July 07, 2024

New Reserve Rules: Impact on Tenants and Building Managers

The procedure for adopting a new Building Management and Maintenance Act is underway, which should bring significant changes in the field of building management. Although the law has not yet entered into force, the public consultation reveals key innovations that will affect both tenants and building managers.

New law

The new law on the reserve is currently in the public consultation phase, which means that it is open to suggestions and comments from citizens. The aim of the law is to modernise and improve the management of residential buildings and to ensure a more transparent and efficient management of the reserve. The main changes proposed relate to the obligations of tenants and building managers, with an emphasis on transparency, accountability and increased control of finances.

News for tenants

According to the draft of the new law, tenants will have several new obligations and responsibilities:

Community of co-owners

The community of co-owners consists of all owners of special parts of the building. The community of co-owners manages the common property in the building and is a legal entity with legal personality. The association of co-owners regulates its rights, obligations and mutual relations by means of an inter-ownership agreement. A community of co-owners may acquire rights and obligations, and sue and be sued in matters relating to the management of property. The community of co-owners participates in legal transactions for the purpose of maintenance and management of the building by identifying itself with a personal identification number assigned by the Ministry of Finance, Tax Administration by exchanging data in real time with the Register of the Community of Co-owners.

Separate communities of co-owners

If the building has several functional units with separate entrances or there are several separate buildings on one cadastral parcel, each of them may establish a separate community of co-owners to which all provisions of this Act apply.

Liability for damage

The community of co-owners is liable for damage caused by non-performance or improper execution of works related to the maintenance of the building.  The community of co-owners is also responsible for damage caused by a part of the building when it is not possible to determine from which specific part of the building the damage originates. In this case, together with the community of co-owners, all owners of special parts and the manager shall be jointly and severally liable for the damage if it is proven that the damage occurred as a result of the administrator’s failure to comply with the obligations prescribed by this Act.

Elevator installation

On the basis of the new Building Management and Maintenance Act, the state budget co-finances the installation of elevators in existing buildings:

  • in which the co-owners of the natural person own more than 50% of the co-ownership parts of the building registered in the land register, i.e. in which the co-owners of the natural person own more than 50% of the total usable area of the building for buildings for which no co-ownership parts have been determined,
  • which have at least three floors,
  • for which the main design for the installation of elevators has been made in accordance with the construction regulations,
  • in which an absolute majority of co-owners made a decision on the installation of an elevator,
  • that have secured financial resources according to the share of the community of co-owners in the total costs of elevator installation.

The Republic of Croatia will co-finance one third of the total costs of installing elevators in existing buildings.

The program for the installation of elevators in existing buildings is adopted by the Government of the Republic of Croatia at the proposal of the Ministry.

Investment Maintenance

Investment maintenance includes activities aimed at improving the designed or achieved properties of the building, for which it is necessary to allocate funds in an amount higher than the reserve funds that the co-owners are obliged to pay during one year.

An investment maintenance intervention that exceeds the scope of regular maintenance of real estate by its nature or scope is considered an improvement within the meaning of the law governing ownership and other real rights.

Building Manager News

Forced building manager

In buildings in which the co-owners have not elected a building manager in the manner prescribed by this Act, the municipal mayor or mayor of the local self-government unit in whose area the building is located (hereinafter: local self-government units) shall be obliged to appoint a compulsory building manager by a decision within six months of becoming aware. Only a person who meets the conditions for a building manager can be appointed as a compulsory building manager.

The compulsory building manager manages the building with the rights and obligations of the manager until the building is taken over for management by the new building manager. No appeal can be lodged against the decision of the local self-government unit, but an administrative dispute can be initiated before the locally competent administrative court. A proposal for the appointment of a receiver may be submitted to the local self-government unit by any co-owner or manager whose management contract has been terminated, but only if the co-owners have not appointed a new administrator by the date of termination of the contract.

Obligation to collect bids

For works and other works on the maintenance of the building, the value of which exceeds  EUR 2,500.00,  the building manager is obliged to collect at least three independent and comparable bids.

Conclusion

The new law on the reserve is still in the process of being adopted, and changes are possible before it enters into force. Its final form will depend on the results of the public consultation and the proposals to be considered by the legislator.

Here you can ready everything about the new Residential management and maintenance act.

If you need a lawyer for tenancy law and co-ownership relations, feel free to contact us at:

info@odvjetnik-bistrovic.hr

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