1. Compliance of free trade union associations
2. Procedures for the appointment of the managing agent by the co-owners
3. Statute of limitations for an action to annul the managing agent's mandate
4. Clarification of the co-owners' standing to
sue 5. Reference to a fixed base index in an indexation clause
6. Recovery of rental charges
7. Modification of the allocation of charges following a change of use of a unit in co-ownership
8. Conditions for termination of the lease
9. Breach of the seller's duty to inform and liability of the notary
1. Compliance of free trade union associations
3rd Civ. November 5, 2014 (No. 13-21.014) FS-PBRI :
The Court reiterates here that the failure to bring the bylaws of a free trade union association (ASL) into compliance before the expiry of the period stipulated by the Ordinance of July 1, 2004 (Art. 60) and by the Decree of May 3, 2006, deprives it of its capacity to sue or be sued, but does not call into question its legal existence.
In this case, a summons had been issued in 2009 at the request of an ASL. Created in 2001, this ASL had only published the amendment to its bylaws on June 9, 2012. On April 4, 2013, the Court of Appeal annulled all procedural acts carried out at the request of the ASL from the date of the initial summons.
The Court of Cassation quashed the judgment on the grounds that the irregularity resulting from the failure to bring the statutes into compliance was remedied at the time the Court of Appeal ruled.
It should be noted that the solution adopted in the judgment is expressly enshrined in the 2004 ordinance. Article 60 I of the ordinance, as amended by the ALUR law, includes a third paragraph stipulating that homeowners' associations (ASLs) that brought their statutes into compliance after May 5, 2008, regain the rights mentioned in Article 5 of the ordinance upon publication of the ALUR law, without, however, being able to challenge decisions that have become res judicata.
3rd Civil Chamber. November 12, 2014 (No. 13-25.547) FS-PB :
In this case, a homeowners' association (ASL) established on April 12, 1989, sued one of its members on May 31, 2005. The defendant argued that the claim was inadmissible. The Court of Cassation dismissed the appeal against the Court of Appeal's decision, which had ruled that the ASL had lost its capacity to sue and declared its action inadmissible.
The Court of Appeal held that
"the ASL failed to produce any document demonstrating the effective amendment of its bylaws to bring them into compliance with the ordinance of July 1, 2004." Furthermore, it specifies that "the acknowledgment of receipt of the 'association's statutes' issued by the prefecture on December 27, 2004, being insufficient to prove that these were indeed the statutes brought into compliance with the new regulations, and the establishment of new statutes dated October 3, 2011, which it noted, for an unchallenged reason, were not in compliance with the applicable texts, could not allow it to regularize its situation with regard to its right to take legal action."
2. Procedures for the appointment of the trustee by the co-owners
3rd Civ. November 5, 2014 (No. 13-26.768) FS-PB :
A resolution to appoint a property manager was not approved by the majority required under Article 25 of the Law of July 10, 1965. Having received at least one-third of the votes of all co-owners, a second vote was immediately held, requiring a majority under Article 24, which led to the appointment of this property manager.
The Court of Appeal annulled this resolution because the assembly was also required to vote on the candidacy of another property manager and therefore could not proceed to a second vote under Article 24 until after submitting the second candidacy to a vote under Article 25.
The Court of Cassation reiterates that "Article 19 of the decree of March 17, 1967, issued pursuant to Article 25-1 of the law of July 10, 1965, applies when several management contracts are submitted to the general meeting for approval" and dismisses the appeal.
3. Statute of Limitations for Actions to Annul Management Contracts
3rd Civil Chamber, November 19, 2014 (No. 13-21.399) FS-PB :
A co-owner filed a claim on March 25, 2010, seeking, firstly, the annulment of a decision of the general meeting of May 6, 2009, notified on May 14, 2009, appointing a management agent, and secondly, the appointment of a provisional administrator.
The Court of Appeal declared the claim inadmissible on the grounds that the action was time-barred. According to the court, pursuant to Article 42, paragraph 2 of the Law of July 10, 1965, actions challenging decisions of the general meeting must be brought within two months of notification of said decisions.
The Court of Cassation quashed the judgment on the grounds that the claim, based on the lack of legal personality of the entity appointed as managing agent in the management contract and on the absence of a separate bank or postal account, did not constitute an action challenging the general meeting that appointed the managing agent.
4. Clarification on the standing of co-owners to sue
(3rd Civil Chamber). November 19, 2014 (No. 13-18.925) FS-PB :
In a group of buildings subject to condominium ownership regulations, comprising thirteen buildings, unit owners in building 7 were authorized by a general meeting of the building's owners to connect their apartment, located on the 3rd floor, to their rooms on the 4th floor via an interior staircase, to close off the portion of the common hallway on the 4th floor that exclusively served their units, and were granted exclusive use of this section of the hallway. Unit owners in another building sued them for the return of the hallway and the demolition of the interior staircase.
The Court of Appeal dismissed the claim. In support of its decision, the Court of Appeal emphasized that "the condominium regulations distinguished between general common areas belonging to all co-owners of the buildings and special common areas belonging to the owners of each building; that they stipulated that each unit was allocated general thousandths and specific thousandths for the common areas of each building; and that the co-owners of each building could hold special meetings for matters concerning only their special common areas."
The Court of Cassation dismissed the appeal on the grounds that the Court of Appeal correctly held that these regulations created undivided ownership among the co-owners of each building, such that the other co-owners had no undivided ownership rights over the relevant parts of the buildings. Since the plaintiffs did not own any unit in building 7, their request for the return of common areas of that building was inadmissible for lack of standing and interest.
