Apportionment of Service Charges in Commonhold: Transparency of Accounts Confirmed by the French Supreme Court

Imagine you are the owner of a flat in Tarnos, receiving each year a thick document entitled “commonhold accounts”. You desperately try to find out why your share of the service charges has increased by 15% even though the central heating has not changed. The lines blur together, totals accumulate, but there is no clear distinction between what relates to routine maintenance, energy-saving works, or management fees. You are not alone: this opacity is a source of recurring disputes in commonholds, from Capbreton to Mont-de-Marsan.

The question every commonhold owner asks: “Does the management company have the right to present me with accounts in a jumble, without separating charges according to their nature?” The answer is no, and the French Supreme Court has just forcefully reiterated this in a judgment of 9 February 2011 (No. 09-70.951).

This decision, based on Article 10 of the Law of 10 July 1965 — a provision of public policy (meaning it cannot be derogated from by contract) — imposes absolute transparency in the presentation of annual accounts. In clear terms, each category of charge must appear separately, according to its nature and its apportionment as provided for in the commonhold regulations. But what does this obligation actually mean? And how should it be applied in your building? That is what we will break down.

The Facts: An Everyday Story

Mr X, owner of a unit in a commonhold located in Tarnos, in the Landes region, receives as every year the general meeting of commonhold owners. On the agenda: approval of the accounts for the past financial year. But while reviewing the documents attached to the notice of meeting, Mr X notes that the management company has presented a simple summary table of expenses, without distinguishing general charges (maintenance of common parts, electricity, insurance) from special charges (lift, central heating) or charges relating to specific works.

The commonhold regulations nevertheless provide for an apportionment of charges according to the nature of each expense: some are apportioned according to general shares (the proportion of each unit in the common parts), others according to specific keys (for example, the number of floors for the lift). However, the management company applied a single apportionment in 10,143ths, without explaining why a particular charge fell under a particular method of calculation.

Mr X then challenges the resolution approving the accounts and brings the matter before the Regional Court. He argues that the presentation of the accounts does not allow verification of whether the apportionment of charges complies with the commonhold regulations. The management company, for its part, maintains that the documents are sufficiently detailed and that Mr X is simply trying to delay payment of his charges. The court rules in its favour at first instance, but Mr X appeals. The Court of Appeal of Pau affirms the judgment, considering that the commonhold owner had not demonstrated how the apportionment was erroneous. Mr X then appeals to the Supreme Court.

The Reasoning of the Court — Analysed

The French Supreme Court quashes the appeal judgment on the grounds of Article 10 of the Law of 10 July 1965, in its version then in force. This text, which is of public policy, provides that “commonhold owners are obliged to contribute to the costs incurred by collective services and common equipment elements in proportion to the usefulness of those services and elements in relation to each unit”. It also states that the apportionment of charges must be made in accordance with the commonhold regulations.

But what the lower courts had overlooked is that this obligation of compliance necessarily implies that the accounting documents communicated to the commonhold owners must show the distinction between the different charges according to their nature. In other words, the management company cannot simply provide a global list of expenses. It must present a statement that allows each commonhold owner to verify, item by item, that the apportionment applied is indeed that provided for by the regulations.

The High Court clarifies that merely criticising the number of shares (these fractions that determine each person's share) is not enough: the documents must also allow each charge to be linked to a specific category. In this case, the management company apportioned all charges according to the same number of shares, without indicating whether some charges should have been apportioned according to a different key. Therefore, the Court of Appeal could not reject Mr X's challenge without examining whether the presentation of the accounts allowed such verification.

This reasoning is part of a consistent line of Supreme Court decisions which, since the 2000s, have strengthened the management company's transparency obligations. This is not a reversal, but a confirmation: the right of commonhold owners to an effective check of the accounts is a requirement of public policy, which prevails over any contrary contractual provision.

What This Changes for You — Practically

If you are a commonhold owner (whether you live in your home or not), this decision gives you a powerful tool. From now on, when you receive the annual accounts, you can require that they be presented by nature of charge (examples: “general charges”, “heating”, “lift”, “management fees”) and that for each nature, the apportionment key (general or specific) be clearly indicated. If this is not the case, you can refuse to approve the accounts at the general meeting and judicially challenge the resolution.

For landlord owners in Capbreton, for example, who rent out a studio by the seaside, vigilance is required. If your tenants pay service charges (the apportionment of which mirrors that of the commonhold), any error in the presentation of the accounts can lead to a dispute with the tenant and a contested adjustment. Do not hesitate to ask the management company for a detailed statement before the general meeting.

For management companies, this decision is a wake-up call. Presenting accounts in the form of a simple chronological list of expenses is no longer acceptable. You must structure the documents by categories of charges, with for each the total, the method of apportionment (number of general or special shares) and the amount allocated to each unit. Failing this, you risk an action to nullify the general meeting and damages for the injured commonhold owner.

undefined, I have encountered cases where the management company billed routine management fees under the same line as legal costs, preventing commonhold owners from verifying the actual amount of fees. This decision now makes it possible to prevent such opaque practices.

Four Tips to Avoid This Type of Dispute

• Require a detailed accounting statement before each general meeting. Do not settle for the general ledger. Ask the management company for a document that distinguishes at least: general charges, special charges (lift, heating, water), works, management fees. Check that the apportionment key is indicated for each category.
• Compare with the commonhold regulations. This document normally lists the different natures of charges and their apportionment keys. If your regulations are more than 20 years old, they may be obsolete. Have them checked by a lawyer lawyer.
• Ask questions at the general meeting. If an item seems unclear, ask for explanations before the vote. Have your question recorded in the minutes. If the answer is unsatisfactory, abstain or vote against.
• Keep all documents. Keep the service charge demands, annual accounts and minutes of the general meeting for at least 5 years. In the event of a dispute, you will be able to prove the opacity of the presentation.

Further Reading: Related Case Law and Developments

This 2011 decision is part of a line of judgments that strengthen commonhold owners' control over charges. For example, in a judgment of 4 December 2008 (No. 07-18.398), the Supreme Court had already ruled that the management company must provide commonhold owners, before the general meeting, with a summary statement of the sums owed by each commonhold owner. More recently, the ALUR Law of 2014 imposed a separate bank account for each commonhold and minimum content for accounting documents.

The trend is therefore towards increased transparency, for the benefit of commonhold owners. However, some courts remain reluctant to annul general meetings for a mere lack of presentation, considering that the error must be substantial. Caution is therefore required: the challenge must demonstrate real prejudice or a risk of error in the apportionment.

Summary and Next Steps

• What to remember: The management company must present the accounts by distinguishing charges by nature and indicating the apportionment key for each nature. Failing this, the commonhold owner can challenge the approval of the accounts.
• What to do if your accounts are not clear? Before the general meeting, ask the management company for a detailed version. If the management company refuses, you can apply to the civil court for an order to disclose the documents under penalty.
• Time limits: The challenge to the general meeting must be made within two months of notification of the minutes. After this period, the resolution becomes final.
• Cost: Legal action can cost between €1,500 and €3,000 in lawyers' fees, but a simple formal notice may suffice to obtain rectification.

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