Establishing a condominium: when is it worth it, and how does it work?

Why establish a condominium?

In co-ownership, each co-owner holds a notional share of the whole property. In practice, this causes several difficulties:

• when selling to an outsider, the other co-owners generally have a right of pre-emption;
• for loan financing, the bank may require special conditions, such as an appropriate agreement on use;
• exclusive use of the individual flats is best settled in a separate agreement.

Once the condominium has been established, each flat receives its own land registry number and becomes separate property, while the staircase, the roof and the other common parts remain in common ownership.

The steps

1. Technical documentation

Floor plans of the building are needed, showing the individual flats and the common parts. Registration at the land registry requires appropriate floor plans and, where necessary, further technical and official documentation; a simple sketch is not enough. The legal and technical status of the building and the units must be checked in advance.

2. Ownership shares

It must be determined how large a share of the common property belongs to each flat. Voting rights generally follow these shares. Common costs are also usually borne in the same proportion, although the rules of organisation and operation may provide otherwise.

3. Deed of foundation

The deed of foundation must be set out in a notarial deed or a private document countersigned by an attorney, and, where the condominium is established by agreement, signed by all co-owners. A sole owner may also establish a condominium as a single founder.

4. Registration at the land registry

The deed of foundation must be submitted with its annexes to the land registry authority, which registers the condominium in the land register.

What to watch out for

If any co-owner disagrees, establishment by agreement is not possible. However, where the statutory conditions are met, any co-owner may ask the court to end the co-ownership by converting it into a condominium. If there is a mortgage on the property, the bank must also be consulted. The rules of organisation and operation govern day-to-day operation. In a condominium of no more than six units, the community may decide to apply the Condominium Act's rules on organisation and operation; otherwise, these matters are governed by the Civil Code's rules on co-ownership. Establishing a condominium does not in itself end every right of pre-emption: the deed of foundation may also create one, and a separate law may also provide one.

This article is for general information only and does not constitute legal advice. For advice on your specific situation, please get in touch.