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The Latest Amendment Of The Act On Management Of Apartment Ownership - August 2011



Representation, quorums and voting:

Some good changes improve the rules for authorizing a third person to represent an owner: - except in written, a third owner or a member of the family (registered in the Book of Condominium Ownership, previously - Book of Owners) may be empowered by an owner orally, at the previous GA for the next one. In line with the Attorneys Act, solicitors may now be empowered by an owner with a written Power of attorney only, without a notarization.
A significant complication of the requirement for quorum has been adopted. According to the old regulation, if less than 67 % of the common areas are represented at the announced hour of the meeting, it may continue an hour later with as many shares as are represented. The new requirement is that an hour later at least 33% of the common areas are represented. If the reduced quorum is not achieved, the meeting of the GA can continue only the next day (unless it is a holiday or a day off), with as many shares as are represented.

There is no change in voting rights - every owner/user has a voting right proportionate to his/her share in the common areas. Like before, some decisions require a higher majority of votes of the common areas, others - an ordinary majority of more than 50% of the represented common areas.

Some new provisions allow for adoption of decisions with a qualified majority of 67% to 75% of the common areas - for release, postponing or spacing out of duties, for renovation, basic repair and for European, state or municipal funding, for connection to the heating, electricity, water or gas network or for cutting of the gas or heating connection of the condominium ownership.
An alternative way of estimation of voting rights:

We are particularly fond of this brand new section of the law, which fills a gap that was causing confusion and risk of objection and cancellation of any decision taken by a GA. We are about to see whether the present formulation of this amendment will work well, but it was necessary so having it in the law by itself is a step forward. It is well known that some notary deeds do not contain the relevant percent or sometimes not even the real figure of the common areas, adjacent to the property, subject of the notary deed. In such cases it is difficult or even impossible for an owner to make a precise estimation of his voting rights. Often the estimation would not even be correct, because the total percent of all common areas would not come to a 100%. Additionally, sometimes the percent of the common areas, stated in a Notary deed prove to be wrong either. In our practice we have had experiences of both types - accumulating the percents of common areas of all owners in the complex, as per their title deeds, did not make a total of 100%. On another case our attempt to fill a gap and estimate the percent, corresponding to the size of the common areas, stated in the notary deeds, ended with a final figure far from 100%.

Therefore the new legal provision, allowing the manager to estimate the percents of ideal shares of every owner when they have not been estimated, or to re-estimate them, when they have been wrongfully estimated, is timely and appropriate. The principle is simple and fair - the manager acquires information on the total size of each unit (including the servicing premises) from each owner or from the Cadastral agency. Then the size of each unit is divided to the total size of all units and the result is converted into percent (by multiplying to 100).

This way of estimating the percent of common areas adjacent to each apartment shall apply in three cases:
- When the percent of the common areas is not shown on the Notary deeds;
- When the percent of the common areas is shown on the Notary deeds, but the total percent of all common areas is not equal to 100;
- When in a complex with several entrances, separate management of each entrance applies and the total percent of all common areas in this entrance is not equal to 100;
The estimation, done by the manager/management council, is subject to approval by the General Assembly, where this is the only case, provided in the law, when each independent unit gives one vote for its owner. The required majority is 2/3rd. Refusal to approve the estimation is allowed only in case an estimation mistake was made.

The Owners Association:

When the Act on Management of Condominium Ownership was first adopted in 2009, the Owners Association was introduced for the first time as a specific type of legal entity of non-commercial purpose. The idea was good, because the Owners Association, being registered in a special register, would be more recognizable by authorities and third parties, than the standard managing bodies of condominium ownership. The great problem which practically deprived this regulation from functioning was the requirement for unanimous decision of all owners to constitute the Owners Association, as well as the very high risk of its quick and easy dissolution if only one owner resigned of it.

The long awaited change of these strict requirements finally took place and some clarifications of the purposes and functions of the Owners Association were introduced as well.

According to the changes, a majority of owners, representing 67% of the common areas is required to constitute an Owners Association. Respectively, it will be dissolved if the resigning of an owner leads to a lower percent of the common areas represented. Another important amendment is the possibility for owners in a separate entrance to constitute their own Owners Association.
Furthermore, it is clarified that the Owners Association may be constituted for the purpose of acquiring European, State, Municipal or alternative funding or for the expenditure of their own funds for repair and renovation. It is also provided that the Owners Association may be constituted for the execution of any other activities related to the management of condominium ownership and that it may be created only for the purposes of the Act.

Article was written by Asya Mandjukova (Ms.) Attorney at law.

The subject is complicated so if you have further queries from this article please contact Asya.

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