Co-owners Assembly and Decision-Making

Co-owners Assembly and Decision-Making in Switzerland

Floor-level ownership (PPE) represents a widespread form of property ownership in Switzerland, requiring collective organisation to manage the common parts of the building. The co-owners' assembly constitutes the supreme body of this organisation, where fundamental decisions concerning the building are made. The Swiss legal framework, primarily governed by articles 712a et seq. of the Civil Code, precisely defines the operating procedures of these assemblies and the decision-making processes. A thorough knowledge of these mechanisms is essential for any co-owner wishing to assert their rights and participate effectively in the management of their property.

Legal Framework for Co-owners Assemblies in Switzerland

Swiss law rigorously governs the functioning of floor-level ownership (PPE) through several legal provisions. Articles 712a to 712t of the Swiss Civil Code constitute the fundamental legal basis governing relations between co-owners. These norms define the organisational structure of co-ownership, the rights and obligations of owners, as well as the decision-making rules.

The administration and use regulations (RAU) represent a key document in the organisation of a PPE. These regulations, specific to each building, specify the practical operating procedures of the co-owners' community. They may establish particular rules regarding the frequency of assemblies, the quorums required for certain decisions, or the allocation of common charges. However, the RAU can never contravene the mandatory provisions of the Civil Code.

The co-owners' assembly has clearly defined legal powers under article 712m of the Civil Code. Among these powers are:

• The adoption and modification of the administration and use regulations
• The appointment of the administrator and definition of their powers
• Approval of the annual budget, accounts and allocation of costs
• The decision to undertake construction work
• The representation of the community with respect to third parties

In addition to the Civil Code, Federal Supreme Court case law has progressively clarified the interpretation of certain legal provisions. Several landmark rulings have clarified fundamental concepts such as the distinction between ordinary and extraordinary administrative acts, or the limits of the assembly's decision-making power vis-à-vis the individual rights of co-owners.

Cantonal legislation may sometimes provide additional specifications, particularly regarding procedure or enforcement of decisions. These cantonal specificities must be known to co-owners, particularly when they concern the means of challenging assembly decisions.

Limits of the Assembly's Decision-Making Power

Despite its status as the supreme body, the co-owners' assembly does not have unlimited power. Certain decisions may only be taken unanimously, particularly those affecting the purpose of the building or substantially modifying the rights of co-owners. The Federal Supreme Court has developed case law protecting individual rights, thus limiting the omnipotence of the majority within the assembly.

Organisation and Convening of Assemblies

The frequency of co-owners' assemblies is generally fixed by the administration and use regulations. In the absence of a specific provision, article 712n of the Civil Code provides for an ordinary annual assembly. This meeting allows addressing recurring questions such as approval of accounts, budget vote or renewal of the administrator's mandate.

Extraordinary assemblies may be convened when particular circumstances require it. The law recognises the right of the administrator, but also of one fifth of co-owners, to request the holding of such an assembly. This possibility constitutes a democratic safeguard allowing a significant minority to submit an urgent question to all co-owners.

The convening notice for assemblies must respect a certain formalism to guarantee its validity. Article 712n paragraph 3 of the Civil Code imposes a minimum notice period of ten days between the sending of the notice and the holding of the assembly. This notice must mention the agenda items with sufficient precision to allow co-owners to prepare for the meeting. Case law has confirmed that a decision taken on a subject not on the agenda is in principle null, unless all co-owners are present and agree to deal with the item.

The location of the assembly is not strictly governed by law, but must be reasonably accessible to all co-owners. In practice, meetings are often held in the building itself, at the administrator's offices or in a room hired for this purpose. The regulations may specify this point.

• The convening notice must indicate: date, time and place of the assembly
• The detailed agenda of items to be discussed
• Relevant documents (accounts, estimates, etc.)
• Terms of representation for absent co-owners

The COVID-19 pandemic led to temporary adaptations in the organisation of assemblies. The COVID-19 Ordinance on company law temporarily authorised virtual or correspondence assemblies, even in the absence of prior regulatory provisions. This experience has opened reflections on the permanent integration of these arrangements into PPE functioning.

Role of the Administrator in Organisation

The administrator plays a central role in preparing and running assemblies. Responsible for convening and setting the agenda, they must ensure that co-owners are properly informed. Their neutrality in conducting discussions is fundamental to guaranteeing the legitimacy of the decisions taken. An administrator who excessively directs discussions could see the assembly's decisions challenged before the courts.

Decision-Making Mechanisms and Required Majorities

The voting system within co-owners' assemblies in Switzerland rests on a double majority principle for the most common decisions. According to article 712p of the Civil Code, these decisions require a majority of co-owners present or represented (head majority) as well as a majority of the shares represented at the assembly (value majority). This system aims to balance the influence of small and large owners in the management of the building.

For certain particularly important decisions, the law requires qualified majorities. Article 712g paragraph 2 of the Civil Code stipulates that more significant administrative acts, such as renovation works beyond ordinary maintenance, require a majority of co-owners representing at least two thirds of the shares. This reinforced requirement guarantees that no major decision can be taken without broad consensus.

At the extreme of the decision-making spectrum, certain fundamental modifications require unanimity of co-owners. These include decisions that:

• Change the purpose of the building
• Significantly restrict the exercise of a co-owner's rights
• Change the allocation key for common charges
• Remove exclusive rights over certain parts of the building

The calculation of shares, a determining element in votes, is generally established upon the constitution of the PPE. These shares theoretically reflect the proportional value of each unit in relation to the entire building. Once fixed, they can only be modified with the unanimous agreement of co-owners, except for manifest error in their initial determination.

