, the control organ (if any is elected), some state and local municipal authorities and the owner regarding his own details, have access to the book.

The details of the Book of owners must be presented by the Manager/Council of managers upon obligatory registration of the building or the separate entrance in the special public Registry of buildings in regime of apartment ownership. This registration is obligatory according to art. 44 of the Act and only as recently as 3 July 2009, the overdue Ordinance regulating the creation and keeping of the public Registry and the set of rules for registration was published in the State Gazette.

The registration is free of charge and is within the obligation of the Manager/Council of managers. Since there is no explicit clause to provide whose obligation it is to prepare and keep the Book of Owners, my conclusion is that again the Manager/Council of managers must have this obligation. The Book of owners, if kept properly, will help in finding who are the owners of units in one building or entrance which is often a problem in holiday residential complexes and puts any decisions or meetings at risk of being appealed due to breach of someone’s rights. The Book of owners however will not provide details on the respective ideal shares of the common areas of every owner, so the problem of finding what voting rights every owner has will remain, because investors in most cases (and often intentionally) do not provide any architectural plans or tables showing the ideal shares adjacent to every separate unit.

 

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