Version updated on 21 May 2020

Issued by the French government pursuant to the emergency law to tackle the Covid-19 epidemic, Ordinance No. 2020-304 of 25 March 2020 adapting the rules applicable to courts of law ruling in non-criminal matters and to certain co-ownership property manager contracts (accessible in French here), as successively amended by Ordinance No. 2020-460 of 22 April 2020 and Ordinance No. 2020-595 of 20 May 2020 (the "Ordinance"), adjusts on account of the state of public health emergency, the rules applicable to certain co-ownership property manager contracts (contrats de syndic de copropriété) and mandates entrusted to members of co-owners' committees (conseil syndical). It also adjusts the rules applicable to courts of law ruling in non-criminal matters (this part of the Ordinance is analysed here).

Article 11 (I) (2) (j) of the emergency law to tackle the Covid-19 epidemic authorised the French government to introduce measures "to adapt the law on co-ownership of buildings to take into account, in particular the appointment of managing agents, the impossibility or difficulty of convening general meetings of co-owners".

In this respect, the Ordinance introduces measures regarding co-owners' general meetings that should have been held during the epidemic to (i) appoint a new property manager further to expiry of the existing property manager's contract and/or (ii) appoint new members of the co-owners' committee further to expiry of the existing members' mandates, amongst other matters. The purpose of the Ordinance's provisions is to ensure continuity in managing co-ownerships throughout the health crisis.

Lastly, Ordinance No. 2020-595 of 20 May 2020 (accessible in French here) aims to decorrelate the duration of certain initial provisions of the Ordinance from the sliding duration of the state of public health emergency to end it on a fixed date, and to allow the holding of fully dematerialised general meetings of co-owners.

1. CO-OWNERSHIP PROPERTY MANAGER CONTRACTS

The Ordinance provides that "if a property manager's contract expires or has expired between 12 March 2020 and 23 July 2020 inclusive, it shall be renewed on its existing terms until entry into effect of the new property manager's contract awarded by the next co-owners' general meeting".

The Ordinance thus introduces an exception to the principle that co-ownership property manager contracts are fixed-term agreements that cannot be renewed tacitly. This exception allows for the "automatic renewal" of any contracts expiring between 12 March 2020 and 23 July 2020 inclusive if the co-owners' general meeting that was to award a new property management contract cannot be held.

Under these circumstances, and in accordance with the Ordinance, acting property managers' contracts shall be renewed until entry into effect of the new manager's contract appointed by the next co-owners' general meeting. The Ordinance moreover provides that such general meeting must be held at the latest on 31 January 2021.

The Ordinance also provides that the lump-sum remuneration awarded to the property manager for the current period must be calculated according to the terms of the expired contract, pro rata to the duration of its renewal.

Lastly, it should be noted that the Ordinance specifies that the above-mentioned provisions "shall not apply where a general meeting held before [26 March 2020], appointed a property manager whose contract enters into effect after 12 March 2020". Indeed the objective is not to override any appointments validly approved at a general meeting held before the publication of the Ordinance.

2. CO-OWNERS' COMMITTEE MEMBER MANDATES

The Ordinance introduces similar rules for mandates of co-owners' committee members. Their role mainly consists in assisting the property manager and overseeing its management of the co-ownership, and consulting on tenders and contracts to be executed by the co-ownership association.

Accordingly, the Ordinance provides that "if a mandate entrusted to a co-owners' committee member by resolution of the general meeting expires or has expired between 12 March 2020 and 23 July 2020 inclusive, it shall be renewed until the next co-owners' general meeting", it being specified that such general meeting must take place at the latest on 31 January 2021. The above-mentioned provisions do not apply "where a co-owners' general meeting was held and appointed new co-owners' committee members before [26 March 2020]".

3. ORGANISATION OF FULLY-DEMATERIALISED CO-OWNERS' GENERAL MEETINGS

Due to the Covid-19 epidemic and related prohibitions large meetings, many co-ownerships are materially unable to hold general meetings under normal conditions.

As this situation is likely to continue beyond the term of the state of public health emergency, the Ordinance provides for a certain number of measures to allow the holding of fully dematerialised general meetings of co-owners, which is not allowed by the law of 10 July 1965 and its implementing decree.

These measures are mainly as follows:

• possibility for the co-ownership property manager to convene a general meeting without the physical presence of the co-owners, who can then participate in the meeting by videoconferencing or email voting before the general meeting is held, it being specified that:
  • in cases where the use of videoconferencing is not possible, the co-ownership property manager may stipulate that decisions will be taken solely by means of a postal vote;
  • the co-ownership property managers who have already convened a general meeting may have recourse to these new possibilities, provided that the co-owners are informed of it at least fifteen days before the general meeting is held;
  • the rules for convening (information on the place of the meeting and the procedures for participation, etc.) and holding general meetings (certification of the attendance sheet, signing of the minutes, etc.) provided for in the decree implementing the law of 10 July 1965 are adjusted accordingly;
     
• possibility for a co-owner, as a representative, to receive more than three voting delegations provided that the total of the votes he himself and his principals have together does not exceed 15% of all co-owner votes (as opposed to 10% under normal circumstances);
   
• possibility for the co-ownership property manager to decide on the technical means enabling the organisation of a general meeting without physical presence (video conference, audio conference, etc.), without the prior need for the general meeting to have decided upon the use of such technical means.

It should be noted that the measures referred to above relating to the organisation of fully dematerialised general meetings of co-owners are applicable from 1 June 2020 (the date on which the provisions relating to postal voting provided for by Ordinance No. 2019-1101 of 30 October 2019 reforming co-ownership law come into force) until 31 January 2020 (the date until which the other derogatory provisions relating to co-ownership provided for by the Ordinance will apply).

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The partners of Gide's Real Estate Transactions & Financing practice group are available to answer any questions you may have in this respect. You may also get in touch with your usual contact at the firm.

This legal update is not intended to be and should not be construed as providing legal advice. The addressee is solely liable for any use of the information contained herein and the Law Firm shall not be held responsible for any damages, direct, indirect or otherwise, arising from the use of the information by the addressee.

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