The question of quorum constitutes a technical but fundamental aspect of the decision-making process. For the assembly to be able to validly deliberate, article 712p paragraph 1 of the Civil Code requires the presence or representation of half the co-owners holding at least half the shares. If this quorum is not reached, a second assembly may be convened, which may then deliberate regardless of the number of co-owners present.

Special Cases and Practical Solutions

Certain specific situations may complicate the decision-making process. In case of co-ownership of a unit, the co-owners must designate a single representative to exercise their voting right. Similarly, in the presence of a usufructuary and a bare owner, it is generally the usufructuary who exercises the voting right for ordinary administrative decisions, while extraordinary decisions fall to the bare owner.

Practice has developed various solutions to facilitate decision-making when the required unanimity seems difficult to obtain. The creation of renovation funds, for example, allows anticipating the financing of major works without requiring a specific decision at the moment these works become necessary.

Challenging and Annulling Assembly Decisions

Decisions taken at co-owners' assemblies are not unassailable. Swiss law provides several mechanisms for challenging a decision considered irregular or detrimental. Article 712m paragraph 2 of the Civil Code opens the way to an annulment action before the competent judge. This action must be brought within a strict period of one month from becoming aware of the challenged decision.

Grounds for challenge are varied and may concern both the form and substance of the decision. On formal grounds, an irregular convening notice, an incomplete agenda or failure to comply with majority rules constitute admissible grounds. On substance, a decision may be challenged if it violates the law or the administration regulations, or if it infringes the legitimate rights of a co-owner.

Federal Supreme Court case law has progressively clarified the conditions under which a decision may be invalidated. Ruling ATF 141 III 528 established in particular that a simple formal irregularity is not sufficient to justify the annulment of a decision if this irregularity did not have a determining influence on the outcome of the vote. This pragmatic approach aims to avoid purely formalistic annulments that would not serve the community's interests.

During judicial proceedings, the challenged decision remains in principle valid and enforceable. However, the judge may order provisional measures suspending the enforcement of the decision until the final judgment, particularly if its immediate application would risk causing irreparable harm.

• Formal grounds for challenge: defective convening notice, non-compliance with deadlines, incomplete agenda
• Substantive grounds for challenge: violation of law, regulations, abuse of right
• Appeal period: one month from becoming aware of the decision
• Competent court: court of the location of the building

Alternatives to Judicial Challenge

Given the costs and delays involved in judicial proceedings, alternative dispute resolution mechanisms have developed. Real estate mediation, in particular, offers a less adversarial framework for resolving disputes between co-owners. Some administration regulations now provide for a mandatory mediation phase before any judicial recourse.

The intervention of a neutral expert can sometimes defuse a nascent conflict, particularly when the challenge concerns technical aspects such as the necessity or cost of certain works. This assessment helps objectify the debate and often facilitates the emergence of consensus.

Contemporary Challenges and Evolving Co-ownership Practice

The management of floor-level ownership in Switzerland faces significant transformations related to societal and technological changes. The digitalisation of decision-making processes constitutes one of the major innovations in this field. An increasing number of co-ownerships are adopting digital platforms allowing electronic voting or virtual assemblies. This development, accelerated by the health crisis, nevertheless raises legal questions regarding the validity of decisions taken through these new channels. The Federal Supreme Court has not yet established definitive case law on this point, creating a legal uncertainty zone that co-ownerships must navigate with care.

Environmental concerns are profoundly changing decision-making priorities within assemblies. Energy renovation of buildings, installation of solar panels or electric vehicle charging points now regularly feature on the agenda. These projects complicate the decision-making process as they often involve substantial investments and structural modifications to the building. The question of financing these works can create tensions between co-owners with disparate financial capacities.

The ageing of the Swiss real estate stock poses a major challenge for many PPEs. Buildings constructed in the 1960s-1970s, a period of co-ownership expansion in Switzerland, now require significant renovation. These works frequently cause decision-making blockages, particularly when the PPE has not built up a sufficient renovation fund. Recent case law tends to facilitate these renovations by interpreting more broadly the notion of necessary works, which may be decided by simple majority.

• Digital challenges: legal validity of electronic votes, data protection, digital divide
• Environmental challenges: financing energy renovations, equitable distribution of costs
• Intergenerational issues: reconciling divergent interests between elderly and young owners

The Evolving Role of Law Firms in Co-ownership Management

Faced with the increasing complexity of the legal framework and decision-making challenges, recourse to specialised legal expertise is increasingly necessary. Our law firm regularly assists co-owners and administrators in securing decision-making processes legally. This support may take various forms: revision of administration regulations to adapt them to new realities, preventive advice before a delicate assembly, or representation in case of disputes.

The preventive approach is gaining importance in our practice. A legal audit of PPE functioning allows identifying potential risks and proposing solutions before conflicts arise. This approach is particularly relevant during major renovation projects or regulatory changes.

The constant evolution of case law in PPE matters requires careful legal monitoring. Recent decisions of the Federal Supreme Court can substantially modify the interpretation of certain legal provisions. Our law firm ensures this monitoring and adapts its advice to the latest case law developments, thus guaranteeing the conformity of decisions taken at assemblies.

Real estate mediation constitutes an increasingly valued competence. Several lawyers in our firm are trained in these alternative dispute resolution techniques, allowing defusing tense situations without systematically resorting to the courts. This approach preserves neighbourly relations, a fundamental element for the smooth functioning of a co-ownership over the long term.

Required Majorities According to Decision Type in PPE

Frequently Asked Questions About the Co-owners Assembly