The underlying dispute
The case involved a serviced residence in Namur, with a co-ownership structure The co-owners’ association had entered into a service agreement with an operator to provide support services.
A number of co-owners subsequently brought proceedings before the Justice of the Peace of the First Canton of Namur against both the co-owners’ association and the operator of the residence. They challenged the validity of the service agreement and sought the annulment of the resolution of the general meeting of the co-owners’ association by which that agreement had been approved.
According to the co-owners, the Civil Code prohibits a co-owners’ association from operating a serviced residence, either directly or through a third party.
The co-owners relied on the following articles of the Civil Code:
- Article 3.86, § 3 defines the purpose of a co-owners’ association: the preservation and management of the building or group of buildings for which it is responsible.
- Article 3.85, § 4 stipulates that any clause in the deed of co-ownership that restricts a co-owner’s right to entrust the management of their private unit to a person of their choice is null and void.
According to the co-owners, the articles of association or the internal rules of the co-ownership must not deviate from these provisions of the Civil Code. In the present case, the deed of co-ownership stipulated that the building was intended to be used as a serviced residence.
The Justice of the Peace of the First Canton of Namur referred a question to the Constitutional Court for a preliminary ruling as to whether those provisions give rise to a conflict of competence between the Federal State, the Communities and the Regions. More specifically, the question arises as to whether the above-mentioned provisions of the Civil Code – which, according to the co-owners, imply a prohibition on a co-ownership association operating a serviced residence – do not give rise to a conflict of competence with the Walloon Region, which has sole competence for elderly care policy and the regulations governing care facilities for the elderly, and which, in the context of these regulations (and more specifically in Article 334, 2°, c of the Walloon Code of Social Action and Health), takes the view that a co-ownership association may indeed operate a serviced residence.
Assessment by the Constitutional Court
1. No prohibition on the operation of serviced residences by a co-ownership
The Constitutional Court found that the reasoning that the Civil Code prohibits serviced residences in co-ownership is based on a misinterpretation of the law.
Article 3.86, § 3 of the Civil Code, which defines the purpose of the co-owners’ association as the preservation and management of the building, does not, according to the Court, prevent management from being carried out in line with the building’s purpose as defined in the articles of association. If that purpose is a serviced residence, proper management implies that the building is used as such.
In this respect, the Court appears to endorse a functional interpretation of the concept of ‘management’ within the meaning of Article 3.86, § 3 of the Civil Code, having regard to the building’s designated purpose. Management is therefore not confined to technical acts. Rather, it entails that the building is managed in accordance with that purpose. Where the articles of association designate the building as a serviced residence, it can and must be managed as such.
The Court also adopts a nuanced interpretation of Article 3.85, § 4 of the Civil Code. This provision merely seeks to prevent co-owners from being compelled to entrust the management of their private unit to a specific manager, often the building trustee, thereby limiting their freedom of choice. It does not constitute a general prohibition on the provision of collective services or on cooperation with an external operator within the co-ownership.
2. No conflict of competence between Federal legislation and Walloon legislation
Since the decree of 14 February 2019, the definition of a serviced residence in the Walloon Code of Social Action and Health has been broadened. Serviced residences can now take two forms:
- either a traditional model whereby dwellings are let and additional services, such as meals, assistance and on-call support, are provided, or
- a model whereby the operator provides services collectively, without letting the dwelling.
According to the Court, the second formula is fully consistent with the system of co-ownership as set out in the Civil Code, as interpreted by the Court.
The Constitutional Court therefore confirms that there is no conflict of competence between the federal regulations on co-ownership and the Walloon regulations on care facilities for the elderly.
Practical implications
With this judgment, the Constitutional Court marks a significant departure from the previously view of the limited statutory purpose of co-owners’ associations.
As the Court derives its main conclusion from its interpretation of the Civil Code, independently of specific regional regulations on housing for the elderly, the impact of this judgment is likely to extend beyond the serviced-residence sector alone.
In other sectors, such as holiday parks and leisure complexes or student residences under co-ownership, it would also mean that a co-owners’ association may be legally responsible for or participate in the organisation and operation of communal facilities, whether or not through an external operator, if its articles of association so provide – something which many authors had previously considered inconsistent with the traditional interpretation of the relevant statutory provisions.
