Joseph Calleja
The development of apartments in Malta has not only increased dramatically during the last 20 years, but will undoubtedly intensify in the years to come. This puts into focus the importance of administering the common areas available for use by more than one resident, which areas are commonly referred to as condominium. Indeed, as our lifestyles and private spaces start to feel they are being encroached on, the effective and efficient management of related condominiums will undoubtedly feature higher on our presumed needs.
One would expect that all condominiums are maintained to their maximum level of upkeep. Indeed, for those living in such residences, condominiums are the key passageway to their homes. Therefore, it is only natural to anticipate that expectation levels in this respect will be on the high side. Nonetheless, these very same expectations may give rise to divergent opinions that can very well escalate into disputes, unless checks and balances are agreed, accepted and followed up.
As such, with neighbours living in such close proximity and co-owning property together, it becomes imperative that the right decision-making structures are in place. Such structures need to ensure an efficient and an effective mechanism capable of providing effective remedy when improper actions and/or decisions are deemed to have taken place.
With this in mind, in 2001, the legislator promulgated the ‘Condominium Act’, Chapter 398 of the Laws of Malta. This act provides a regulatory framework for the good administration and management of the common parts. It starts by defining what constitutes a condominium and explains what makes up the common parts. Some of the most important provisions include the way decision are taken, the apportionments of costs, the responsibility for maintenance, the carrying out of alterations, and the appointment of the administrator.
The main forum where decisions are taken is the meeting of condomini. This meeting refers to the gathering of the owners of each separate unit where they discuss and voice their opinion on matters concerning the common parts and decide by voting on decisions. Such meeting is to be held at least once a year and is to be chaired by the Administrator. The law goes into detail on setting the formalities that are to be observed in order for the meeting to be duly convened, such as the notice period, the quorum and the representation at meetings. More importantly, it also lists those decisions that require the vote of two-thirds of the condomini for these decisions to be valid. Otherwise, any other decision is valid if approved by the vote of a simple majority. It naturally follows that any disputes or disagreements are to be first addressed in a fair and democratic manner during the meeting of the condomini. The Administrator, as Chair of the meeting who is also entrusted with the proper management of the condominium, is to make the first attempt at resolving any disputes amicably.
In cases where this fails, the Condominium Act in various specific instances provides for the institution of mandatory arbitration proceedings as the means of resolving disputes. Noteworthy is the fact that when a condominus feels that his/her share in respect of the common expenses is not fair, s/he may refer the matter to arbitration. Another instance where arbitration proceedings fulfil a crucial role is when the meeting of the condomini fails to come to an agreement on the appointment of the Administrator. In this case, the Arbiter will proceed to make such appointment. Matters concerning the revocation of the appointment of an Administrator can also be referred for arbitration by any condominus.
In instances where a condominus incurs costs that are of an urgent nature and the meeting does not approve their reimbursement, such matter shall be referred to arbitration. Finally, another key function of the arbitral proceedings in resolving disputes between condomini concerns the challenge of any decision of the meeting on grounds that it is either contrary to law, or to the regulations of the condominium, or that the decision is unreasonable or oppressive.
An important provision of the Condominium Act is Article 24. This article sets out the possibility of having in place a set of rules that bind all condomini regarding the better use and enjoyment of the common parts. These rules may also address the apportionment of the expenses and provides for the preservation of the condominium’s décor.
Any condominus can take the initiative of preparing these rules which are then submitted to the meeting of the condomini’s approval. Once approved by a two-thirds majority, these rules must be registered with the Land Registrar. These rules can be challenged and referred to the arbitrator on grounds of unlawfulness, of being unreasonable, or oppressive.
In reality, disputes between condomini are not a rare occurrence and the likelihood is that they will continue to increase as more people opt to live in such buildings. Hence, the need for ensuring a properly functioning owners’ association in a condominium is an indispensable structure that can avert conflicts. The Administrator, as the chair of the meeting of the condomini, also has an important task as s/he acts as a buffer in cases of discord between the condomini. S/he should attempt to minimise the escalation of disputes by advocating a constructive dialogue and by encouraging that disputes are settled in a fair and amicable manner. In cases where this fails, recourse would then need to be referred to Arbitration. Lastly, having in place a set of specific rules tailored for the exigencies of the condominium in question is another essential instrument for good neighbourly relations.
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Dr Calleja LL.B., LL.D., LL.M. (EU Bus. Law)