November 30th, 2015 –The number of problematic French co-ownerships have increased in recent years. It is “impossible to estimate how many, in the absence of recent statistics”, states Blanche Guillemot, a Director of the “Agence nationale de l’habitat” (the National Housing Agency), quoted by the Le Monde newspaper.
The most recent figures date back to 2011. It was estimated then, that 15.5% of co-ownerships representing 1.13 million apartments out of eight million were experimenting some degree of financial difficulties. Many experts believe that the percentage is even higher.
Multiple degradations
Co-ownership deterioration affects many types of buildings, such as small downtown buildings occupied by seniors. The latter can no longer pay their condo fees. Large projects of many hundreds units built in the 1960-1970, are also affected.
The ominous signs of co-ownership trouble are: an increase in unpaid condo fees, the constant increases of condo fees, frequently late payment of suppliers of goods and services, contracts renewed automatically without requests for tender and the deterioration of common portions.
“When work voted upon is not carried out, it generally means that the syndic (the manager of the co-ownership) does not have sufficient funds to start the work, or that he was compelled to use the funds for another purpose”, notes Denys Brunet, President of the “Chambre nationale des propriétaires” (the National Chamber of Co-Owners).
A worrisome situation
The average co-ownership in France comprises 20 units. “Thus, it becomes a real concern when three or four co-owners accumulate 3 late condo fees payment. This generally means that they are overwhelmed and that they will not be able to re-establish themselves”, states Jean-François Buet, President of the “FNAIM (Fédération nationale de l’immobilier)” (the National Federation of Real-Estate).
Realizing that French co-ownership is going through a rough patch, the government has adopted the ALUR Law (Access to Dwelling and to a Renovated Urbanism) to rectify the situation. Adopted on March 24th, 2014, this Law provides, amongst other provisions, for compulsory technical audits to allow the co-owners to anticipate major work, and to build up a working fund to ensure the financing of future major maintenance expenses.
Furthermore, it provides that in those co-ownerships where the debt ratio reaches 25% (or 15% for major projects), the syndic must inform the high Court (“tribunal de Grande instance (TGI)”), who will then appoint a mandatary to act as a judicial manager, who in turn is compelled to carry out an inspection and to issue recommendations to rectify the situation. In extreme cases, he may take over the complete management of the co-ownership.
Co-ownership trouble in Quebec?
France is learning the hard way from its mistakes. “Quebec must also draw inferences from the French experience, because many Quebec co-ownerships could also end up in serious trouble”, warns the Emeritus Lawyer and General Secretary of the “RGCQ”, Yves Joli-Coeur. If it happens in Quebec, the government will in all likelihood have to intervene to avoid a crisis in the residential real-estate market.
Montréal, November 30th, 2015
Source: Le Monde
