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NewsSTUDY OF THE ARTICLES RELATED TO THE MANAGEMENT OF BUSINESS CENTRES IN THE RECENT REFORM OF THE CONDOMINIUM OWNERSHIP ACT

February 1, 20080

I – Introduction

“The Act on the Reform of the Condominium Ownership Act” no. 5711, dated 14/11/2007 amended some provisions of the “Condominium Ownership Act” no. 634 dated 23/6/1965 and added some provisions to adapt the act to current needs.

The most important ones of these amendments regarding business centres are the 3rd article which is a specific provision on the establishment of condominium ownership of work places (added to the article 10 of the Condominium Ownership Act) and the article 22 on the management of business centres.

II – Specific provision on the establishment of condominium ownership of work places

Although the old provision of the article 10 of the Condominium Ownership Act used to allow the registration of several individual units as one unit, it did not provide for a specific provision for work places. This situation used to lead to problems in practice given that it was unclear what to write in the section of owner in the registers.

The third article of the Act no. 5711 added a specific provision on the establishment of condominium ownership of work places to the article 10 of the Condominium Ownership Act entitled “establishment of condominium ownership and condominium easement.” According to this article, registration of several individual units as one unit was permitted where the commercial feature of the business requires it. For instance, hotels or work places which include more than one individual unit can be registered as one unit. In the land register, the numbers of independent units shall be written to the section dedicated to the owner. For this purpose, the related project and the building use permit shall be submitted to the Land Register Office.

III – Provisions dedicated to business centres and mass housing sites

There were no specific provisions in the Condominium Ownership Act regarding collective buildings. In the management of business centres and mass housing sites, the amended article 3 added by the Code no. 2814 used to apply. This provision used to regulate the management of more than one building on a single parcel and used to provide for a simple type of management.

However, the need for a more sophisticated type of management emerged today since business centres and mass housing projects are constructed on more than one parcel. It used to be voiced also in the legal doctrine that specific provisions could satisfy this need.

In order to fill this gap, chapter nine entitled “Specific Provisions on Collective Buildings” was added to the Condominium Ownership Act by means of the article 22 of the Code no. 5711. This chapter constitutes the first regulation in the field. The structure of this chapter composed of nine articles is as follows:

Article 66 – scope
Article 67 – common places
Article 68 – schemes and situation projects
Article 69 – management
Article 70 – management scheme and its modification
Article 71 – appointment of manager and auditor of the condominium
Article 72 – participation to common expenses
Article 73 – temporary management
Article 74 – other applicable provisions

1 – Definition of “collective building” and business centres

The new article 66 defines “collective building” as follows: “Collective building means a group of buildings constructed or to be constructed on one or more parcels according to an urban plan, connected to each other in terms of infrastructure, common places, social facilities and services and their management.” As one may observe in this definition, the lawmaker aimed that the definition to cover the business centres as well, and the provisions of the chapter nine to apply also to business centres. The finding that the expression “more than one buildings” covers also business centres also emerges from the fact that the term of “work place” was explicitly mentioned in the first article of the Condominium Ownership Act which regulates the subject of condominium ownership.

2 – Common places

The new article 67 provides that common places such as parking places, social facilities which are generally found in mass housing sites and business centres will be registered to the land register by indicating the numbers of parcels, blocks, courts and independent units to which these common places are assigned. Thereby, the problem of how to register common places which remained unsolved under the old code is aimed to be resolved.

3 – Management

a) Model of management with five organs

The new code provided for a model of management with five organs. According to the article 69, the management organs of collective building are “condominium board of court”, “condominium board of block”, “board of representatives of block”, “condominium board of collective building” and “board of representatives of collective building.”

i) Condominium board of court

Common places belonging to every court (such as elevator, roof) shall be managed by the condominium board of court. “Condominium board of court” is composed of work place or flat owners of every court. The rules on the “management of condominium” of the Condominium Ownership Act will apply here by means of the new article 74.

ii) Condominium board of block

If there is more than one parcel in a block, it is provided that work place or flat owners in the block might compose a “condominium board of block” to manage the common places of it. However, considering the need for a simple and more efficient model of management it is also provided that the flat or work place owners in the block might transfer the management of common places to a “board of representatives of block” the structure of which is to be settled down in the management scheme.

iii) Board of representatives of block

The “board of representatives of block” is composed of the managers of every court to be elected by flat or work place owners and the representatives of buildings which are not in quality of a court. For the purpose of efficiency of the management, the Code provided that the managers would be entitled to vote equal to the number of flats or work places that they represent.

iv) Condominium board of collective building

The Code provided for a “condominium board of collective building” for the management of common places of business centres and mass housing sites. This board is composed of all the flat and work place owners in a business centre or a mass housing site. The mode of management is to be decided by this board. Again in order to achieve the efficiency of the management, it is regulated that the condominium board of collective building can transfer the management to the board of representatives of collective building.

v) Board of representatives of collective building

The “board of representatives of collective building” is composed of all the managers of courts and the owners of independent units which are not in quality of a court. Again, the managers of courts are entitled to vote equal to the independent units they represent. Furthermore the code provided flexibility in the formation of the managements of business centres by indicating that the number of members of the board of representatives of collective building is to be fixed in the management scheme “considering the particularity of the collective building.”

b) Appointment of manager and auditor of condominium

According to the new article 71, the flat and work place owners of every court shall appoint a manager and an auditor for their court. “The board of representatives of collective building” shall appoint a manager and an auditor for all common places and facilities of the site. In courts and in buildings which are not in quality of a court, manager and auditor shall be appointed by the majority of votes and land shares. It is provided that the manager and auditor of the site are to be appointed by the absolute majority of all the independent units represented by managers and representatives.

c) Board meetings

A specific provision on collective buildings was added to the article 29 of the Condominium Ownership Act on the time schedules of board meetings by means of the article 14 of the new code. Accordingly, in collective buildings the board meetings shall be held at least once a two year, in the first month of the second calendar year, if not provided otherwise.

d) Cancellation of the decisions of the board of representatives of collective building

The article 19 of the Code no. 5711 added a specific provision on the particularity of collective buildings to the article 38 of the Condominium Ownership Act on cancellation actions. This provision says that cancellation actions against the decisions of the board of representatives of block and the board of representatives of collective building shall be brought against the managers to be appointed by the board of representatives of block or the board of representatives of collective building. The manager shall notify the case to the board of representatives of block or collective building.

IV – Important note: Beware the dates of 27.05.2007 and 27.08.2007

The provisional article three of the Code no. 5711 brings the duty to adapt the management schemes of collective buildings to the provisions of the new Code within six months of the date of its entry into force (27.11.2007). Old managements will govern until the new ones are established. A new manager shall be elected within three months beginning from the modification of the management scheme. For this reason, present collective buildings shall modify their management scheme by 27.05.2007 and elect a new manager by 27.08.2007.

V – Conclusion

The Code no. 5711 and its article three in particular, give the impression that the need for specific provisions arising from the particularities of work places has been observed. The absence of a specific regulation for the management of collective buildings which are being constructed also as business centres in our day used to be observed since a long time. The new code has brought specific provisions on the management of collective buildings constructed on more than one parcel which was the most important gap in the Condominium Ownership Act. Now the management of business centres constructed on more than one parcel which are very common in our day will be held with a more developed model of management.

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