THE KNOWLEDGE
will be required to pay the co-ownership charges up to completion. In practice, however, the sellers will pay the co-ownership charges for the quarter during which completion will take place, and the buyers will be asked to reimburse the sellers on completion the pro-rata amount of the co-ownership charges to cover the period from the date of completion to the end of that quarter. There is no such refund
“Buyers are advised to study the co-ownership rules to ensure that there is nothing that would prevent them from using the property as they wish”
including seasonal letting activities. If the prospective owners intend to rent the place on a seasonal basis, they will need to ensure that the co-ownership rules expressly permit the activity, or they could find themselves in a tricky situation. It will also be important
to review the minutes of the most recent AGMs as they will provide details of costs due to be paid by each co- owner for the running of the co-ownership – as well as any extensive works recently approved by the committee of co-owners that the prospective buyers would be expected to fund if the call for funds is made following completion. Also, the minutes of the AGM
and financial status reports are always good indicators as to how the co-ownership is run generally, and could reveal any dysfunctions in its management or disagreements amongst the co-owners, or between the co-owners and the managing agent, which is never a good omen.
MONEY MATTERS The role of the managing agent in a property transaction involving a co-ownership is pivotal as they manage the accounts and provide essential information about the co- ownership, including the financial information to both parties, buyers and sellers. The managing agent will
be asked to produce two financial status reports: the first one, called pré-état daté, is the provisional financial status report provided before the contract is signed; and the second one, the état daté, will be produced just before completion, once the completion date is fixed. The sellers are responsible for paying the managing agent’s fees for producing the reports, which should not exceed €380. Both reports will provide
details of the co-ownership charges, provisions for works expenditures (fonds de travaux), as well as details of any unpaid charges or any ongoing litigation involving the co-ownership. The sellers
mechanism available for the provision for works expenditures that the sellers paid when they bought the property and is kept by the managing agent. The sellers will therefore need to ensure that there is an express agreement in place for their buyers to reimburse them this amount on completion. By contrast, buyers should
note that they are – by law – required to pay for any calls for funds made by the syndic following completion, even if they relate to works which were voted for before the transfer of ownership occurs. The minutes of the last AGMs should help ascertain the existence and/or extent of any such works. If an AGM takes place
between signing the contract and completion, the sellers will also need to inform the buyers and invite them to vote in their place, in person or by proxy. While it is possible for the
parties to depart from the legal rule and agree that the sellers will remain responsible for any future calls for funds for works that were approved before completion, this agreement is not enforceable against the managing agent. It is therefore important to ensure that any pro-rata payment and contributions are reflected in the completion statement (décompte) which the notaire will prepare on completion.
COMPLETION Following completion, the notaire will notify the
managing agent of the change of ownership and settle any amounts owed by the sellers to the syndic from the sale proceeds. The sellers should note that the notaire will not be in a position to release the net sale proceeds to them until the managing agent confirms there are no arrears owed by the outgoing owners. This means there may be a slight delay between completion and receipt of the net proceeds of sale by the sellers. Also, if the managing agent raises an objection and the issue is not resolved within three months of the objection, the part of the sale proceeds held by the notaire will automatically be transferred to the managing agent, unless either party (the sellers or the managing agent) takes the matter to court. The managing agent will
register the buyers as the new owners who will become directly responsible for the future charges and calls for funds, as explained above. It should be noted that the managing agent will have been notified of the identity of the buyers prior to completion, as it has the power to block the transaction if it transpires that the buyers already own a lot in the co-ownership and are in breach of any co-ownership rules or in arrears of their co- ownership charges. While buying within a co-
ownership is a popular option, especially for second-home owners who may feel reassured by the very fact that the property is within a co-owned complex, buyers would be well advised to seek guidance and have all necessary checks carried out to ensure that they do not join a dysfunctional co-ownership, and that they will be able to use and enjoy the property as intended. ■
Fabienne Atkin is a Senior Associate at Heslop & Platt (part of Ashtons Legal) Tel: 0113 393 1930
heslop-platt.co.uk
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FRENCH PROPERTY NEWS: November/December 202385
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