Co-ownership in difficulty: alert, administrator, plan

The alert: the ad hoc agent

The trigger. At the closing of the accounts, if arrears on the budget prévisionnel (annual budget) and the works fund reach the 25% threshold (or 15% for co-ownerships of more than 200 lots), or if the general meeting has not approved the accounts for at least two years, the syndic informs the conseil syndical (owners’ committee) and applies to the president of the tribunal judiciaire (civil court) by petition (art. 29-1 A). It does not need authorisation from the assemblée générale (owners’ general meeting) (F20388).

If the syndic does not act within the month following the closing of the accounts, or if there is no syndic, the judge may be petitioned by co-owners representing at least 15% of the votes, the president of the owners’ committee, a creditor for water, energy or works voted and carried out who has been unpaid for six months despite a formal demand for payment, the préfet, the public prosecutor, the mayor or the president of the inter-municipal body responsible for housing (art. 29-1 A).

The assignment. The syndic hands the agent all relevant documents within fifteen days of notification of the decision. Within three months, renewable once, the agent sends the judge a report on the financial situation and the condition of the building, its recommendations and the outcome of its mediation (art. 29-1 B). The syndic puts the corresponding resolutions on the agenda of the next general meeting; if that meeting does not take place within six months of the report being delivered, it calls one specially, within three months if emergency measures are recommended (art. 29-1 B).

The decision appointing it sets its remuneration (service-public.gouv.fr, F20388), and the judge gives reasons for how the costs are split between the syndicat (the owners’ association) and the other parties (art. 29-1 B). The ad hoc agent cannot become syndic at the end of its assignment (art. 29-1 C).

The temporary administrator

The judge may appoint a temporary administrator if the syndicat’s financial balance is seriously compromised or if it can no longer provide for the preservation of the building. The judge is petitioned by co-owners representing 15% of the votes, the syndic, the mayor, the president of the inter-municipal body, the préfet, the prosecutor or the ad hoc agent (art. 29-1, I).

Its powers. The administrator receives all the powers of the syndic, whose mandate ends automatically without compensation, as well as all or some of those of the general meeting and the owners’ committee (art. 29-1). Service-public.gouv.fr specifies that it cannot decide to buy or dispose of real property, nor amend or draw up the règlement de copropriété (building regulations) (F2643). The syndic in office cannot be appointed, and the administrator cannot become syndic of the co-ownership for five years after its assignment (art. 29-1).

The duration. It is set by the judge and cannot be less than twelve months. If no ad hoc agent’s report was drawn up in the previous year, the administrator delivers an interim report after six months at the latest (art. 29-1).

The debt freeze. Its appointment suspends for twelve months the payability of earlier debts, except public and social-security debts, and halts proceedings by the creditors concerned. Contractual late-payment penalties and repayments of collective loans are also suspended. The judge may extend these suspensions up to thirty months (art. 29-3). Creditors have three months to declare their claims, and the debt clearance plan cannot exceed five years (F2643).

Rescue plan and declaration of default

The rescue plan is a matter for the préfet, who acts on its own initiative or on the proposal of the mayor, the inter-municipal body, residents’ or co-owners’ associations, or the temporary administrator (F32088). A committee proposes a plan setting out, within a five-year period, the measures to restore the finances, carry out works and clarify the legal organisation. The préfet may extend it for periods of two years (CCH, art. L615-2). As soon as the plan is received, the syndic puts the measures on the agenda; if the general meeting is not held within six months of the plan’s approval, it calls an extraordinary general meeting (F32088).

The declaration of default targets a syndicat unable to ensure the preservation of the building or the safety and health of the occupants. The mayor or the president of the inter-municipal body applies to the judge; with their agreement, the préfet, the syndic, the temporary administrator or co-owners representing 15% of the votes may also do so. The judge appoints experts for three months at most, renewable once. Difficulties are presumed if the accounts are not provided to the expert within two months of the request. The syndicat or the syndic may challenge the judgment within two months of its notification (CCH, art. L615-6). A declaration of default opens the way to compulsory purchase of the common parts, or even of the building (F2667).

What this means for a buyer

• The advertisement for a lot must state whether the syndicat is subject to an alert procedure, a temporary administration or a default procedure (CCH, art. L721-1).
• Before the promesse (preliminary sale contract), the seller provides in particular the overall statement of unpaid charges and of the debt owed to suppliers, the charges it paid over two financial years and the minutes of the last three general meetings (art. L721-2).
• During the temporary administration, the general meeting retains only the powers not entrusted to the administrator (art. 29-1); the administrator enters its decisions in the register and sends them to each co-owner, with the corresponding call for funds if needed (F2643).
• After the assignment, the debt clearance plan is implemented by the syndic (F2643): the effort continues.
• In the event of a declaration of default, the compulsory purchase compensation takes into account the cost of the works needed to preserve the building (F2667).

Any co-owner may consult the report of the agent or the administrator, and obtain a copy at their own expense (F20388, F2643). See also our guides acheter en copropriété (buying in a co-ownership), charges impayées (unpaid service charges) and charges de copropriété (co-ownership service charges).

Which professional to consult

Before buying, the notaire (notary) analyses the financial information provided with the promesse, the minutes of general meetings and the court decisions concerning the syndicat. The agent immobilier (estate agent) marketing the lot must mention ongoing procedures in the advertisement (CCH, art. L721-1).