Are disputes over cost allocation within an HOA inevitable?
Within a homeowners’ association (HOA), the allocation of costs for common areas is often a source of conflict. Differences of opinion about the fairness or accuracy of the allocation method frequently lead to disputes and, in some cases, legal proceedings. The interpretation of the declaration of co-ownership, the bylaws, and the relevant legal provisions is central to such matters.
Legal framework
The rules on cost allocation are set out in Book 3 of the Civil Code.
Article 3.81 of the Civil Code states that HOA expenses – such as maintenance, repair, and renewal – are, in principle, allocated in proportion to the value of each private unit. However, the parties may opt for allocation based on the benefit each common element provides to a unit. Both criteria can also be combined.
According to Article 3.85, §1, paragraph 4, 2° of the Civil Code, the criteria and calculation method for cost allocation must be included in the HOA bylaws.
These bylaws generally set out specific rules based on the ownership shares of the co-owners. Exceptions are possible where certain costs benefit only a specific part of the building.
Case study
In a recent case before the Justice of the Peace in Zelzate, the dispute concerned the correct application of the bylaws to certain expenses.
Key takeaways:
The bylaws provided a cost allocation method but left room for discussion in exceptional cases. The judgment stressed the importance of a precise reading to determine the original intent.
One co-owner argued that the allocation was unfair because the costs mainly related to areas they did not use. This prompted a review of the proportionality principle and the justification for deviations.
Decisions by the general assembly must comply with the law and the bylaws. Irregularities can lead to annulment, but only if they are challenged in time. Otherwise, the decision becomes final.
General principles for cost allocation
Contributions are generally calculated based on ownership shares in the common elements. Exceptions are possible for costs benefiting only one or several co-owners.
- Transparency and consultation
Clear communication and accurate documentation help prevent disputes. Co-owners must have access to accounting records and cost breakdowns. Recording the allocation method in the meeting minutes increases transparency.
Practical recommendations to avoid disputes
A clear and up-to-date set of bylaws prevents many problems. It is advisable to review and update them regularly to match the current needs of the HOA.
When expenses are approved, the general assembly should always specify the allocation method. Any co-owner in disagreement must take action within the legal time limits. Detailed minutes are essential.
Prevention is better than cure. The property manager or a mediator can often help avoid legal proceedings. Regular informal meetings can also reduce tensions.
What if the dispute continues?
If disagreements persist, the court will examine whether the bylaws were applied correctly and whether the decisions comply with the law.
Note: any legal action must be filed within 4 months of the decision; otherwise, the decision becomes final and the costs must be paid according to the established allocation.
Facing a dispute over cost allocation or considering legal action?
Feel free to contact one of our Wanted Lawyers for tailored advice and assistance.