Condominium: A Member of a Share-Allocation Company May Chair the Meeting

Imagine the scene: you are in Cannes, in an upmarket holiday home, and the general meeting of unit owners must elect its chair. Among the candidates is a representative of a share-allocation company (a structure holding several units on behalf of its members). Some unit owners are outraged: "How can a mere member chair our meeting? He is not even an owner in his own name!" The question is legitimate, and it came before the courts. In a judgment of 6 March 2002, the Court of Cassation ruled: yes, a member of a share-allocation company may be elected chair of the meeting, provided that company owns units in the condominium. Explanation.

But what does this actually change? For condominiums where share-allocation companies hold units (common in holiday resorts or buildings divided into rented apartments), this decision clarifies the governance rules. It avoids sterile deadlocks and allows effective representation of collective interests. In short, the right to vote and eligibility follows ownership of the units, regardless of whether the owner is a natural or legal person.

This article analyses the case, explains the judges' reasoning, and gives you practical tips to avoid conflicts in your condominium, whether you are in Antibes, Cannes or elsewhere. Because condominium law is often a matter of shares (condominium shares) and representativeness.

The facts: a story that happens every day

The case begins in a condominium where a share-allocation company – let's call it "SCI Les Palmiers" – owns several units. This company was formed by several people who pooled their assets. At a general meeting, a member of the SCI, Mr Dupont (fictitious name), stands for election as chair of the meeting. Some unit owners object: according to them, Mr Dupont is not a unit owner in his own right; therefore he cannot exercise a function that requires being a "unit owner" in the strict sense. The disagreement is sharp: voices are raised, the session is heated, and ultimately Mr Dupont is not elected.

The SCI Les Palmiers then takes the matter to the tribunal de grande instance to have its member's right recognised. At first instance, the judges rule in favour of the objectors: they consider that only the company's legal representative (its manager) may attend meetings and be elected chair. The SCI appeals. The court of appeal reverses the judgment: it holds that each member of a share-allocation company has the right to attend the meeting under the same conditions as an individual unit owner, and therefore may be elected chair. The dissatisfied unit owners appeal to the Court of Cassation.

On 6 March 2002, the Court of Cassation dismisses the appeal. It confirms the appellate decision: "The member of a share-allocation company that owns units in a condominium may be elected chair of the meeting provided that, pursuant to the mandatory provisions of Article 23 of the Law of 10 July 1965 and Article 12 of the Decree of 17 March 1967, each member participates in the general meeting under the same conditions as unit owners where several units are allocated to persons who have formed a company owning those units." In other words, the status of member of a share-allocation company confers the same voting and eligibility rights as that of a direct unit owner.

The court's reasoning — explained

To understand this decision, we must look at the texts. Article 23 of the Law of 10 July 1965 sets out the voting rules in a condominium: each unit owner has a number of votes proportional to his share (his shares). Article 12 of the Decree of 17 March 1967 specifies that the chair of the meeting is elected from among the unit owners present or represented. The crux of the issue: is a member of a share-allocation company a "unit owner" within the meaning of these texts?

The Court of Cassation answers in the affirmative, relying on a specific feature of share-allocation companies. These companies, often SCIs (real estate civil companies), are created to hold units in common. The members do not own the units individually, but they have rights over the company's assets. However, the law provides that where several units are allocated to persons who have formed a company owning them, each member participates in the general meeting under the same conditions as unit owners. This is a mandatory provision, meaning that it cannot be derogated from by contract or condominium regulations.

The judges specify that eligibility for the chair of the meeting is a corollary of participation in the meeting. Since the member can vote, he can also be a candidate. This reasoning is logical: if the law gives members the same voting rights as unit owners, it implicitly confers the same eligibility rights. The Court of Cassation thus dismisses the objectors' argument distinguishing between "unit owner" and "member". This decision is part of a jurisprudential trend favouring a broad interpretation of the rights of members of share-allocation companies, in order to facilitate the management of complex condominiums.

