If you own a flat in Italy as part of a block of flats, what is the extent of your liability for the debts and obligations arising from the common parts of the building, or, in Italian legal terms, of your “Condominio ” ?

Is there a risk that you may be required to pay more than your annual service charges (Oneri Condominiali ) ?In Italy the answer to this question has changed over recent years due to an evolution of the caselaw of the Italian Supreme Court (Corte di Cassazione).
It will change again on 18th June 2013 when new legislation on the management of block of flats (Condominio) will came into force.Background – “Condominio” (Co-ownership) is the legal relationship between several owners of the same property, land, buildings or parts of the same building. Under Italian law this is the position where there are several owners of individual apartments in a block of flats. Each individual flat owner (Condomino ) also owns a share of the common parts of the building (Parti comuni ), such as the foundations, staircases, lifts, main supporting walls, roof etc.

These shares of common parts are stated as a quota out of an overall total of 1,000, on a document called “Tabella Millesimale”. So, depending on a number of factors, whereas one flat may be listed with a 350/1000 share of common parts, another in the same block may be listed with only a 200/1000 share etc. The individual shares may be changed depending on the particular qualities of the individual flat considered, however, the overall total for the whole block of flats, must always be 1,000.

Ownership of a share of the common parts comes with responsibility for the same. So each flat owner must contribute rateably to the maintenance of the common parts, and if anything unpleasant happens, such as a tile slips off the roof, is liable for a proportion of the consequences. These are normally reflected in the service charges (Oneri condominiali ) each owner is required to pay annually.

Under the original caselaw of the Italian Supreme Court, each flat owner could be held liable without limitations for any matter arising from the common parts of the building, subject to a subsequent right to contribution from the other owners, in proportion to their shares.

Under the caselaw of the Italian Supreme Court if the Condominio (block of flats as a whole) did not pay a debt arising from the maintenance / improvement of the common parts, the creditor could sue any of the flat owners for the full amount of the debt. This unfortunate flat owner would have to pay the full amount of the debt and then, later, seek a refund for the amount exceeding his share / his service charges, from the other owners.

The caselaw of the Italian Supreme Court (Corte di Cassazione) – For many decades this harsh rule was strictly enforced in Italy.

Eventually the Italian Supreme Court changed this rule in 2008, and this amended version of the rule is still the current law.

The Italian Supreme Court introduced a new rule whereby each co-owner in a block of flats is only liable for his share of the overall debt / liabilities of the “Condominio“ (his share of service charges). An individual flat owner cannot also be called to pay his neighbours` share of communal debts or in other words his neighbour`s service charges.

The Italian Supreme Court noted in this Judgment that there is no specific statutory provision which requires an individual flat owner who has already paid his service charges (Oneri Condominiali) also to pay for and on behalf of his defaulting neighbours, over and above his share as stated in the Tabelle Millesimali .

In order to collect his unpaid debt, a Condominio`s creditor must since 2008 commence enforcement proceedings against individual defaulting flat owners, who have not paid their service charges, for the amount outstanding. This principle was again confirmed by the Italian Supreme Court, as recently as February 2013.

This rule is fair from the point of view of the individual flat owner (Condomino). Why should a property owner be also liable for the unpaid share of communal debt / service charges due by his neighbours?

However, from the creditor`s point of view, this rule is burdensome. In order to recover an unpaid debt, a creditor must since 2008 as many enforcements proceedings as there are defaulting flat owners in the particular Condominio, and then only for the outstanding service charges.

Such a creditor will require information from the manager of the Condominio(Amministratore) as to who the defaulting owners are and what are their respective unpaid service charges. Because there could be several debtors, there will be a higher risk that part or the whole of this debt cannot be recovered.

The future or a partial return to the past – On 18th June 2013 the long awaited reform of the “Condominio” legislation will come into force in Italy. Time honoured provisions of the Italian Civil Code, with the supporting caselaw developed over more than 70 years will change.

The rule as to how Condominio`s debts and liabilities are shared will change again. The arm of the scales will swing back in favour of Condominio`s creditors.

This time, specific legislation is being introduced stating that, in the first instance, a flat owner will only be liable to pay his share of service charges. In so far as he has paid his service charges (Oneri condominiali) this flat owner cannot immediately be called upon to pay his defaulting neighbour`s share of communal debts.

Thus the unpaid Condominio`s creditor will be required to sue the defaulting flat owners in the usual way.

However, in the second instance, if enforcement proceedings prove fruitless against impecunious defaulting flat owners, the unpaid creditor can proceed even against compliant flat owners to recover a “Condominio” debt. Under the new law, an unpaid creditor, after having attempted and failed to collect the debt against defaulting flat owners, is allowed to pursue flat owners who have already paid their share / their service charges.

This is probably fairer all round. From the point of view of individual flat owners (Condomino ) they will not be called upon to pay a larger share of Condominio`s debt / liability than their fair share, in the first instance.

From the point of view of a Condominio`s creditor, they will still be required to commence recovery action to pursue a number of individual, separate defaulting flat owners / debtors. However, should any individual enforcement procedure prove unsatisfactory, such a creditor will have the opportunity of recovering the full amount of his credit, if necessary from the other, compliant, flat owners.

Probably it is a case of new law – fairer law. The devil of course is in the detail and in how these new rules will actually be implemented in Italy.

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Claudio Del Giudice 25.04.2013