Co-ownership: who pays the staff's wages? The managing agent or the owners' association?

Imagine: you live in a residence in Vénissieux, and the caretaker, Mr. Croce, comes to see you. He is angry: he has not been paid for three months. The managing agent, the one who managed the building, has resigned. Who should he turn to? The former managing agent, who hired him? Or the owners' association, that somewhat abstract entity to which you contribute each quarter? This is precisely the question the Court of Cassation had to decide in 1974. A question every owner asks: am I personally liable for the managing agent's debts?

This decision, rendered nearly fifty years ago, remains highly relevant today. It reminds us of a fundamental principle of co-ownership law: the managing agent is merely an agent (a representative) of the owners' association. If he acts within the limits of his powers, he does not incur personal liability. It is the owners' association, i.e., the community of co-owners, that is the true employer and debtor. In other words, if you are a co-owner, you are, through your association, the ultimate payer.

But be careful, this rule has limits. What happens if the managing agent has exceeded his powers? Or if he acted without authority? The decision we will analyse together answers these questions with a clarity that has set a precedent. So, how should you react if a building employee asks you for money? And above all, how can you prevent this from happening?

The facts: a story that happens every day

Mr. Croce worked as a caretaker in a co-owned building in Lyon. He had been hired by the then managing agent, a certain Mr. X. But things went wrong: the managing agent ceased his functions, and Mr. Croce was no longer paid. He then sued the former managing agent, considering that it was he who had hired him and therefore should pay his wages. The managing agent, for his part, argued that he had merely executed the decisions of the owners' association, and that the latter should pay.

The case was first heard by the employment tribunal, then by the Lyon Court of Appeal. The lower courts ruled in favour of Mr. Croce: they ordered the former managing agent to pay the wages, holding that he was the employer. But the managing agent appealed to the Court of Cassation (a recourse to the highest judicial authority). The Court of Cassation quashed the appeal decision, i.e., it annulled it, and remanded the case to another court of appeal.

The twist came from the legal classification: the Court held that the former managing agent was not the employer. According to it, the managing agent is an agent (a representative) of the owners' association. In accordance with the authority (power of representation) given to him, he binds the owners' association, not his own person. Consequently, the wages due to the staff constitute a charge of the co-ownership and not a personal debt of the managing agent. The claim for payment could only be brought against the owners' association, represented by the managing agent in office at the time of the action.

The reasoning of the court — dissected

The Court of Cassation relies on two legal pillars. First, the general law of agency: Article 1998 of the Civil Code (then in force, now Article 1156) provides that the principal (the one who gives the authority, here the owners' association) is bound to perform the engagements contracted by the agent (the managing agent) in accordance with the power given to him. In short, if the managing agent hires a caretaker within the scope of his duties, it is the owners' association that is bound by the employment contract, not the managing agent personally.

Second, the Court refers to the Law of 10 July 1965 on co-ownership and its implementing decree. Article 14 of this law provides that the owners' association has legal personality (it can sue, own property, contract). Article 18 entrusts the managing agent with the execution of the decisions of the owners' association and the power to represent it in court. The Court deduces that the managing agent is merely an executing body, and that debts incurred within the scope of his duties are debts of the owners' association.

However, note: this reasoning applies to acts performed within the limits of the authority. If the managing agent had hired a caretaker without the authorisation of the general meeting, or for personal use, his liability could have been engaged. But in this case, the hiring was a routine management decision, falling within his powers. The Court therefore held that the former managing agent did not have to pay out of his own pocket.

What few people know is that this decision was a confirmation, not a revolution. Already in 1958, the Court of Cassation had ruled that the managing agent was not personally liable for the debts of the co-ownership (Civ. 3e, 12 February 1958). But the 1974 decision has the merit of clearly restating the principle, especially in the context of the new co-ownership statute of 1965. Since then, case law has been constant: the owners' association is the employer, the managing agent is only a representative.

