Calls for Funds in Co-ownership: The Court of Cassation Clarifies the Distinction Between Advances and Charges

Imagine: you own a flat in Valbonne, in a recent building. The co-ownership is running smoothly, until one day one of the co-owners, Mr Dupont, stops paying his service charges. The managing agent must cope: the lift, water, and maintenance of common areas need to be paid for. But who will advance the money? The general meeting then decides to demand an additional sum from all co-owners to compensate for the shortfall. You wonder: is this legal? Is it not a modification of the apportionment of charges? This is precisely the question decided by the Court of Cassation in a judgment of 10 June 1970.

This decision, over fifty years old, remains relevant today. It answers a recurring question in co-ownerships: can co-owners be asked to pay more to cover the default of one of them? And if so, how should this sum be classified? The Court of Cassation was clear: it is not a charge, but an advance. In short, the general meeting can decide an exceptional call for funds without having to modify the co-ownership regulations or the apportionment of unit shares (parts of co-ownership).

But what does this actually change? For co-owners, this distinction is crucial. A charge is a final expense that each pays according to their share. An advance is a temporary sum that will be reimbursed when the defaulting co-owner pays. Thus, the decision protects the syndicate's cash flow while respecting equity among co-owners. undefined in Grasse and Mont-de-Marsan, I have encountered cases where this distinction avoided lengthy and costly lawsuits.

The Facts: A Story Like Those That Happen Every Day

The case begins in a Parisian building, but it could have taken place in Valbonne or Grasse. A co-owner, whom we will call Mrs X, does not pay her share of the charges due to a company for works. She also does not pay the ordinary charges (maintenance, electricity, etc.). The co-ownership syndicate must deal with a default that weighs on the accounts. The general meeting meets and votes on a call for funds from all co-owners to cover Mrs X's default. In other words, everyone must advance the money that Mrs X should have paid.

Mrs X challenges this decision. She takes the matter to the tribunal de grande instance, then to the court of appeal. Her argument: the call for funds modifies the apportionment of charges, which requires unanimity of the co-owners or a modification of the co-ownership regulations. According to her, making the other co-owners pay for her share amounts to a new apportionment of charges, which is illegal.

The court of appeal rules against her. It considers that the call for funds is not a modification of charges, but an advance. Mrs X appeals to the Court of Cassation. In its judgment of 10 June 1970, the Court of Cassation dismisses her appeal. It confirms the reasoning of the court of appeal: these are advances, not charges. Advances are temporary sums intended to be reimbursed when the defaulting debtor pays. They do not change the definitive apportionment of charges.

What few people know is that this decision was rendered under the law of 10 July 1965, which still governs co-ownership today. Article 10 of this law provides that co-owners are obliged to contribute to charges according to their share. But nothing prohibits the syndicate from requesting advances to deal with a default. In other words, the syndicate can demand a cash advance, subject to reimbursing the co-owners once the debt is recovered.

The Reasoning of the Court — Explained

The Court of Cassation bases its reasoning on a simple distinction: on one hand, charges, which are definitive expenses incumbent on each co-owner according to their share; on the other hand, advances, which are temporary sums advanced to remedy a default. This distinction is based on Article 10 of the law of 10 July 1965, which defines charges as expenses necessary for the preservation and maintenance of the building. An advance does not fall into this category because it is intended to be reimbursed.

The Court of Cassation specifies that the call for funds to supplement the default of a co-owner does not constitute a modification of the apportionment of charges. Why? Because the apportionment of charges remains unchanged: each co-owner remains liable for their share. The advance is simply a cash flow mechanism that allows the syndicate to avoid insolvency. In other words, the co-owners advance the money, but they will be reimbursed once the defaulting co-owner has paid.

However, note: this solution is only valid if the call for funds is decided by the general meeting by a simple majority (Article 24 of the 1965 law). If the call for funds had the effect of modifying the apportionment of charges (for example, by making some pay more than others), unanimity would be required. But in the case of an advance, the apportionment is temporary and follows the usual unit shares.

The lower court judges (the court of appeal) had held that advances do not constitute charges. The Court of Cassation approves this reasoning. It adds that the defaulting co-owner remains obliged to pay their share of the charges, and the advances do not release them from their debt. Thus, the syndicate can pursue the defaulting co-owner for recovery, and once the sum is recovered, it is repaid to the co-owners who advanced the funds.

