Legal regime of condominium
Condominium is essentially a legal regime governed in Barbados by the Condominium Act, Cap 224A. A developer who wishes to create such a regime must comply strictly wIth the requirements of the Act, especially with regard to the provisions governing the content of the two governing documents: the ‘declaration’ and the ‘bye-laws’. The developer must in particular ensure that the declaration contains all the information required by s 4(1) of the Act, such as a description of the building and of each unit in the building by reference to its floor area, and restrictions affecting the use of the units. It has been stated by a Bahamian judge, with reference to the similarly-worded Bahamian legislation, that ‘the declaration is the foundation stone on which the entire legal edifice in the Act was built, and if the declaration is defective, the edifice must fall’: Henry, J in Goodyear v Maynard (1983). Also essential to a condominium scheme are the bye-laws, which govern such matters as the composition of the board of management and the procedure for electing members of the board, the conduct of general meetings, matters relating to the operation of the property, including fixing the amount of contributions payable by unit owners, and restrictions imposed on unit owners’ use of the property. Some of these matters may also be addressed in the declaration. The Schedule to the Act sets out standard bye-laws which may be adopted by the developer; alternatively, the developer may instruct its attorney to draft such bye-laws as it thinks fit.
Rights of the unit owner
One of the notable features of condominium unit ownership is that the purchaser acquires a freehold interest in his/her unit. A freehold interest lasts in perpetuity and cannot be terminated, unlike a leasehold, which lasts for a fixed period only and may even be terminated prematurely on account of a breach of a covenant in the lease. A freehold is thus more valuable than a leasehold, as it is likely to appreciate in value over time, whereas a leasehold inevitably depreciates as it approaches its expiry date. Prior to the Condominium Act (enacted in 1971 and revised most recently in 1988), a unit in an apartment block could only be held ‘leasehold’; it was not possible to hold a freehold interest in a unit in an apartment block, because of the ancient rule, derived from English common law, that only the owner of the soil on which a building stood could have a freehold in the building, so that the occupant of an apartment or flat on an upper floor could only have a leasehold interest in that apartment. The Condominium Act made it possible to purchase a freehold interest in any apartment or flat in a building, so long as the developer who erected or acquired the building had satisfied the necessary legal formalities for establishing a condominium within the meaning of the Act.
In addition to the freehold interest in his unit, a unit owner in a condominium scheme also acquires a share in the ‘common property’, which refers to those parts of a condominium building and grounds which are used or enjoyed in common by all the unit owners, such as halls, corridors, basements, lifts, staircases, parking areas, gardens and swimming pools. Also included in the common property are central installations for water, power and air-conditioning, and the bearing walls, members and roof of the building.
The nature of condominium ownership was succinctly explained by Gonsalves-Sabola, J in Triple Ecstasy Ltd v Bay View Village Management Ltd (1988). He said that the legislation ‘introduced…the condominium concept of ownership, whereby a building could be subdivided among several owners, each owner owning absolutely his compartmentalized unit, but yet having defined rights over other parts of the property, subject to his liability to make financial contributions towards the general maintenance of the condominium.’
Obligations of the unit owner
The two main obligations of a condominium unit owner are (i) to pay the contributions levied by the condominium management (the ‘body corporate’) (s 18), and (ii) to observe the bye-laws (s 23). Regarding payment of contributions, it has been judicially emphasized that ‘the success of the condominium idea depends on the punctual discharge by the unit owners of their financial obligations’: Gonsalves-Sabola, J in Triple Ecstasy Ltd v Bay View Management Ltd (1988). Indeed, condominium management will inevitably depend on unit owners’ monetary contributions in order to provide necessary facilities such as security and maintenance of buildings and grounds, as well as to pay insurance premiums and a host of other expenses. So crucial is prompt payment of contributions that management boards often resort to ‘naming and shaming’ delinquent unit owners by publishingand/or circulating lists of defaulters. In cases of persistent default, the Act gives a body corporate two methods of recovery of outstanding contributions: (i) an action for debt against the defaulting owner (s 18), and (ii) a lien entitling the body corporate to sell the unit and recover the amount owed (s 21).
Duties and powers of the ‘body corporate’
Section 13 of the Act provides that ‘the proprietors of all the units described in the declaration shall…be established as a body corporate…’, with separate legal personality, and thus capable of suing and being sued in its own name. Section 14 states that the body corporate has three duties: (i) to operate the property for the benefit of all the unit owners and to be responsible for the enforcement of the bye-laws; (ii) to keep the common property in good repair; and (iii) to insure the building to its replacement value, against fire, hurricane and sea-wave.
Although the body corporate under the Act is comprised of all unit owners, it would be impracticable, especially where there are large numbers of owners, for all of them to participate in the day-to-day management of the condominium. The owners will therefore exercise their right to vote for the appointment of a management board of up to 7 persons (under the scheduled bye-laws) which will be responsible for the operation of the condominium. Board members may also be voted out of office by the unit owners at a general meeting, according to the procedure stipulated in the bye-laws.
Where the management board fails to carry out any of the duties specified by the Act (for example, where it fails to enforce the bye-laws against delinquent owners, or neglects to maintain the common property), an aggrieved unit owner may bring an action in court for a mandatory injunction to compel compliance; and in cases of serious breaches of duty (for example, failure to provide the unit owners with access to the audited financial records concerning the management of the condominium, as required by s 17), unit owners may apply to the court under s 27 for an order appointing an administrator to take over the operation of the condominium from the body corporate.
Written by Dr Vanessa Kodilinye, Attorney-at-Law, 2015-04-30