Is the legal regulation regarding condominiums changing?

1. The Importance of Legal Source Criticism

A dear friend of mine sent me this article. Asking for my thoughts on it. First of all, we should not really believe legal content that was not written by a lawyer. Of course, “Statute-reading John” can also write correct things. But let’s face it, the chances of that are quite slim. When we see that Julianna Csutka Zumba Fehér (what a witty name!) is lecturing about condominiums, we can safely scroll past. And while we are at it, let’s block her. So we encounter one less source of nonsense in the future. Source criticism cannot be emphasized enough.

2. Debunking the Myth of “Condominium Collectivization”

Turning to the merits of the matter. According to Julianna’s legal position, the law will obligate condominiums to transform into legal entities. This would reportedly entail “that the residents (this includes everyone living in a self-owned apartment) contribute their apartments to the condominium’s assets upon establishment. Just like when you put share capital into a limited liability company from your own savings. The consequence of this will be that from then on, the apartment will not be your property. But that of the condominium, and you will only have a right of use!”

Naturally, none of the above statements are true. So for now, we do not need to worry about “condominium collectivization”. The law (Act XCII of 2021) does not state that condominiums would transform into legal entities, and there is certainly no mention of asset contributions. It is no coincidence that no references are provided. Julianna either has a vivid imagination or has fundamentally misunderstood something.

3. Understanding the New Register of Legal Entities

The cause for the misunderstanding might be that the law indeed establishes a new public authentic register, which will be named the Register of Legal Entities. From this, one might think that in the future, only legal entities will be included in the register. But this is not the case; the register will also include non-legal entities whose registration is mandated by law (see Section 2 (2) of Act XCII of 2021).

4. The Current Legal Capacity of Condominiums

An example of this is the condominium. As a condominium is currently not a legal entity (Decision 3/2006 (II. 8.) of the Constitutional Court). The condominium possesses limited legal capacity, which means it can act in matters related to the maintenance of the building and common property. It can have assets, it can be sued, and the condominium can also sue. But it cannot establish an amusement park or a deep-fried dough stand. As an amusement park is not related to the maintenance of the building. It is possible that sometime in the future, the condominium will be granted legal personality. However, this is likely not going to happen in the near future. As neither the Civil Code nor the Condominium Act has been amended in this direction.

Overall, to summarize briefly, the only change will be that it will be possible to search the data of condominiums, common representatives, and persons included in the register. Condominiums will not become legal entities, and our property has not been transformed into a right of use either.

5. Misconceptions About Common Representatives and Property Sales

Although the post has already become quite long, I will briefly cover the further parts of the aforementioned HVG article. The “law-degree-holding” lady made some interesting statements. According to her, the “execution of condominium decisions will become simpler. Because the condominium, becoming a legal entity, will have an authorized representative capable of acting independently in legal transactions.” As we clarified above, condominiums will not be legal entities for now, and condominiums already have a representative. This person is, of course, the common representative, who can act in condominium matters without further ado even now. Thus, it is incomprehensible to me how the workflow would be simplified.

The other interesting claim is that the sale of common property becomes simpler because of the new representative. Unfortunately, it is not clear from the article exactly how. It would be a bit far-fetched if the common representative could decide to sell someone else’s property. Therefore, I unfortunately have to disappoint the dear reader: the sale of the attic space in common ownership will still not be an easy task. (A 4/5 majority is required for it). For this to change, the Condominium Act would need to be amended, which has not happened yet.