Separate bank account in co-ownership: absence does not invalidate the manager's mandate

Imagine: you own a flat in Cavaillon, in a quiet residence. The co-ownership general meeting (GM) approved the accounts, but you discover that the property manager never opened a separate bank account in the name of the syndicate. You wonder: can this negligence invalidate everything? Must the GM be reconvened? This decision of the Court of Cassation of 14 January 2016 provides a precise answer to this question. And the answer may surprise you.

Under co-ownership law, Article 18 of the Act of 10 July 1965 requires the property manager to open a separate bank account for each syndicate. But what happens if he fails to do so? Can co-owners demand the annulment of his mandate and of the decisions taken? The Court of Cassation has ruled: the failure to open an account is not a ground for annulling the mandate of the provisional administrator. In other words, even if the manager has committed an irregularity, this does not affect the validity of his appointment nor of the GMs he convened.

This decision, handed down in a case between the syndicate of co-owners of the Les Hauts de Praz residence and the company BDI, has concrete implications for all co-owners, particularly those in the Avignon area, such as in Pertuis or Cavaillon. But how should you react if you are in this situation?

The facts: a story like many others

Mr. X, a resident of Cavaillon, is a member of the co-owners' syndicate of the Les Hauts de Praz residence. In 2010, a general meeting (GM) was convened by the company BDI, acting as property manager. This GM, held on 10 December 2010, took several decisions: approval of the accounts for previous financial years, voting on the provisional budget, and appointment of a new manager. But not everything went as planned.

A co-owner challenged the validity of this GM, arguing that the manager had not opened a separate bank account in the name of the syndicate, in breach of Article 18 of the Act of 10 July 1965. According to him, this irregularity vitiated the manager's mandate and, consequently, rendered all decisions of the GM void. He therefore sued the syndicate and the company BDI before the tribunal de grande instance (TGI) to obtain the annulment of the GM and of the manager's mandate.

At first instance, the TGI of Avignon dismissed his claim. The co-owner appealed. The Court of Appeal of Nîmes upheld the judgment: the failure to open a separate bank account does not lead to the annulment of the manager's mandate. The case was then brought before the Court of Cassation, which, by a judgment of 14 January 2016, dismissed the appeal and validated the position of the lower courts.

What few people know is that this case lasted nearly six years, from the first GM to the final decision. An example among many of the slowness of justice, but also of the importance of knowing your rights.

The reasoning of the court — analysed

The Court of Cassation had to answer a specific question: does the failure to open a separate bank account by the manager constitute a ground for annulling his mandate? To answer this, it relied on Article 18 of the Act of 10 July 1965, which provides: 'The manager is required to open, for each syndicate, a separate bank or postal account in the name of the syndicate.'

In clear terms, this obligation is explicit: the manager must open a distinct account for the co-ownership funds. But the Court distinguished two things: the validity of the mandate (the appointment of the manager by the GM) and the consequences of non-compliance with his obligations. It considered that the absence of a separate account is a breach of management rules, but not a cause of nullity of the mandate itself. In other words, the manager was duly elected; his mandate is valid. The fact that he did not open a separate account is a failing that may give rise to civil liability (Article 1240 of the Civil Code – which requires compensation for damage caused by fault), but it does not affect the legality of his appointment.

The Court also relied on the fact that the GM approved the accounts. By approving the accounts, the co-owners implicitly validated the manager's management, including the absence of a separate account. This does not prevent them from suing the manager for fault, but it prevents them from seeking annulment of the GM or of the mandate.

This decision confirms previous case law, notably the Court of Cassation judgment of 19 November 2009 (No. 08-20.136), which already ruled out nullity of the mandate for failure to have a separate account. The trend is therefore consistent: judges favour the stability of GM decisions and only annul for serious defects affecting the validity of the vote (such as failure to convene or irregular majority).

What this means for you — concretely

For co-owners: If you discover that your manager does not have a separate bank account, you cannot demand the annulment of the GM or of his mandate. However, you can bring a claim for damages if this absence has caused you harm. For example, if funds have been mixed and you have suffered a financial loss.

For property managers: This decision does not give you a free pass! The obligation to open a separate account remains mandatory. In the event of an inspection, you risk disciplinary sanctions (fine, suspension) and civil proceedings. Moreover, the absence of a separate account can complicate management and financial transparency.

For purchasers of a co-ownership unit: Before buying, check that the manager is compliant. Request the statement of the separate bank account from the co-ownership documents. If this account does not exist, it may be a red flag regarding the manager's management.

Example with figures: Imagine a co-owner in Pertuis who discovers that the manager used the co-ownership account to pay personal expenses. The damage could be assessed at the amount misappropriated, plus interest. But if the manager simply failed to open a separate account without any other breach, the damage is difficult to prove. undefined, I have come across cases where the absence of a separate account allowed the manager to conceal abusive expenses; in such cases, a liability action can succeed.

If you are in this situation, you must act quickly. The limitation period (time limit for legal action) to challenge a GM is two months from notification of the minutes. For a liability action against the manager, the period is five years from the harmful event.

Four tips to avoid this type of dispute

• Check the existence of the separate bank account as soon as you enter the co-ownership. At the first GM you attend, ask for the bank statement. If the manager refuses, it is a warning sign.
• Demand transparency on accounts. Each year, the manager must present the approved accounts. Ensure that the movements are clear and that the account is in the name of the syndicate.
• Do not delay in challenging. If you notice an irregularity, act within two months of the GM. After this period, decisions become final (unless there is abuse of majority).
• Consult a lawyer lawyer. Legal advice can save you time and money. A 30-minute initial consultation often helps identify possible remedies.

Further reading: related case law and developments

The decision commented on is part of a consistent line of authority. In a judgment of 19 November 2009 (No. 08-20.136), the Court of Cassation had already ruled that the failure to open a separate account did not affect the validity of the manager's mandate. This case law has been confirmed by several Courts of Appeal, including that of Nîmes in this case.

On the other hand, in a decision of 27 September 2018 (No. 17-22.036), the Court of Cassation specified that the absence of a separate account could justify the judicial removal of the manager for serious fault. This shows that while annulment of the mandate is not possible, the manager's liability can be engaged.

The trend of the courts is therefore to distinguish the validity of the mandate (which depends on the vote of the GM) from the manager's management obligations. In short, the mandate is valid as long as the GM was properly convened and the votes are valid. The manager's breaches are sanctioned by damages, not by a nullity that would disrupt the life of the co-ownership.

For the future, it is possible that the legislature will strengthen sanctions for non-compliance with the obligation to have a separate account. But as it stands, this decision protects the stability of GM decisions.

In practice: what to do

FAQ:

• The manager does not have a separate account, can I annul the GM? No, according to this decision. You can only bring a civil liability claim.
• Can I refuse to pay charges if the account does not exist? No, the obligation to pay charges is independent. You risk penalties.
• What are the time limits for action? To challenge a GM: 2 months. For a liability action: 5 years.
• How can I prove the absence of a separate account? Request a bank statement from the manager. If he cannot provide one, that is sufficient proof.
• What if the manager refuses to provide the accounts? Apply to the judicial court (formerly TGI) for an injunction.

Checklist:

1. Check for the presence of the separate account in the co-ownership documents.
2. If absent, request in writing that the manager regularise within 15 days.
3. If refused, consult a lawyer to consider a liability action.
4. Do not block payment of charges to avoid additional costs.
5. Attend GMs and ask questions about financial management.

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