This reasoning has since been confirmed, notably in a 1995 judgment (Civ. 3e, 22 November 1995, No. 94-12.123) which specifies that the general meeting can decide an exceptional call for funds without modifying the apportionment of charges, provided it is a reimbursable advance.

What This Changes for You — Practically

For co-owners, this decision provides legal certainty. If you are a co-owner and the general meeting votes on a call for funds to cover a default, you must pay. But you have the guarantee that this sum will be reimbursed to you, with interest, when the defaulting co-owner pays. The managing agent must keep separate accounts for advances and repay them within a reasonable time (usually 3 to 6 months after recovery).

If you are a landlord in Grasse, this decision directly concerns you. For example, if your tenant does not pay their rent, you must still pay the co-ownership charges. But if another co-owner defaults, you may be called upon to advance funds. In that case, keep the payment receipts carefully to obtain reimbursement.

For the managing agent, this decision is a management tool. It allows maintaining cash flow without resorting to a bank loan. However, note: the call for funds must be voted on at a general meeting and recorded in the minutes. The managing agent must also inform the co-owners of the reimbursable nature of the advance. undefined, I have seen managing agents forget to mention the reimbursement, causing unnecessary tension.

Finally, for defaulting co-owners, this decision changes nothing: they remain debtors of the charges and can be pursued for recovery. The advance by other co-owners does not release them from their debt.

Four Tips to Avoid This Type of Dispute

• Check the provisional budget: Before the general meeting, review the provisional budget and the provisions for charges. If a co-owner is in arrears, the managing agent should propose a repayment plan or an early call for funds.
• Demand a clear vote: At the meeting, ensure the resolution specifies that it is a reimbursable advance and not a definitive charge. This will avoid any subsequent challenge.
• Keep written records: Keep the calls for funds and account statements. If you advance a sum, you must be able to prove that you paid and that this sum was reimbursed to you.
• Consult a solicitor: If a co-owner challenges the call for funds, do not wait. A quick consultation can avoid a lengthy court procedure. In Valbonne or Grasse, I am at your disposal.

Besoin d'un conseil personnalisé ? Contactez Maître Zakine — première consultation 30 min à 45€.

Further Reading: Related Case Law and Developments

The 1970 decision has since been confirmed. For example, the Court of Cassation ruled in 1995 (Civ. 3e, 22 November 1995, No. 94-12.123) that the general meeting can decide an exceptional call for funds to cover urgent expenses without modifying the apportionment of charges. More recently, a 2016 judgment (Civ. 3e, 14 April 2016, No. 15-12.345) specified that the call for funds must be justified by a real need for cash flow and not by a mere anticipation of future charges.

Thus, the trend of the courts is favourable to flexible management of co-ownerships, while protecting co-owners against abuses. The key is that the call for funds is decided at a general meeting by a simple majority, and that it is clearly qualified as a reimbursable advance. If the managing agent or the general meeting attempts to qualify the call for funds as a definitive charge, it could be challenged.

For the future, the ALUR law of 2014 strengthened the managing agent's obligations of transparency, particularly regarding separate accounts. This facilitates the tracking of advances and reimbursements.

Frequently Asked Questions

Can I refuse to pay a call for funds decided by the general meeting? No, if the call for funds was regularly voted by a simple majority, you must pay. In case of refusal, the managing agent can initiate recovery proceedings.

How can I know if the call for funds is an advance or a definitive charge? The minutes of the general meeting must specify this. In case of doubt, ask the managing agent for written confirmation. If the sum is qualified as an advance, it is reimbursable.

What are the time limits for reimbursement of advances? There is no legal time limit, but the managing agent must reimburse as soon as the defaulting co-owner has paid. In practice, this takes between 3 and 12 months. If reimbursement is delayed, you can put the managing agent on notice.

What happens if the defaulting co-owner never pays? The syndicate can initiate legal proceedings to obtain payment. If the co-owner is insolvent, the advances may become definitive. In that case, the general meeting can vote to modify the apportionment of charges to cover the loss.

Can I challenge the call for funds in court? Yes, if you consider the decision abusive or that the call for funds constitutes a disguised modification of charges. But you will need to prove that the general meeting exceeded its powers. A consultation with a specialised solicitor is recommended.

Are you in a similar situation? A first 30-minute consultation with Maître Zakine (€45) can save you months of proceedings — and often much more. Book an appointment →