In the previous parts of this series of articles, we have focused on general issues of co-ownership, in particular on the ideal co-ownership of a thing. This part will focus on residential co-ownership, which affects many owners of residential units and brings its own important specificities.
What is home ownership?
According to Section 1158 of the Civil Code, co-ownership of a flat is defined as co-ownership of immovable property based on the ownership of units. This type of co-ownership arises if the immovable property includes a house with at least two flats.
The unit includes the apartment as a spatially separated part of the house and a share in the common parts of the immovable property, which are interconnected and inseparable. The main difference from the ideal co-ownership, which we have discussed in previous articles, is that the unit is a separate immovable property. The common parts of the immovable property include, for example, the land, the structural parts of the house that are important for its maintenance and the facilities that serve the use of the flats (e.g. elevator, staircase). The common elements are always the land on which the house was built or an easement that gives the unit owners the right to have a house on the land. This also applies if a certain part is given to a unit owner for exclusive use (e.g. terraces or front gardens).
Shares in common parts
Under the new Civil Code, shares in common parts can be defined in different ways. They can be set as equal or determined by reference to the nature, size and location of the apartment. Unless otherwise determined, they are determined by the ratio of the size of the floor area of the apartment to the total floor area of all apartments in the building.
Methods of formation of units
Units can be created in the following ways:
- By construction – A unit is created by construction if the parties commit to it in connection with the construction of the house or its alteration. The house must be at least at such a stage of construction that it is already enclosed externally by the exterior walls and roof structure and the dwelling is enclosed by the exterior walls. The basic conditions regarding the creation of the units may be defined in the building contract.
- Court decision – The unit will be created if the court so decides when separating from the community of property, when dissolving and settling the community of property, when reducing the community property or when settling the community property.
- By registration in the public register – The owner or a person entitled under another property right by declaration divides his/her right to the house and land into ownership of the units. A declaration in this sense means the owner’s declaration, which is the basic document that determines the division of the land (and the house that is part of it) into individual units, and also determines the basic conditions for the management of the house and land.
Particulars of the owner’s declaration
The law sets out the minimum mandatory elements of the owner’s declaration at least to the following extent:
- Information about the land, house, municipality and cadastral area
- Unit details, in particular:
- Identification of individual flats at least by number and location, specifying the purpose of use.
- Identification and description of the common areas with regard to their structural, technical or user nature and, if applicable, which of them are reserved for the exclusive use of the owner of a particular unit.
- Size of shares in common parts.
- Rights and defects passing with the creation of the ownership of the unit to all or some of the unit owners.
The declaration shall be accompanied by floor plans of all floors, or diagrams thereof, indicating the location of the flats and common parts of the building, together with the floor areas of the flats.
The owner’s declaration should also contain rules for the management of the house and land and the use of the common parts. The Civil Code stipulates that if the division creates at least five units, at least four of which will be owned by four different owners, the declaration must include the statutes of the unit owners’ association with the requisites provided by law.
Differences between legal regimes
It is important to note, however, that the above rules apply to units defined after 1. 1. 2014 . However, a large number of units were defined prior to 31 December 2013 pursuant to Act No. 72/1994 Coll., on the Ownership of Flats (the “Flat Ownership Act”). Although at first glance this change does not appear to be significant for apartment owners, from a legal point of view it brings with it different legal aspects. Whether a unit has been defined according to the Civil Code or the Condominium Ownership Act can be ascertained from the title deed of the unit or by consulting the website of the Land Registry Office(http://www.cuzk.cz), where this information is listed as “Unit type”.
An important difference between these legal regimes is the specification of the unit. In the case of a unit defined under the Home Ownership Act, the location is always in a building, whereas a unit defined under the Civil Code is usually defined in a plot of land. A unit defined under the Condominium Act also includes a co-ownership interest in the common parts of the building and, where applicable, the land under the building. A unit defined by the Civil Code automatically includes a share in the common parts of the immovable property, which are interconnected and inseparable.
Practical advice for owners
Even after more than ten years since the Civil Code came into force, we often encounter incorrect specification of units, especially when clients come with self-prepared contracts on transfer of ownership. These contracts often do not meet the legal requirements for the specification of the units, which leads to the rejection of the application for registration of the ownership right.
Recommendation:
When preparing contractual documentation for the transfer of ownership of a unit, we strongly recommend consulting with experts to avoid unwanted prolongation of the proceedings at the Land Registry.
If you would like more information or need assistance with preparing contract documentation or an owner’s declaration, please do not hesitate to contact us.
This article is for informational purposes only and does not constitute legal advice or guidance for any particular case.