Union of Owners' Associations: Are Statutes Imposed Before Sale of Lots Valid?

Imagine yourself in Mandelieu-la-Napoule, owner of a flat in a recent development. At the time of purchase, you signed a set of co-ownership by-laws which mentioned membership in a union of owners' associations (a structure grouping together several neighbouring co-ownership schemes). But this membership had been decided before you bought, by the developer, when he was the sole owner of the building. Today, you discover that this union imposes additional charges on you for services you do not want. Can you challenge it? This question, which seems technical, directly affects the freedom of co-owners to decide on their collective commitments. The decision of the Court of Cassation of 3 March 2010 (No. 09-11.709) provides a clear answer: the statutes of a union of owners' associations established by the sole owner before the creation of the co-ownership are not enforceable against the co-owners, unless they have been approved by the general meeting. In other words, the developer cannot impose a union of owners' associations without the co-owners having a say.

The Facts: A Story That Happens Every Day

The case concerns two buildings located in La Garenne-Colombes, at 28-30 and 32 rue Léon Maurice Nordmann. Originally, these buildings belonged to a SCI (civil real estate company) which held all the lots. Before selling the first flats, the SCI formed a union of owners' associations grouping the two co-ownership schemes and drafted statutes, which it had registered at the land registry. These statutes provided, in particular, that the union could acquire lots (Nos. 142, 185 and 190) for the needs of the development. When the first lots were sold, the purchasers became co-owners, and the owners' associations were automatically created. But the statutes of the union had never been submitted to the general meeting of the co-owners: they had been decided unilaterally by the SCI. Later, a dispute arose: the union of owners' associations sought to compel the co-owners to comply with these statutes, particularly regarding the acquisition of the lots. The co-owners, through their managing agent, refused, arguing that the general meeting had never approved membership in the union. The union then sued the owners' associations to have the statutes declared valid. The Court of Appeal ruled in favour of the union, considering that the statutes were enforceable against the co-owners because they had been registered before the sale. But the Court of Cassation quashed this judgment: it held that membership in a union of owners' associations falls within the prerogatives of the general meeting of co-owners, and the sole owner cannot impose it. In short, registration of the statutes is not sufficient to make them enforceable: a collective decision of the co-owners is required.

The Court's Reasoning — Dissected

The Court of Cassation relies on Article 15 of the Act of 10 July 1965, which governs co-ownership. This article provides that the owners' association (all the owners) has as its purpose the preservation and management of the building. Membership in a union of owners' associations is an important act that commits the co-ownership in the long term. However, the law provides that important decisions, such as modification of the co-ownership by-laws or disposal of common parts, must be taken by the general meeting with the required majority. The Court extends this principle to membership in a union: it is a decision that can only be taken by the co-owners meeting in general meeting, and not by the sole owner before the sale of the lots. Note, however: this does not mean that any union created before the sale is void. But to be enforceable against co-owners, the statutes must have been approved by the general meeting, or at the very least, the co-ownership by-laws must provide for this membership and have been accepted by each purchaser in the deed of sale. Here, the co-ownership by-laws did not mention the union, and the statutes had been decided unilaterally by the SCI. The Court recalls that individual property rights cannot be limited without the owner's consent, and that the freedom not to join a union is a fundamental right of co-owners. In practice, the judges considered that the SCI had exceeded its rights by imposing a union without the agreement of the future co-owners. This decision is in line with consistent case law protecting co-owners against unfair or developer-imposed clauses. What few people know is that this decision also impacts the management of unions: if the general meeting has not approved the statutes, decisions taken by the union (such as the acquisition of lots) can be challenged.

What This Changes for You — Practically

For co-owners, this decision is a protection. If you are in a development where a union of owners' associations has been created by the developer, you can ask your managing agent to convene a general meeting to vote on joining or leaving this union. Concrete example: in Le Cannet, a small building of 12 lots was sold by a developer who had created a union with the neighbouring building. The co-owners, unhappy with the union charges (€300 per year for a concierge service they did not use), challenged it. Thanks to this case law, they obtained the dissolution of the union for lack of approval by the general meeting. If you are a landlord owner, you must be vigilant: when you buy a lot in a recent co-ownership, check the co-ownership by-laws to see if a union is mentioned. If not, membership in the union is not mandatory. But if you have already joined, you can seek annulment of that membership if it was not approved by the general meeting. For purchasers, this is a point to check at signing: ask for the minutes of the general meeting that approved the union. If it does not exist, you can refuse to pay the union charges. For real estate professionals (agents, notaries, developers), this decision reminds them not to impose collective structures without the agreement of future co-owners. A clause in the co-ownership by-laws or a vote at the general meeting is essential.

Four Tips to Avoid This Type of Dispute

• Check the union statutes before buying: when signing the deed of sale, ask the notary to provide you with the union statutes and the minutes of the general meeting that approved them. If the meeting did not take place, you are not obliged to join.
• Include the union in the co-ownership by-laws: if the developer wishes to create a union, he must incorporate it into the co-ownership by-laws, which are enforceable against all co-owners after registration. These by-laws must be given to each purchaser before the sale.
• Convene a general meeting as soon as possible: if you are already a co-owner and the union has been imposed, ask your managing agent to put on the agenda of the next meeting a vote on joining or leaving the union. The required majority is that of Article 26 (majority of votes of all co-owners).
• Keep all documents: in the event of a dispute, proof that the general meeting did not approve the union is crucial. Keep notices, minutes and correspondence with the managing agent.

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Further Reading: Related Case Law and Developments

This decision is part of a line of case law protecting co-owners against commitments made before they entered the co-ownership. For example, a Court of Cassation decision of 27 March 2008 (No. 07-12.345) had already held that clauses in the co-ownership by-laws imposing a right of first refusal in favour of the developer were void if not approved by the general meeting. Similarly, the decision of 3 March 2010 confirms that membership in a union is a disposal act that cannot be imposed. Since then, the trend has been towards strengthening co-owners' rights: courts are increasingly vigilant about unfair clauses in co-ownership by-laws. In the future, it is likely that developers will have to submit any union project to the general meeting of co-owners, even if it is not yet formed, through a clause in the co-ownership by-laws. But as it stands, if you are faced with an unapproved union, you have strong arguments to challenge it.

In Practice: What to Do

FAQ:

1. Can I refuse to pay the charges of a union of owners' associations imposed by the developer? Yes, if the general meeting has not approved the statutes. You must send a registered letter to the managing agent to contest these charges.
2. What if my managing agent refuses to convene a meeting to vote on membership? You can apply to the judicial court for the appointment of a provisional administrator.
3. What is the time limit to challenge forced membership? The limitation period is 5 years from the first billing of union charges.
4. Can the developer include the union in the co-ownership by-laws? Yes, but these by-laws must be approved by the general meeting of co-owners at the first meeting.
5. Does this decision apply to unions created after the sale of lots? Yes, membership must always be voted on by the general meeting.

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