Section 24 Private real estate developments

(1) The special system of ownership established in section 396 of the Civil Code shall apply to private developments that meet the following requirements: a. Being formed by two or more detached buildings or independent plots between them used mainly as dwellings or premises. b. Owners of such buildings or of the units in which they are divided participate in an indivisible co-ownership of other immovable elements, roads, facilities or services.

 

(2) The private developments referred to in the preceding subsection may:

 

a. Constitute one commonhold through any of the procedures provided for in section 5 (2).

In this case they shall be subject to the provisions of this Act, which shall be entirely applicable to them.

 

b. Create an association of commonholds. For this purpose, the commonhold community statement must be executed by the sole owner of the development or by all the presidents of the component commonholds, duly authorised by majority vote of their respective Owners’ Committee .

The commonhold community statement shall include the description of the whole development and of the common parts, roads, installations and facilities. It shall also contain the percentage established for each one of the component commonholds. These shall be jointly liable for the general expenses of the association. The commonhold community statement and the articles of the association may be registered at the Land Registry.

 

(3) The aforementioned association shall enjoy the same legal status as commonholds and shall be governed under the provisions of this Act with the following specifications:

 

a. The Owners’ Committee shall be formed, unless otherwise agreed, by the president of each component commonhold in representation of its individual unit owners.

 

b. The adoption of resolutions for which the law prescribes qualified majorities shall require, in turn, a prior appropriate majority at the Owners’ Committee of each one of the commonholds belonging to the association.

 

c. Unless the Owners’ Committee decides otherwise, the provisions of section 9 concerning a reserve fund shall not apply to the association.

Duties of governing bodies of the association shall only cover common elements, roads, installations and facilities or services. Their decisions shall in no event diminish the powers of the governing bodies of the component commonholds.

 

4. Provisions of this Act, with the same specifications indicated in the preceding paragraph, shall apply supplementarily to covenants adopted by and between owners in the case of those developments that do not adopt any of the legal forms provided in subsection 2 of this section.

 

 

24.1 Special commonholds

 

This section tries to cover a legal loophole for those macro-estates in which there are sub-commonholds integrated in a master community.

 

One may wish to create a master community in the following situation.

Assume there are four blocks of flats around a garden. Each block of flats has its own unique maintenance and covenant issues, but all blocks want to share the common garden. Each block could be a separate commonhold with maintenance obligations, voting and other rights pertaining just to that block. Only those in the affected block would get to vote on issues relating to that block. Each sub-commonhold has its own service fees, its Owners’ Committee, its president and its own common elements but it is also belongs to a master community with general common elements. Each sub-commonhold has to contribute to the expense of the master community in accordance with the allocation established for this purpose in the title, thus, there are two types of allocations some in respect of each unit to its sub-commonhold; and others of each commonhold in respect of the master community.

The master community only has authority over general matters and general common elements not over affaires of each sub-commonhold.CA ruling in Lleida 14-12-2007 held that a sub-commonhold is not entitled to claim for withdraw of an air conditioning unit placed in a common general area

 

24.2 Scope 

 

In order to find out which commonholds are under the scope of this section, it is necessary to consider section 2 and 3 of the Act.

Section 2 provides that the Act shall be applied to:

 

a. Registered commonholds

b. Unregistered commonholds

c. Private real estate developments

 

Thus, a development fulfilling these features reflected in this section may be constituted as a standard commonhold or as a private real estate development (master community). Considering the jurisprudence we find examples of types of buildings subject to this section.

• Developments formed by blocks of flats, detached houses and plots for the building of future homes.CA ruling in Seville 15-03-2006

• Three semi-detached houses with only the foundations as common element.  CA Asturias 19-11-2001

• Four blocks of flats joined with only a communal garage as common element. CA Cadiz 11-04-2003 and 21-03-2003

• Industrial estates with roads and drainage as common elements. CA ruling in Zaragoza 01-07-2002

 

24.3 Private real estate developments without title

 

Courts have been recognizing its inclusion in section 24 provided that there is a constitutive will (but where it has not been formally expressed). SC 07-04-2003 CA ruling in Alicante 12-06-2008

The CA ruling in Cadiz 21-03-2003 held that the existence of a book of minutes was sufficient in order to acknowledge an intention.

