Please note that French property law is a complex subject and you should not rely on this article without professional advice on the facts of your case.
Syndics are the management companies which run buildings such as blocks of flats which are owned through co-ownership (copropriété) in France. They are similar to management companies for leasehold flats in England. As in England the good management of a building with charges at a reasonable level is important in keeping up the value of the flats. Some matters to raise about the syndic when buying a flat in France are set out below. Each syndic should have a contract in place with the co-owners in the particular building. This contract will include terms which deal with the fees of the syndic for the services they provide. Generally this will be divided into standard fees, which are agreed and fixed at the outset and additional fees which will apply from time to time and are not agreed at the start. There has long been confusion as to what services/activities are covered by their standard fees and what can be charged for as additional services. New legislation came into effect on 1st July 2010 in an attempt to clarify the position.
The legislation will only apply to contracts with syndics which are entered into after 1st July 2010. Syndics are appointed for a maximum term of three years (the minimum is normally one year) which is renewable; i.e. the same syndic can be reappointed at the end of their term. Where the same syndic is reappointed after 1st July 2010, the legislation will apply. The "renewed" contract is normally negotiated like the initial contract and has to be approved by an annual (or extraordinary) general meeting.
It is likely that co-owners will need to wait until the end of the term of the current syndic before the legislation can apply to their circumstances as syndics are unlikely to offer to alter contracts already in existence. It is also only possible to terminate a syndic's contract midway through a term in limited circumstances; generally there have to be serious grounds to justify any early termination.
The legislation lists 44 items which constitute everyday management, the fees for which must fall within the quote for standard fees set out the contract. All specific (additional) management costs must be detailed in the contract (e.g. the costs of the syndic attending meetings out of defined hours). However, not all matters which might be considered everyday are included in the list of 44 items.
Some of the matters addressed in the legislation include:
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The contract must now provide the amount of time for attending the annual general meeting which is included within the standard fee for everyday management. The days and timeframes are also to be agreed. In the past syndics have often charged extra for attending the annual general meeting if this took place in the evening, which is when a good number of meetings have to take place due to the other commitments of the attendees. Some consumer groups feel that the wording of the new legislation is not clear enough to avoid an extra charge being made for the syndic being present at an annual general meeting held in the evening. If the co-owners of a building know that their AGM generally takes 3 hours and is held at 6 p.m. on a weekday, then those are the days and timeframes which should be stipulated in the contract to avoid extra charges.
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Calculating each co-owner's share of all liquids (e.g. water) and energy (e.g. electricity) supplied to the building is defined as part of everyday management - but only if the meters were already in place when the syndic was first appointed. Consumer groups have highlighted the risk that syndics may find ways around this aspect of the legislation and bill separately for some tasks that should fall within this definition.
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Handling archives: those deemed useful to the everyday management of the property are to be held and managed by the syndic within the quote for standard fees. Syndics have previously charged additional fees for accessing archives, even for matters which are regular occurrences (e.g. for dividing the service charges). There is concern from consumer groups that the term “useful” is undefined and may cause confusion.
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Managing all compulsory technical and other reports and files are defined as being part of everyday management by the syndic and are to fall within the standard fees. In the past, syndics have frequently charged extra for this.
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Insurance policies - it seems that insurance policies taken out in the name of the co-ownership will need to be given prior approval by the co-ownership. This appears to mean that a decision from an annual or extraordinary general meeting will be required to approve such insurance policies. This gives control of taking out insurance policies to the co-owners and takes it away from the syndic.
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Currently syndics charge additional fees for providing service charge and other information about the building to prospective buyers. It is likely that this does fall outside everyday management, and therefore is not included in the standard fees. However, as an additional service the details of such a charge will need to be set out in any new syndic contracts.
It is safe to say that this is further evidence that co-owners should be very specific about the wording when negotiating syndic contracts. Whilst the new legislation improves the situation, it is far from perfect. Prospective buyers of flats should ask whether the syndic is being run according to the new rules. It is also sensible before signing any contract to buy to ask for the syndic's latest accounts for the building as well as copies of the latest minutes of its meetings. These should reveal whether provision is to be made for any heavy item of expenditure such as new lifts which may be a reason for the owner selling. Enquiries can also be made of other owners to ascertain whether they have any issues with the Syndic or want to replace it. As the information the Syndic has is confidential to the flat owners you usually have to get your seller to tell the Syndic to release information to you or go through your seller. Notaires are usually not particularly thorough in obtaining information about service charges and Syndic contracts unless you specifically raise issues with them. In some cases Syndics can be very offhand with prospective buyers and refuse to give them any worthwhile information. You may decide this is a bad sign and indicates a problem and you should consider buying elsewhere.
December 2010
Solicitor and Chartered Tax Adviser
Solicitor and Clerc de Notaire