From 1st January 2014 Act No. 89/2012 Coll., the Civil Code applies in ownership relationship relating to flats (residential units) and related administration of residential dwellings  and in particular the regulation of an association of flats owners, newly in the Civil Code referred to as  “owners association ”.The new Civil Code provides for an entirely different set of rules for the establishment of an owners association, as compared to the legal regime effective till the end of 2013. According to the rules valid till December 2013,  in buildings with at least 5 flats and  3 different owners (sec. 9 par. 3 of act No. 72/1994 Coll.) an owners’ association was established by operation of law, independently from the owners’ will,  In the former case, an owners’ association was formed automatically upon the delivery of document registering the ownership title to a flat in the building of the 3rd owner.

Quite contrary to the above, section  1198 of the Civil Code abandons the concept of establishment of an owners’ association “ex lege” and newly imposes a duty to establish the owners’ association in the house with at least 5 apartments owned by at least 3 different owners.

Potential sanction

As a safeguard against a potential breach of the duty to establish an  owners’ association, it’s the provision of section  1198 par. 2 of the Civil Code provides that any further transfer of flats in the respective building will be barred (registration of the title transfer in the cadaster will not be permitted), unless the establishment of an owners’ association as required by law is ascertained. In this respect it is necessary to note that it is not enough to merely establish the owners’ association, but the incorporation of the owners’ association is required – which means the association needs to be registered in the relevant public registry. (sec. 1204 CC).