Note, however, that this solution only applies to share-allocation companies formed by the persons to whom units have been allocated. It does not apply to any company owning units (for example, an investment company that has purchased units without an allocation link). What few people know is that the concept of "share-allocation company" is specific: it implies that the members have contributed real estate rights to the company in exchange for shares, and that the company allocates the units to the members. This is a common structure in holiday homes or buildings divided into apartments.

What this means for you — practically

If you are a unit owner in a condominium where a share-allocation company holds units, this decision has immediate practical implications. For example, in Antibes, a holiday residence comprising 20 apartments: 10 are held by a family SCI grouping three siblings. Until now, only the SCI's manager could attend meetings and vote. Now, each member can not only vote but also be elected chair of the meeting. This can change the dynamics: members can have more weight in decisions, especially if the manager is often absent.

For individual unit owners, this decision can be seen as a threat (an "external" member takes the chair of the meeting) or as an opportunity (more potential candidates). In practice, it avoids situations where a share-allocation company, lacking an authorised representative, cannot effectively participate in management. If you are a manager of a share-allocation SCI, you must inform your members of this right: they can now stand as candidates for the chair.

Numerical example: in Cannes, a condominium of 50 units, of which 25 are held by a share-allocation SCI. The general meeting must elect a chair. If the SCI presents its majority member (holding 60% of the SCI's shares), that person can be elected with the SCI's votes, i.e. 25 shares out of 50. This is a realistic scenario that may displease minority unit owners. But the law is clear: the member is eligible. If you are in this situation, you must check that the condominium regulations do not explicitly prohibit this possibility (which would be contrary to public policy and thus unenforceable).

Four tips to avoid this type of dispute

• Check the nature of the company owning units: If a company holds units in your condominium, ask it whether it is a share-allocation company within the meaning of Article 23 of the 1965 Law. This will determine the voting rights of its members. Review the company's articles to confirm.
• Adapt the condominium regulations: If you wish to limit eligibility for the chair to natural persons only, be aware that any clause contrary to public policy is void. Better to provide clear representation rules for companies.
• Inform members of their rights: If you are a manager of a share-allocation SCI, hold a meeting before the general meeting to explain to members that they can vote and stand as candidates. This will avoid challenges on the day.
• Consult a specialised lawyer if in doubt: Every condominium is unique. Personalised legal advice, like that I offer at my firm in Grasse, can help you anticipate conflicts and draft compliant meeting minutes.

Further reading: related case law and developments

This 2002 decision is part of a line of case law favouring a broad interpretation of the rights of members of share-allocation companies. An earlier Court of Cassation judgment of 13 December 1994 (n° 93-10.584) had already ruled that members of a share-allocation company must be summoned to condominium general meetings like unit owners. The 2002 decision goes further by extending eligibility for the chair.

Since then, no major decision has contradicted this position. The trend is therefore stable: courts protect the right of participation of members, considering that the share-allocation company is merely a technical intermediary. What this means for the future: in condominiums where share-allocation companies are numerous, general meetings could become more contested, with each member seeking to assert his interests. It is therefore essential to prepare the agendas carefully and to set appropriate quorum rules (minimum number of attendees to deliberate).

What you absolutely need to remember

FAQ:

Can a member of a share-allocation SCI be chair of the meeting? Yes, the Court of Cassation has confirmed this. He attends the meeting like a unit owner.

Can I object to this candidacy if I am an individual unit owner? No, if the company is indeed a share-allocation company. Any contrary clause in the condominium regulations would be void.

What if only the SCI manager is summoned? Request the summoning of all members. If refused, you can apply to the court to have the meeting annulled.

What are the risks of ignoring this rule? The general meeting could be annulled for procedural defect, resulting in costs and delays.

Does this rule apply to all companies owning units? No, only to share-allocation companies formed by the persons to whom the units were allocated.

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