A Condominium Bylaws document is a legally-binding document governing the relationships between unit owners, as well as the rights and responsibilities of each unit holder in the condominium.
Much importance is attributed to the Bylaws in governing unit owner relations. So much so, that the Land Act, 5729-1969 (hereinafter: “the Land Act“) requires that every condominium operate under the provisions of its Bylaws. Condominium unit owners may agree on a set of Bylaws, which may then be filed with the condominium registry. The Bylaws apply to all unit owners until they are modified. In the absence of agreed-upon Bylaws, or in cases where the Bylaws do not address certain issues specified in the Land Act, the provisions of the Common Bylaws, outlined in the Supplement to the Land Act, apply.
Issues Covered by the Bylaws
The main issues addressed in the Bylaws are the distribution of costs among tenants, condominium decision-making process, appointing representative body of the unit owners (“Representative Body”), provisions on attaching parts of the common areas to specific units, such as parking space, storage units, rooftop space and construction rights, and the ways in which these attached areas are to be used. In this article we will refer to two main issues: removing parts of the common areas and attaching them to specific units, and the ongoing management of the condominium.
Removing certain areas from common ownership
One of the central issues regulated by the Bylaws is the process of removing certain areas from common ownership and attaching them to a specific unit. The Land Act stipulates that removing a given area from common areas is subject to the consent of all condominium unit owners. Given its importance, this cogent provision cannot be superseded by agreed-upon Bylaws, or by an amendment to the Bylaws.
Therefore, according to the Land Act, a majority of unit owners holding two thirds of the common property may amend the Bylaws, however the power of this majority is limited to the following two cases: (1) Unit owners may not be subject to new fees or liabilities, other than those listed in the Act, and their rights may not be limited, without the consent of all unit owners, and (2) no part of the common areas may be attached to a given unit without the explicit consent of all unit owners.
Given the above, how shall we treat a tenant, who has begun adding an additional floor to the building, without obtaining the consent of other unit owners? In this case, we will refer to the Condominium Bylaws. If the particular condominium is subject to the Common Bylaws in the Supplement to the Land Act, i.e. in the event where the rooftop has not been attached to a given unit, and where there is no other provision stating that the rooftop has been attached to a given unit, then the tenant may not build any additions on the rooftop without the consent of all other unit owners. In contrast, in cases where the Bylaws ascribe the rooftop to that particular unit, and that development rights belong to that particular tenant, then the unit owner’s actions conform to the law.
Another example which has been cause for uncompromising conflict among condominium unit owners concerns condominium development rights in general, and rooftop addition development rights in particular. In recent years, given the proliferation of urban renewal projects in condominiums, such as Tama 38, the importance of Condominium Bylaws has been taking center stage.
A Tama 38/1 project involves a contractor or developer strengthening the structure of an existing condominium building to withstand earthquakes, and in return is awarded development rights in the building. The contractor or developer then uses the additional development rights to add several additional units, including on the rooftop of the existing building, which they then proceed to sell to third parties. This raises the question: who owns the development rights?
The common (and erroneous) view is that development rights necessarily belong to the owners of units immediately under the roof. This stems from the assumption that only roof unit owners have the option of realizing rooftop development rights. However, court rulings have been very clear on this matter, stating that attaching the rooftop of a building to a certain unit does not automatically attribute the rooftop development rights to the same unit. For this to occur, the Bylaws must explicitly attribute the development rights to that particular unit. In the absence of such a provision, all condominium unit owners own the development rights.
Management of the condominium – Bylaws vs . Management Company
As stated above, the Bylaws also provide for the ongoing management and maintenance of the condominium. In recent years we have witnessed an increase in the number of condominiums electing to contract a management company. This isn’t surprising, given that condominiums are built as high-rise buildings, comprising many tenants as well as many common facilities, such as event space, underground parking, gym, bicycle and stroller storage spaces, etc.
In order to make the ongoing management and maintenance of the condominium easier, tenants elect, through their Representative Body, to contract a third party to handle all such matters within the framework of a property management agreement.
The property management agreement outlines the powers and responsibilities of the property management company. Specific powers vary from one property to the next based on local needs, however it is fair to say that property management companies are generally given broad authority in connection with their ascribed duties. In practice, the entire section in the Bylaws which address the distribution of costs among unit owners (except particular cases) and the ongoing management of the property is delegated to the property management company. Consequently, property management companies are responsible, among others, for the ongoing management of the condominium, its maintenance, the maintenance of its shared facilities, such as elevators, parking space, and the likes, and even sets out guidelines in connection with using shared facilities, where such facilities exist.
It should be stated, however, that the property management company is also subject to the Land Act and the Common or agreed-upon Bylaws, as they may apply. Therefore, in cases where the provisions of the management agreement contradict the provisions of the Bylaws, the Bylaws prevail.
It is worth stressing that, just like the Representative Body has appointed and hired the property management company, following a decision made by the unit owners’ general assembly, the power to decide to terminate the agreement with the property management company remains in the hands of unit owners. Similarly, unit owners may demand that the property management company change its course of action, for example in determining the mechanism of distributing costs.
Condominium Bylaws are unquestionably important. In the vast majority of cases, the Bylaws document outlines all rights and obligations, as well as other agreements, among unit owners in a condominium. This is further supported by the provisions of the Act, stipulating that any condominium shall be governed by Bylaws, be it agreed-upon Bylaws or Common Bylaws. Hence, unless they are amended, all current and future unit owners are bound by the Bylaws; any unit owner who seeks to protect their rights is advised to have them explicitly expressed in the Bylaws.