Co-ownership: Majorities and (un)certainties in the event of complete demolition and reconstruction
By Deloitte Legal
Plot demolition and reconstruction are far reaching infringements of property rights. It is not self-evident that they can be forced on (co-)owners without their consent. Yet this is the path that the legislator followed in 2018, when the possibility of a four-fifths majority decision was introduced in the general assembly (‘algemene vergadering’) to proceed with the demolition or reconstruction of a plot. However, the Constitutional Court pulled the brakes with a 20 February 2020 ruling, legislating that infringements of property rights must be proportional and necessary in light of the objective pursued. Additional safeguards were therefore introduced by the law of 31 July 2020 to protect that right.
Co-ownership law - also called apartment law - is an increasingly important matter. However, this was not always reflected by the law, with an outdated legislative framework in place until 2018. This was why the legislature had considered legislative intervention as necessary, particularly to prevent the ageing and deterioration of certain apartment buildings. Nonetheless, co-ownership is also protected by property law, which means that all Constitutional and European law guarantees apply (article 10, 11 and 16 of the Constitution and article 1 1st Protocol of the European Convention on Human Rights in particular). The legislator must thus take into account the principles of legality, proportionality and expediency.
Legislation of 18 June 2018
By the law of 18 June 2018, the legislator modified the system of majorities within the general assembly of the association of co-owners (‘algemene vergadering van mede-eigenaars’). The Civil Code already provided for a dual system of unanimity and special majorities. Art. 577-7 CC lists the various matters on which the co-owners can decide by a four-fifths majority.
Art. 167, 7 ° in the law of 18 June added the following scenario: 'the complete demolition and reconstruction of the building for reasons of hygiene or safety, or when the cost of adapting the building to the legal provisions would be excessive'. This deviates from the usual unanimity required for demolition and reconstruction, as provided for in art. 577-7 §3 CC, but only for those reasons exhaustively listed above.
However, a co-owner that did not wish to give their approval had (and has) the option to relinquish ownership right on their plot for the benefit of the other co-owners. This possibility exists on the condition that the value of the lot is lower than the share it represents in the total cost of the works. In that case, the co-owner is entitled to a compensation agreed by mutual agreement. In the absence of a mutual agreement, compensation is determined by the judge based on the market value of the plot in question, without taking into account fluctuations in value after demolition and reconstruction.
Constitutional Court judgment no.30/2020 of 20 February 2020
Art. 167, 7 ° of the Law of 18 June 2018 was nullified by the Constitutional Court, due to an excessive erosion of the right to property that is not proportionate with the public interest pursued – facilitating real estate-neutral decisions regarding the demolition and/or reconstruction of the building - by the legislator. The Court hence demanded greater protection of property rights.
For example, the Court ruled that the right of initiative to bring the case before a judge in the event of a disagreement regarding demolition and reconstruction should not lie with the co-owner of the plot in question, but with the general assembly of co-owners. However, under the law of 18 June, this was the general rule that led the Court to decide that a fair balance between the right of property and the public good had not been struck by the legislator. Such a legislative change was thus required by the court in light of an established infringement of art. 1 1st Prot. ECHR.
Law of 31 July 2020
With the law of 31 July, the legislator responded to the unconstitutionalities established by the Court. In art. 577-9 §1 CC an additional protection of the right to property was introduced in the event that the decision to demolish or rebuild is not taken unanimously. The general assembly of co-owners will then have to file suit within four months from the date on which the general assembly took place. The claim is directed against all co-owners who, with voting rights in the general assembly, have not approved the decision. In addition, the decision to demolish or rebuild will be suspended until the court's decision is final.
The costs associated with the claim are borne by the association of co-owners (art. 577-9 §8 CC).
The concerns raised by the Constitutional Court regarding the right of initiative were also addressed by the legislator; said right will fall entirely to the association of co-owners. They have a period of four months in which to initiate a claim. The Justice of the Peace can conduct a legality test and order an expert investigation to investigate whether the compensation is reasonable.
After a period of legal uncertainty, the legislator addressed the concerns raised by the Constitutional Court by providing coowners with safeguards. Despite these adjustments, it remains undeniable that the ownership right of the co-owner has become more relative in the cases listed in art. 577-7 CC. Nevertheless, with this latest legislative amendment, the legislator seems to have done what is necessary to remedy the unconstitutionality and thus neutralise the legal uncertainty in this area. The new law entered into force on 18 August 2020.
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