1. Housing units under the AOHU and under the NCC
Although the AOHU was abolished on the effect of the NCC, the ownership of housing units that arose while the AOHU was in effect will continue to be governed by the AOHU instead of the NCC, as is clear from the provisions of § 3063 of the NCC, under which the ownership of housing units in a building will be governed by the AOHU even after the NCC has come into effect, if at least one of the owners acquired ownership rights to a housing unit according to the AOHU before the effective date of the NCC.
This therefore gives rise to dual-track regulation of housing ownership. When transferring a housing unit, or other disposition therewith, it will therefore be necessary to assess whether ownership rights are governed by the AOHU or NCC.
2. The housing unit and its relation to housing shares
Under § 1159 of the NCC, a housing unit is understood as a spatially separate part of a building used for living and a share of the interconnected and inseparable common parts of the real property.
A housing unit under the NCC is therefore the only real property, which includes, in addition to the actual housing unit, a share of the common parts of the building and land. Under the rules of the NCC, a housing unit and the co-ownership shares belonging thereto are inseparable and constitute a single real property – housing unit in legal terms.
This is a significant difference from the provisions of the AOHU, where the housing unit was a separate item, as was the share of the common parts of the building and share of the common parts of the land. On transfer, it was therefore necessary to separately transfer the housing unit and the co-ownership shares belonging thereto, as the transfer of the housing unit did not mean the automatic transfer of housing shares, as in the case of the NCC.
3. Association of unit owners
The NCC also brings several crucial changes in the operation of the association of unit owners (hereafter “AUO“). Under both the NCC and AOHU, the AUO is a legal entity responsible for building management. An AUO is mandatory in a building with at least five units, of which at least three are owned by different owners.
An innovation brought by the NCC, however, is the option of establishing an AUO in a building with less than five units, with the consent of all owners (see § 1199 NCC), which was not possible under the AOHU.
Establishment of an AUO. The NCC also changes the manner in which an AUO is established. According to § 9 (3) of the AOHU, an AUO arises in a building with at least five units, which are owned by at least three different owners, at the moment a document certifying ownership of the unit is delivered to the third owner.
According to the NCC, an AUO does not arise automatically on the fulfilment of statutory requirements, but according to § 1200 of the NCC, on approval of the statutes. Thus, according to the NCC, an AUO only arises based on the negotiation of unit owners. The AUO is therefore established on approval of the statutes. The AUO then arises, pursuant to § 1204 of the NCC, on the date of its registration in a public register. The registration of the AUO in a public register is thus of a constitutive nature.
If an AUO is not formed, although it is required by the NCC (the owners do not establish an AUO), then all unit owners in the building will be limited in their disposition rights, as under § 1198 (2) of the NCC, the registration of ownership rights to transferred units in the Land Register is subject to the establishment of an AUO. Demonstrating the establishment of an AUO is therefore a condition of registration of ownership in the Land Register.
Voting. The NCC also brings an important change to voting in the AUO. As a rule, the adoption of a resolution will newly require the consent of the majority of votes of owners present, unless the statutes or the law requires a higher quorum (see § 1206 (NCC).
By contrast, the AOHU set various quorums for adopting resolutions, depending on what the decision related to. For example, the adoption of a resolution on the reconstruction and modernisation of the building required the consent of three-quarters of all owners. In practice, problems arose when reconstruction could not be approved due to the repeated absence of certain owners.
The NCC should therefore facilitate decision-making within the AUO. Outside the above, pursuant to § 1194 of the NCC, it will be additionally possible to decide outside of AUO meetings, by a postal vote, which will allow owners who are unable to attend the AUO meeting to vote.
4. Rights and obligations of unit owners
The NCC also includes more detailed regulation of the rights and obligations of unit owners. For example, under the NCC, the unit owner is obliged to maintain the common parts of the building (see § 1176 NCC).
The NCC further prescribes an obligation for anyone purchasing a unit into their ownership to notify the AUO of this fact within one month of learning, or the moment they could have learned that they are the owner, including their address and the number of persons who will be living in the housing unit (see § 1177 NCC).
Also, any unit owner has the right to request the AUO to give them the name and address of any unit owner or tenant in the building (see § 1178 NCC).
The rights and obligations of unit owners under the NCC are therefore more complex than the simple regulations under the AOHU.
5. Conclusion
In view of the above, it can be concluded that the NCC primarily introduces dual-track legislation on the ownership of housing units, where some housing units will continue to be transferred according to the AOHU, while units arising after the effective date of the NCC will be transferred in accordance with the NCC.
A specificity of the transfer of units under the NCC is primarily the fact that housing shares are connected to the housing unit and form a single real property.
A significant change primarily affects the management of buildings and housing units within the framework of the AUO, where its establishment is left to the disposition of unit owners. New management rules are designed to facilitate decision-making within the AUO and to eliminate the complications arising on the inaction of some owners (failure to attend meetings).
The NCC also includes more comprehensive regulation of the rights and obligations of unit owners than before.
However, there are many more changes in the ownership of housing units, e.g. under the NCC, a member of the AUO can also be a person who does not own a housing unit in the building.
An overview of all these changes is beyond the scope of this article and we therefore recommend contacting an expert capable of assessing the potential risks and specifics of the NCC when resolving legal problems concerning the ownership of housing units.
For more information, please contact our office’s partner, Mgr. Jiří Kučera, e-mail: jkucera@kuceralegal.cz ; tel.: +420604242241.