Establishment of a property owners' association for any building with four or more owners

- A clearance certificate for the seller issued by the Shareholders’ Association is a condition for transferring possession of the unit to the buyer.

- The “Union” is dissolved if the number of owners falls below the minimum required for its establishment.

- The owner is responsible for maintaining their unit and the exclusive parts associated with it.

- All owners of real estate units become members of the “Association.”

- The “Union” acts as custodian of the common areas and is liable for damages suffered by owners and third parties.

- “Unions” with shared areas may establish a joint entity among themselves with independent legal personality.

In the context of enhancing social responsibility, providing a safe and positive environment, opening channels of communication among owners, and strengthening their cohesion, the relevant authorities in the country are exploring the creation of a legal entity for any property owned by multiple persons, each owning a subdivided portion and a shared share in the common areas of the property, provided that the number of real estate units therein is no less than four.

The establishment of a Shareholders’ Association for real estate units aims to manage, develop, invest in, maintain, and preserve the units and both common and exclusive parts, with the Union serving as custodian of the common areas and being responsible for damages incurred by owners and third parties.

According to the concept under study, the owners’ union for real estate will have legal personality and an independent financial status from the date of agreement on its establishment. A general assembly for the entity, composed of all owners of units in the same property, will be convened. In cases where multiple owners own a single unit, they will have one representative in the assembly, to establish a management system for the common areas. The government authority responsible for registering real estate transactions will be the competent authority.

Under the preliminary concept, each owner will have the right to dispose of the exclusive portion they own and to use and exploit it in a manner consistent with the agreed designation or intended purpose. Furthermore, each owner, in order to benefit from their exclusive portion, may use the common areas for their designated purposes, while respecting the rights of other owners. Prior to implementing any improvements, approval from the Union’s Board of Directors is required; if such approval is not obtained, the owner must seek a court order permitting the implementation.

The proposal prohibits owners from undertaking any action that threatens the structural integrity of the building or alters its shape or external appearance. All owners bear the costs of preserving, maintaining, managing, and renovating the common areas, proportionate to their respective shares. The Union may, with the approval of the general assembly, acquire one or more units within the same property it manages, without having a voting right in the assembly.

1. All owners of units in the property are summoned by the entity that established it, the Ministry, the competent authority, or one of the unit owners in the same property, to convene the founding meeting of the Union.

3. In the event of disagreement among owners regarding the establishment of the Union, any of them may petition the competent court for authorization to complete the procedures. The court will designate the founding committee to finalize registration procedures if authorization for the Union’s establishment is granted. If no owner applies to establish the Union, the Ministry or the competent authority, as stipulated in the Executive Regulations, shall establish the Union and appoint the founding committee from among the owners or others. The costs of establishing the Union shall be borne by the owners according to their respective shares.

4. All owners of units in the property become members of their owners’ Union.

4. Gifts, donations, and similar contributions made by owners, which align with the Union’s objectives.

The owners’ association shall be dissolved if the number of owners falls below the minimum required for its establishment, or in the event of total destruction of the property, unless the General Assembly resolves to renew it within six months from the date of destruction. The General Assembly of the association is competent to approve the association’s bylaws, elect and dismiss the board of directors, approve the regulations governing the management of common areas, and appoint an external auditor. It shall also determine the payment of financial allowances to the chairman and members of the board of directors, approve the association’s estimated budget, adopt the final accounts and audited budget, discharge the board of directors and the auditor from liability, and determine each owner’s share in the contributions and maintenance expenses for the common areas of the property. It shall also decide on rebuilding in cases of total or partial destruction. Any owner who fails to meet financial obligations shall have no voting rights, and the decisions of the General Assembly shall be binding on all owners.

If a real estate unit is occupied by someone other than the owner, whether under a lease agreement, usufruct, or any other legal ground, the association, according to the proposal, shall be entitled to collect its dues from the owner by attaching, under the rules governing garnishment of a debtor’s claims against third parties, the portion due to the owner from the occupant of the unit, up to the amount owed to the association.

The owner shall be responsible for maintaining his real estate unit and the exclusive parts appurtenant to it. If he delays in carrying out repairs, the association’s manager, after being tasked with the repairs, may, by any means of notification, declare at least 24 hours in advance that he will obtain from the judge of urgent matters permission to enter the unit to carry out the repairs at the owner’s expense.

The transfer of ownership of any real estate unit shall require the seller to provide the buyer with a financial clearance certificate issued by the owners’ association. This transaction shall not be registered until such certificate is obtained, in accordance with the procedures set forth in the Executive Regulations of the Law.

Owners’ associations that share common areas may establish a joint owners’ association to manage these areas. Such a joint association shall have independent legal personality and legal capacity limited to the purpose for which it was established, and shall have an independent financial status upon its registration with the Ministry and the competent authority, in accordance with the controls and procedures specified in the Executive Regulations. The joint association shall have a single board of directors and a General Assembly, in accordance with the controls and procedures stipulated in the Executive Regulations, and with the powers and authorities assigned to it.

According to the proposal, penalties shall apply to any chairman, board member, or manager of the association who submits inaccurate budgets or contracts while aware of their inaccuracy, and to any person who drafts, issues, or approves inaccurate documents relating to the owners’ association while aware of their inaccuracy.

Penalties shall also apply to any person who deals with third parties in the name of the owners’ association before its registration with the Ministry or the competent authority, or to any person who falsely assumes the title of chairman, board member, or manager of the association.

Under the proposed framework, in the event that the association’s board of directors is absent, dismissed, resigns, or is removed, the competent Ministry shall form an interim committee to exercise the board’s functions until the General Assembly elects a new board of directors within three months from the date of dismissal, resignation, or removal.

The owners’ association shall have a priority right in the process of collecting outstanding obligations, extending to the real estate unit, its appurtenances, the owner’s undivided share in the land, the common areas of the property, and any movable property located within the unit.