The Governance Mechanism of Owners' Co-ownership

Author | Attorney Wang Feng

Legal Foundations

1. The Property Law Section of the Civil Code (Articles 271–287)

(1) Clearly define the owner’s ownership of the exclusive portions and their co-ownership rights over the common areas, and specify the scope of the common areas (such as elevators, stairwells, green spaces, and public facilities).

(2) Matters decided upon jointly by the owners must be approved through the prescribed legal procedures (such as the “double majority” or “two-thirds majority” voting rules).

2. Regulations on Property Management

Standardize the establishment and responsibilities of owners’ assemblies and owners’ committees, and clearly define the service boundaries of property management companies.

3. Local regulations

Local regulations (such as the Beijing Municipal Regulations on Property Management) may include additional provisions regarding voting thresholds, the use of repair funds, and other matters.

Governance structure

1. Owners' Assembly

(1) The supreme decision-making body: responsible for deciding on major matters such as the management rules for common areas, the selection of the property management company, and the use of the repair fund.

(2) Conditions for convening: Participation is required from owners whose collectively owned areas account for more than two-thirds of the total and who represent more than two-thirds of the total number of owners.

2. Homeowners' Committee

(1) Executive body: Implements resolutions of the Owners’ Assembly, supervises the property management company, and mediates disputes among owners.

(2) Method of establishment: Elected by the owners’ assembly, and required to regularly disclose its work and accept oversight.

3. Property service enterprise

Service provider: As stipulated in the contract, the service provider shall furnish cleaning, security, facility maintenance, and other services, and shall have no authority to dispose of common property without authorization.

Key decision-making mechanism

1. Voting Rules

(1) For ordinary matters (such as the formulation of management rules): “two-thirds in attendance and a majority of those present” is required.

(2) For major matters (such as raising repair funds or undertaking reconstruction or rebuilding), “two-thirds of owners participating and three-quarters of those participating must approve.”

2. Management of Repair Funds

(1) Procedure: The owners’ committee or property management proposes a plan → public announcement → owner voting → application for disbursement → project acceptance.

(2) Regulatory requirements: Funds must be held in a dedicated account, undergo regular audits, and have their financial statements made publicly available to property owners.

3. Distribution of Shared Profits

Revenues from advertising in common areas, parking fees, and other similar sources shall belong to all property owners and may be used to supplement the repair fund or for purposes determined by the owners collectively.

Practical Challenges and Responses

1. Low owner engagement

Countermeasures: Implement an online voting system (such as a WeChat mini-program), streamline the voting process, and establish a system of council representatives.

2. Challenges in the Property Owners’ Committee Fulfilling Its Duties

Countermeasures: Clearly define the list of powers and responsibilities of the owners’ committee, establish a financial transparency system, and introduce third-party audits.

3. The property management company has exceeded its authority.

Countermeasures: Refine the terms of the property service contract, establish anHomeowner supervision group, and conduct regular assessments of service quality.

4. Dispute Resolution Methods

(1) Consultative mediation: Mediation is facilitated through the residents’ committee or the subdistrict office.

(2) Legal action: For serious infringements (such as the encroachment upon common areas), a claim for protection of property rights may be brought.

Optimization suggestions

1. Digital Governance

Leverage blockchain technology to record the usage of shared assets and the flow of funds, thereby enhancing transparency.

2. Professional Training

Regularly organize training sessions for the members of the owners’ committee on the Civil Code and property management regulations.

3. Incentive Mechanism

Owners who actively participate in community affairs will be rewarded with property fee reductions or other incentives.

Summary

The governance of owners’ common property rights must be anchored in a legal framework, achieving the sustainable management of shared resources through clear delineation of rights and responsibilities, an efficient decision-making mechanism, and a transparent oversight system. The proactive participation of property owners and the enhancement of their awareness of the rule of law are key to the effective functioning of the mechanism.

Author

Introduction

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Zhiheng · Introduction