Other courts do not consider this requirement as indispensable, holding that it is enough where there are common elements. CA ruling in Malaga 30-05-2005 and CA ruling in Madrid 27-04-2007

 

Other assumptions considered by courts as ‘de facto’ commonholds would be:

 

• Where the registered deed of purchase establishes duties in respect of common elements. CA ruling in Granada 22-12-2004

 

• Holding meetings or paying service fees. CA ruling in Málaga 30-05-2005

 

24.3.1 Allocation of contribution 

 

As the Act does not give any provision, courts are holding that the area of each unit is not an essential criterion to determine allocations. CA ruling in Zaragoza 09-10-2003 and CA ruling in Córdoba 28-03-2005

 

24.3.2 Majorities regime

 

As was stated by the CA ruling in Madrid 19-01-2004 the general regime of majorities set forth in the Act shall be applied. However, it is possible to covenant in the Articles, different majorities than those established in the Act. For instance, it is permitted to change the basis for contributions to the expenses of the commonholds by a non-unanimous resolution. CA ruling in Santa Cruz de Tenerife 19-12-2008

As a general rule the Act shall be applicable to those matters not contained in this section 24.

 

24.4 Governing bodies

 

The main feature of these private developments provided in section 24 is that they could be optionally formed by two or more commonholds gathered through the master community.

 

24.4.1 President

 

The master community’s president is appointed by the members of the master community’s committee among the presidents of each commonholds.

 

24.4.2 Master community’s committee

 

It is formed by the presidents of each commonhold , since each one of those commonholds have their own Owners’ Committee. They represent the interests of their commonholds.

 

24.5 Covenants between owners

 

Subsection (4) permits covenants between owners which create commonholds with particular and specific rules. In respect of assessments of quotas it is usual to fix equal allocations in order to contribute to the common expenses regardless of the area of each unit . CA ruling in Cádiz 04-03-2002.

It is also valid to allocate two quotas; one for the expense of the commonhold and other for the contributions to the master community. CA ruling in Valencia 30-04-2002

In spite of the freedom granted by this subsection there are some limitations established in section 13 - 18 of the Act, which are considered compulsory and are not affected by the wishes of individuals.

 

24.6 Common elements of the master community and of the commonholds

 

The title determines which common elements are allocated to the master community and which ones belong to each sub-commonhold. Where there is:

 

i. no provision in the title

ii. no resolution passed for this purpose

iii. no prior typical commonhold practice;

 

Every common element in the development will be considered as belonging to those of the master community. CA ruling in Cádiz 23-12-2005

 

This section 24 is virtually silent on the issue of whether developments are bound by section 7 and 12 of the Act which deal with alteration of units and common parts respectively.

Even though courts are becoming more flexible because of the special features of these developments, in principle, limits on the freedom of commonholders to alter units and others affecting common elements shall be applied.  CA ruling in Alicante 04-05-2005

 

24.7 Alteration of units

 

Section 7 of the Act obliges commonholders to simply notify ‘the commonhold representative’ of any alteration of their units provided that such work not diminish or alter the safety of the building, its general structure, its external image or configuration, or prejudice the rights of another proprietor otherwise the commonholder would need to apply for permission from the Owners’ Committee.

The rules above are also applied in developments regulated by section 24 . CA ruling in Málaga 14-06-2002 and CA ruling in Alicante 04-05-2005

 

Even though facades in developments formed by villas are private elements (CA ruling in Pontevedra 16-01-2008)  alterations of them are not allowed in pursuance of section 7 which ban them if they alter its ‘external image’. CA ruling in Baleares 17-12-2007 Even where the impact is minimum

 

24.8 Notice of meetings

 

Even in case of unregistered developments, notice of meetings must comply with provisions prescribed in section 16 of the Act. CA ruling in Zaragoza 01-07-2002

 

24.9 Debt recovery

 

Section 21 of the Act establishes a special procedure in order to recover unpaid service charges from commonholders. This is fully applicable to developments regulated in this section 24