5. Reference to a fixed base index in an indexation clause
3rd Civil Chamber. December 3, 2014 (No. 13-25.034) FS-PBR :
Pursuant to Article L.112-1 of the French Monetary and Financial Code:
"Any clause in a contract for successive performance, and in particular leases and rentals of any kind, providing for the consideration of an index variation period exceeding the period between each revision, shall be deemed null and void."
In this case, the Court of Appeal notes that the period for assessing index variation is systematically longer than the one-year period between each indexation. Indeed, the lease stipulated that "the annual rent excluding taxes shall be automatically and without any formality indexed annually on January 1st based on the variation of the INSEE construction cost index, that the index to be taken into consideration is the last one published on January 1st of each year, the reference index being the last one known on July 12, 1996."
The Court of Cassation considers that indexation clauses referring to a fixed base index do not contravene Article L. 112-1 of the Monetary and Financial Code, provided that the period of index variation coincides with that of rent variation. Consequently, the Court of Appeal, which failed to investigate whether the calculation method chosen by the clause created an actual distortion between the index variation interval and the period between two revisions, did not provide a legal basis for its decision. 6.
Recovery of rental charges
3rd Civil Chamber. QPC, 5 Nov. 2014 (No. 14-40.039/ No. 14-40.040/ No. 14-40.041) FS-PB :
Article L. 442-3 of the construction and housing code in its version resulting from law No. 2010-1488 of 7 December 2010 on the new organization of the electricity market derogates from the rules of "recovery" of rental charges by allowing the landlord, owner of a building with moderate rent to recover all heating charges including the costs of depreciation and renewal of the installation.
This provision is being challenged, with the plaintiffs arguing that it violates the principles of liberty and equality before the law, guaranteed respectively by Articles 4 and 6 of the Declaration of the Rights of Man and of the Citizen of 1789.
The Third Civil Chamber referred the priority preliminary ruling to the Constitutional Council, given that the text could be considered as introducing unequal treatment among tenants, depending on whether or not the landlord decides to connect the building to a district heating network, an inequality not justified by a reason of general environmental interest, since the resulting financial burden falls only on certain tenants.
Constitutional Council, Priority Preliminary Ruling on Constitutionality, January 23, 2015, Nos. 2014441/442/443 :
According to the Constitutional Council, the principle of equality before the law does not require that the rules for recovering rental charges for heating-related expenses be identical regardless of the heating method used. The Council finds that the contested provisions encourage the use of grid energy for environmental protection purposes, and that the resulting difference in treatment regarding the charges that the social housing organization can recover from its tenants is directly linked both to a difference in circumstances and to the objective of general interest set by the legislature. Consequently, the Council considers that the complaint based on a violation of the principle of equality must therefore be dismissed.
The Council further notes that by modifying, including for existing leases, the legal framework applicable to determining recoverable charges for social housing, the legislature has not infringed upon legally concluded agreements and therefore does not infringe upon the right to the maintenance of legally concluded agreements, guaranteed by Articles 4 and 16 of the Declaration of 1789.
7. Modification of the allocation of charges following a change of use of a unit in a co-ownership
3rd Civ. October 1, 2014 (No. 13-21.745) FS-PB :
The owner of a residential unit located on the fourth floor of a condominium building leased it for use as a medical practice. This owner sued the condominium association to have the general meeting's decision to modify the allocation of elevator expenses for his unit annulled, following the change in its use.
The Court of Appeal upheld the owner's claim, noting that the condominium bylaws stipulate that apartments may only be occupied for residential purposes or used for a professional activity, and held that there had been no change of use within the meaning of Article 25(f) of the Law of July 10, 1965, since the co-owner had simply used his unit in accordance with the condominium bylaws.
Pursuant to Article 25(f) of the Law of 10 July 1965, as applicable to this case, which stipulates that a modification of the allocation of charges resulting from collective services and common equipment, necessitated by a change in the use of one or more private units, may be adopted by a majority vote of all co-owners, the Court of Cassation quashes the judgment of the Court of Appeal. The Court of Cassation holds that this provision applies even when the new use is provided for in the condominium regulations.
8. Conditions for Termination of a Lease
3rd Civil Chamber, 15 October 2014 (No. 13616.990) FS-PB :
In this case, an elderly tenant was sued for termination of the lease due to non-payment of rent.
The Court of Appeal ordered the termination of the lease. The tenant contested the decision on the basis of Article 15 III of the Law of July 6, 1989, which prohibits a landlord from terminating the lease of an elderly and impoverished tenant without offering them alternative accommodation.
In this ruling, the Court of Cassation limits the scope of this provision by specifying that this article does not apply in the event of a court-ordered termination of the lease due to the tenant's breach of their obligations.
9. Seller's breach of their duty to inform and the notary's liability
. 1st Civil Chamber, November 26, 2014 (No. 13-27.965) F-PB :
Ordered to return the deposit to the buyers following the court-ordered annulment of a preliminary sales agreement due to an error regarding the essential qualities of the property sold, the sellers sued the notary for compensation due to professional negligence during the execution of the agreement.
The Court of Cassation limits the scope of the notary's obligations. The court first noted that the cancellation of the preliminary sales agreement was solely due to the sellers' failure to fulfill their duty to inform the buyers. The court then emphasized that this preliminary agreement was intended to formalize the parties' intentions without waiting for the expiration of the time required to obtain the additional information and administrative documents necessary to finalize the sale. Consequently, the Court of Appeal was able to conclude that the notary was not at fault, as he had no reason to suspect the sellers' statements were inaccurate.
