Competitive tendering in co-ownership: no obligation without a resolution

Imagine the scene: you are a co-owner in a beautiful residence in Mougins, with a view of the hills. The general meeting (GM) has voted for facade renovation works costing €80,000. The syndic has signed with a single company, without requesting other quotes. You wonder: should it not have invited tenders? This is the question thousands of co-owners ask themselves every year, often without a clear answer. The Court of Cassation, in a judgment of 26 March 2014, has ruled: the syndic has no obligation to invite tenders if the general meeting has not set the amount of contracts from which such tendering becomes compulsory. In other words, without a specific resolution of the GM, the syndic may deal with a single provider. But what exactly does this change for you?

The facts: a story that happens every day

Mr X, owner of a flat in Cannes, in a co-ownership of about thirty units, contests insect control and timber treatment works carried out by the syndic. According to him, these works, amounting to €15,000, fell within the guarantee of the co-ownership insurance (decennial liability insurance, which covers certain defects). He refuses to pay his share, arguing that the syndic should have invited tenders from several companies before engaging them. The syndic, for its part, considers that it acted in accordance with the co-ownership regulations (the contract governing the life of the co-ownership) and article 22 of those regulations, which provides that treatment costs are borne by the co-ownership. The dispute comes before the tribunal d'instance of Grasse, then before the cour d'appel of Aix-en-Provence. Mr X loses on appeal: the judges consider that the syndic committed no fault (breach of its obligations) because the general meeting had never set the tendering threshold. Mr X appeals to the Court of Cassation (final remedy before the Court of Cassation). The High Court confirms: "No obligation to invite tenders for contracts and works is imposed when the general meeting has not set, pursuant to article 21 of the Law of 10 July 1965, the amount of contracts from which tendering is made compulsory." In other words, the syndic does not have to organise tendering if the co-owners have not, in a GM, decided on the threshold from which such tendering is compulsory.

The reasoning of the court — broken down

The Court of Cassation relies on article 21 of Law No. 65-557 of 10 July 1965 (the law governing the status of co-ownership). This article provides that the syndic (legal representative of the co-ownership) may enter into contracts (works or services contracts) without tendering, unless the general meeting has set a threshold (for example: "any contract exceeding €10,000 must be subject to at least three quotes"). In the absence of such a threshold, the syndic is free to choose the provider it wishes. The Court specifies that the burden of proof lies with the co-owner who contests: it is for him to demonstrate that the GM had indeed set this threshold. In this case, Mr X did not provide such proof. The Court also rejects Mr X's argument that the works should have been covered by the insurer: the co-ownership regulations placed them at the expense of the co-ownership, and the syndic complied with those regulations. This is not a reversal of case law (change in the judges' position), but a confirmation of the strict reading of article 21: no obligation without a resolution. The lower courts (tribunal and cour d'appel) had correctly applied the rule.

What this changes for you — practically

For the co-owner: If you believe the syndic should have invited tenders, first check the minutes of the general meeting (GM minutes): is there a resolution setting a threshold? For example, in Cannes, in a co-ownership of 50 units, if the GM has resolved that any contract exceeding €5,000 must be subject to three quotes, the syndic must obtain them. Otherwise, it may sign with the company of its choice. In practice, many co-ownerships have never set this threshold. For the syndic: It is in your interest to propose a threshold at the GM to secure your actions and avoid disputes. For the professional (architect, company): If you are approached by a syndic, ask it whether the GM has set a threshold. If not, the contract is valid even without tendering. Example with figures: works of €12,000 in Mougins: without a threshold, the syndic may sign with a single company; with a threshold of €10,000, it must request several quotes. If you are in this situation, you must act quickly: the time limit to challenge a GM decision is two months from notification of the minutes (article 42 of the 1965 Law). After this period, the action is inadmissible.

Four tips to avoid this type of dispute

• Consult the co-ownership regulations and GM minutes: Check whether a tendering threshold has been set. If so, require the syndic to comply with it. If not, propose to include this item on the agenda of the next GM.
• Set a realistic threshold at the GM: A threshold that is too low (€500) burdens management; too high (€50,000) makes tendering pointless. A threshold between €5,000 and €15,000 is common. Vote it by simple majority (article 24).
• Require multiple quotes for urgent works: Even without a threshold, the syndic must act as a prudent administrator (prudent management). In case of emergency (water leak, safety measures), ask it for at least two quotes in writing.
• Keep all supporting documents: If you challenge, you will need to prove that the syndic breached its obligations. Keep quotes, GM resolutions, correspondence.

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Further reading: related case law and developments

The Court of Cassation had already ruled in a similar sense: Cass. 3e civ., 11 May 2011, No. 10-16.640, where it held that the syndic was not required to invite tenders for routine maintenance works. The 2014 judgment confirms this line. However, the recent trend is towards greater transparency: the ALUR Law (for access to housing and renovated urban planning) of 2014 strengthened the syndic's information obligations, but without imposing automatic tendering. The courts therefore remain faithful to the letter of article 21. Caution, however: if the syndic deals with a company with which it has a personal connection (conflict of interest), its liability could be engaged on the basis of article 1240 of the Civil Code (liability for fault). What few people know is that tendering may also be required by the co-ownership regulations themselves, even if the GM has not voted on a threshold. So check your regulations.

In practice: what to do

FAQ:

1. Must the syndic always invite tenders? No, only if the GM has set a threshold or if the co-ownership regulations require it.
2. What if the syndic did not invite tenders even though a threshold exists? Challenge the resolution within two months (article 42) or apply to the judicial court to have the contract annulled.
3. Can I refuse to pay my share if the syndic did not invite tenders? No, payment of charges is compulsory. You must first challenge the GM decision or bring an action for liability against the syndic.
4. What is the cost of legal action? Expect between €1,500 and €5,000 in lawyer's fees, depending on complexity. Mediation (negotiation with a neutral third party) may be less expensive (around €500).
5. Can I require tendering for existing contracts? Yes, by proposing a resolution at the GM to set a threshold. The syndic must then apply it to future contracts.

In summary, this judgment reminds us that transparency is not improvised: it is voted on. So, at your next GM in Grasse or Cannes, do not hesitate to ask for the inclusion of a tendering threshold on the agenda. It is the best way to avoid disputes and control the expenses of your co-ownership.

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