What this means for you — concretely

If you are a co-owner in a residence in Écully, this decision concerns you directly. It means that the wages of the caretaker, concierge, or any maintenance staff are a co-ownership charge, apportioned among all co-owners according to their shares (co-ownership shares). If you do not pay your service charges, the owners' association can pursue you, but the employee cannot take action against you individually.

For the managing agent, the lesson is clear: do not pay wages out of your own pocket, even in an emergency. undefined, I have come across cases where a managing agent, to avoid a caretaker's strike, advanced the funds. Afterwards, he had difficulty getting reimbursed by the owners' association. The best practice is to convene a general meeting to vote on a budget or a cash advance.

For an employee like Mr. Croce, the lesson is practical: in case of non-payment, he must sue the owners' association, represented by the managing agent in office. Not the former managing agent, not the co-owners one by one. If he sues the wrong defendant (the person against whom legal action is taken), his claim risks being declared inadmissible. This cost him time and money.

Concretely, if you are a landlord-owner in Vénissieux and your tenant asks you for service charges including the caretaker's wages, check that the managing agent had authority to hire this staff. A managing agent who exceeds his powers exposes you to challenges. But in principle, the owners' association is the sole debtor.

Four tips to avoid this type of dispute

• Check the managing agent's authority: When appointing the managing agent at the general meeting, ensure that his management contract clearly specifies his powers regarding staff hiring. Require a clause limiting financial commitments without prior vote.
• Require separate accounts: The managing agent must open a bank account in the name of the owners' association. Wages must be paid from this account, not from the managing agent's personal account. This avoids any confusion as to the debtor.
• In case of dispute, identify the correct defendant: If an employee asks you for money, do not pay directly. Direct them to the owners' association, represented by the current managing agent. If you are the managing agent, do not pay out of your own pocket without written agreement from the co-ownership council.
• Anticipate non-payment: Provide in the budget forecast a line for wages, with sufficient cash flow. If a co-owner does not pay his service charges, the owners' association must take recovery action quickly, before the employee turns against the owners' association.

Further reading: related case law and developments

This 1974 decision is part of a consistent line. Before it, a judgment of the Court of Cassation of 12 February 1958 (Civil Chamber, Social Section) had already ruled that the managing agent was not personally liable for the debts of the co-ownership. More recently, in a judgment of 13 December 2006 (No. 05-43.579), the Court clarified that the owners' association is the employer even if the managing agent hired without express authorisation from the general meeting, provided the hiring was useful to the co-ownership.

However, note: the personal liability of the managing agent may be incurred if he committed a fault separable from his duties, for example, if he hired a family member unrelated to the co-ownership, or if he misappropriated funds. The current trend of the courts is to protect employees by allowing them to sue the owners' association, but to sanction negligent managing agents on a disciplinary or criminal level.

For the future, the ALUR law of 2014 strengthened the powers of the co-ownership council and the transparency of accounts. It is likely that case law will continue to affirm the employer status of the owners' association, while making managing agents more accountable in staff management.

Key points to remember

FAQ:

Q: Who is the employer of the building caretaker in a co-ownership?
A: The owners' association, represented by the current managing agent. The managing agent is only an agent.

Q: What to do if a building employee asks me for unpaid wages?
A: Do not pay yourself. Inform the managing agent and the co-ownership council. The employee must take legal action against the owners' association.

Q: Can a co-owner be sued personally for wages?
A: No, unless he has given a personal guarantee. The debt is that of the owners' association, apportioned among all co-owners through service charges.

Q: Can the former managing agent be held liable?
A: In principle no, if he acted within the scope of his authority. But if he committed a personal fault (misappropriation, abusive hiring), his liability may be engaged.

Q: What are the time limits for claiming wages?
A: The employee has a period of 2 years from the date the sum became due (or from the termination of the contract) to bring a claim before the employment tribunal.

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 →