Condominium apartments – the most common mistakes
Condominium ownership is governed by the legal provisions of Art. 712 et seq. of the Swiss Civil Code. «It's worth studying these provisions and the regulations of the condominium owners' association,» says Thomas Treichler, head of the Legal department at Alfred Müller AG. «Many disputes arise from insufficient knowledge of the relevant rules and because buyers of condominium apartments don't realise that they are joining a community of owners.» He points out the most common misconceptions about owning an Apartment:
I have bought a condominium apartment. I can do what I want inside my own four walls!
Basically yes, but with restrictions. As co-owner of the building, you have what is termed a special right to the apartment. This means that you are responsible for the management of your own unit, including maintenance and repairs. You are free to decorate the interior of your apartment, provided that no modifications are made to the fabric, structure or physical appearance of the building (windows, shutters, roller blinds, etc.). The conversion of an apartment, for example as doctor's rooms, usually requires the approval of the other condominium owners and possibly also the building authorities.
Changes to the physical appearance are not permitted.
I live on the ground floor and do not use the lift, which means that I also do not have to share in the maintenance costs for the lift!
This is a classic mistake! The administrative costs relating to communal facilities such as the lift, stairs, and also children's play areas and bicycle storage areas often give cause for disagreement between condominium owners. Alfred Müller AG includes an ancillary cost ratio in its regulations for the allocation of the communal costs, which can sometimes deviate slightly from the share of value. As condominium owners' use of communal facilities differs according to their personal situation and subjective needs, it is not very practical to try and apply an individualised cost allocation key. The use of some formula or other is unavoidable. Therefore, the ground floor apartment usually also has to share in the costs for the lift and the childless couple has to contribute to the costs for the children's play area.
I can plant an apple tree in the garden seating area of my condominium apartment. Nobody will complain if I give all my neighbours some apples in autumn!
Nice idea – wrong assumption. You as the owner only have a special right to use the garden seating areas and balconies. Anything that changes the physical appearance of the building or affects the other owners is not permitted and any changes require the consent of the community of owners.
The management company represents the interests of the association of owners.
I as the owner pay the salaries of the management company. Thus I am the boss and my word is law!
You are part of a community and the community is the «boss». This means that the condominium owners' association is the only party that can give instructions to the management company. The association can elect a committee to represent them vis-à-vis the management company. The management company does not represent the interests of the individual condominium owners, but only those of the association of condominium owners. This guarantees equal treatment for everybody in the building.
The long-term tenant of my condominium apartment is moving out. Great, now I can regularly rent out my apartment through Airbnb and earn good money!
While it is sufficient to simply notify the management company of a permanent rental contract, the situation is different when the apartment is used for a commercial purpose such as Airbnb. This requires the consent of the condominium owners' association and should be included in the regulations. The consent of all condominium owners is required for such a change to the purpose of use.
We have bought a condominium apartment in a new building. We are going to wait before we set up a renewal reserve because any damage is initially still covered by the builder's warranty.
It is true that comprehensive and expensive renovation work, for example to the roof, shell or building systems, is usually only needed after 20 to 30 years. However, to prevent unpleasant surprises in the future, it is a good idea to start paying money into a renewal reserve quickly and regularly. We recommend annual contributions of 0.5% of the insurance value of the building. Our regulations also stipulate that a renewal reserve has to be raised after two years. If rehabilitation work is needed and there is not enough money in the renewal reserve, all condominium owners have to contribute to the missing amount in proportion to their share of the building's value or their ancillary cost ratio.
The roof of our building is leaking. There is not enough money in the renewal reserve to pay for the repairs that are needed. Every individual owner now has to pay in extra money, but I do not have the money at the moment. No problem: the association will make up my share!
They can, but they do not have to. If the renovation work is needed for something that is not essential for the building, the work and related investments can be deferred until the financing is available. However, a leaking roof must be repaired immediately. If you cannot contribute the funds that are needed, the worst case scenario is that your apartment can be seized and sold. You cannot therefore rely on the solidarity of your neighbours. This means that it is better to save for a rainy day.
The money in the renewal fund is transferred to the buyer when the property is sold.
I am selling my condominium apartment and moving to another city. I am now legally entitled to the money I paid into the renewal reserve!
Wrong. When you sell your apartment, your share of the renewal reserve passes to the buyer and is not paid out when you move.
I can put a small shoe cabinet outside my apartment door. The others can also do so if they want!
Under the law, the staircase is a communal area of the building divided into condominiums, as are the entrance areas and bicycle storage areas. This means that the individual condominium owners are not allowed to put furniture in the corridors or staircases. This is pointed out in our regulations. The community of owners can also decide to adopt different rules, but they have to comply with the fire safety regulations.
The floor of our new condominium apartment has bumps and dents for which we are not responsible. The floor is still covered by the warranty, so I am going to complain to the people who installed the Floor!
Many general contractors do in fact assign their defect rights against individual suppliers to the buyers when they sell the condominium apartments. This makes life very difficult for the buyers. Not only because they do not know what specific warranties the general contractor agreed with its sub-contractors, but also because it is not always easy to find out which company did what work to the building. We believe that this assignment of guarantee claims is unfair, and this is usually not included in our purchase contracts. We give two years warranty for obvious defects and five years for hidden defects. During the warranty and limitation periods, Alfred Müller AG is liable for defects to its buyers. In this time, buyers can notify defects directly to Alfred Müller AG.
My vote always carries equal weight, regardless of whether we are deciding about the renovation of the roof or the installation of a jacuzzi!
Associations of condominium owners approve decisions either with a simple majority, a qualified majority or unanimously. Building measures that are necessary to preserve the value or serviceability of the building – such as the renovation of the roof – can be approved by the majority of the condominium owners who are present and represented, i.e. by a simple majority. Useful building measures that will increase the value or improve the profitability of the building – such as the installation of an energy-saving heating system – require a qualified majority. This means the majority of all condominium owners who also own more than half of the shares in the value of the building (majority of the value shares). Luxurious measures, such as the installation of a jacuzzi that only serve to make the building more attractive or more convenient, require a unanimous decision and all condominium owners have to agree.
I cannot attend a meeting of the association of condominium owners. I will submit my opinion on the individual agenda items in writing. This also Counts!
No, it does not. But you can be represented at the meeting. According to our regulations, you can be represented by another person living in your household, another condominium owner, a direct descendant or the management company. The representative must submit a written power of attorney signed by you to the meeting. Do not forget to tell your representative how you wish to vote!
Resolutions passed at the meeting apply to everybody.
As I did not attend the meeting of the condominium owners' association and also did not vote, the decisions that were taken are not binding for me!
If the meeting was quorate, the individual decisions also apply to you, regardless whether you were present or voted against the approved motion. A quick reminder: condominium owners are a community and sometimes you just have to accept the decision of the majority.