All you need to know about buying an apartment in co-ownership in Luxembourg
Are you about to buy a apartment in a co-owned building? Are you taking your first steps in the world of apartment buildings? Or are you thinking of becoming a volunteer building manager? Let us take you through the basics.
Glossary of co-ownership
Have you been convened to the GA? Just been billed the service charges by the building manager? Do you know who sits on the homeowner association board?
These are all questions you will have to answer when you buy an unit in an apartment building. So what do you need to know to stay on good terms with your new neighbours?
Homeowner association: this brings together all the co-owners of an apartment building. It is a legal entity in its own right, just like a company. As soon as you buy a unit in an apartment building, you automatically become a member of the homeowner association.
The general assembly or GA: this is the assembly to which all co-owners are convened once a year, at which decisions are taken. The votes are counted according to the shares in the co-ownership. These shares are called “tantièmes” and are calculated by the cadastral administration. Remember that, if you are unable to attend the GA, you can be represented and entrust your “vote” to a neighbour or the building manager. It is mandatory to hold at least one GA per year and all decisions must be recorded in minutes signed by all parties. This helps to monitor the management of the building over the years, especially in the event of a change of building manager or changes of owners.
Homeowner association board: it is composed of a small number of co-owners elected in the GA. It assists the building manager, oversees its work and liaises with all the co-owners. It may sometimes be granted enhanced powers by the homeowner association.
Building manager (Syndic): The building manager is the legal representative of the apartment building. It is mandated by the homeowner association to carry out the decisions taken at the GA.
Is it mandatory to have a building manager in Luxembourg?
Yes, having a building manager is mandatory. However, in apartment buildings of less than 10 units, it is not mandatory to have an independent professional building manager. The building manager may be one of the co-owners, performing this function on a voluntary basis.
Role and legal obligations of the building manager
The role of the building manager, whether professional or volunteer, is governed by the law and revolves around 3 duties:
- Administrative: ensure that you have the necessary permission from the administration for any change in the distribution of the property.
- Accounting: keep proper accounts, anticipate expenses.
- Technical: ensure the maintenance of the building. Deciding to change the boiler if it regularly requires high maintenance costs, for example.
“Ensuring that you have the necessary funds to properly maintain the apartment building and pay invoices is a key responsibility of the building manager. This is particularly important in the context of a sharp rise in gas prices as we are seeing today”, explains Marjorie Drapier, building-rental manager at INOWAI.
Voting rules in the GA
When the building manager is a volunteer, the voting rules in the GA may not be respected, simply because of a lack of knowledge of the law.
In fact, different rules apply depending on the types of requests made. These majority rules are expressed in thousandths.
Unanimity: All co-owners present or not at the GA must agree to changes such as the modification of the pro rata service charges (according to the co-ownership rules). For example, if it is decided that owners on the ground floor no longer contribute to the maintenance costs of the elevator. The sale of common parts also requires the agreement of all.
A 3/4 majority: A 3/4 majority of all co-owners present or not present is required for the amendment of the co-ownership rules or alteration work.
Absolute majority: We speak of an absolute majority when the majority of all thousandths (present or not) voted in favour. This vote is required for the appointment or dismissal of the building manager, permissions to be given to certain owners, to install an awning or a private satellite, for example, and any improvements.
Simple or relative majority: We speak of a simple majority when half of the people present at the GA or represented are in favour. This vote is required for the approval of the accounts, annual budget, maintenance or repair work such as repairing the boiler.
What are the main misunderstandings about co-ownership?
Any private installation is subject to the vote of the assembly. Do you want to install a pergola? A charging station in your parking space? It will be necessary to obtain the permission of the co-owners during the GA.
The building manager must be warned in the event of a problem. Keep in mind that, unlike you, the building manager does not necessarily live on site. In case of malfunction, remember to notify it as soon as possible, along with the homeowner association board that will keep track of developments.
All problems are not the responsibility of the building manager. The building manager manages the common areas, but not the private areas. Is your radiator leaking? Call a plumber. Notify the building manager only in the event of a problem on the installation. Is your neighbour parking in your parking space? Ask them to respect your property right, as the building manager is not competent to resolve disputes that are the responsibility of private parties.
In the event of damage, everyone pays. The garage door was damaged but who is to blame? Did someone leave an old fridge in the courtyard? When the culprit cannot be identified, all the co-owners have an obligation to pay for the repair of the door or the evacuation of bulky objects.
The cost of major works must be anticipated. From October 2022, depending on the energy class of the building, each co-owner will have to contribute a certain amount to a works fund that serves to anticipate an expensive renovation: roof, facade, thermal insulation, etc.
How much does a professional building manager charge?
Prices start from around €20 to €40 per month per unit. The building management market is subject to strong price competition.
“The building manager’s fees must be calculated in relation to the condition of the building and the expectations of the co-owners. If the building requires major work, the price will be revised upwards to assist you effectively in selecting the best service provider,” explains Inowai’s syndic manager.
For those of you who choose the most competitive price, a tip, read the mandate of the chosen building manager to identify possible hidden fees. Ask yourself, for example, if extraordinary general assemblies are charged extra and at what cost. If the costs of convening GAs and of sending paper documents are included. Is there a Commission applied by the building manager on the works voted in a GA? These “additional services” could well increase the costs that appeared attractive at first sight.
In addition to the building manager’s fees, there are other frequent frustrations for co-owners.
Which co-ownership insurance to choose?
The apartment building insurance insures the building, while the insurance of each individual owner is used to cover the contents of the apartment.
In the event of a fire, it is the apartment building insurance that will cover the building, while your personal property will be covered by your home insurance.
Remember to mention to your insurer that you live in a co-owned apartment building to avoid insuring your home twice. Tell them about any improvements you have made in your home, for example the installation of a built-in kitchen or a spa bath. Also consider including the price of your designer furniture, jewellery, computer equipment into the amount of contents you insure. Two articles can help you:
5 things to remember before taking out your home insurance
10 signs that your insurance policy is no longer up-to-date
Remember that your individual insurance is also the one that protects you in case of damage caused to third parties: if one of your planters falls on the neighbour’s car for example.
A big thank you to INOWAI, real estate agency and professional building manager in Luxembourg for their precious insights.
