Analysis of the legal system of the joint management right of the divided ownership of buildings in the Chinese mainland - the legal framework and practical guidelines with the Civil Code as the core- Zhiheng Law Firm

Author | Attorney Wang Feng

Legal Foundations and the System of Norms

In China, the system of co-management rights in building condominium ownership is centered on the Property Law section of the Civil Code, with the Regulations on Property Management and judicial interpretations serving as its implementing rules. Its core basis is:

1. Civil Code:

(1) Article 271:Establish the co-ownership and joint management rights of owners over common areas.

(2) Article 278:Clearly define the scope of matters requiring joint decision-making by all owners and the voting rules.

(3) Article 286:Grant the owners’ assembly and the owners’ committee the authority to manage common affairs.

2. Judicial interpretation:

Articles 1 to 3 of the “Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of Law in the Trial of Disputes over Condominium Ownership” (as amended in 2020) clearly define the scope of “owners” and the criteria for determining the distinction between exclusive-use and common areas.

3. Administrative regulations:

The Regulations on Property Management stipulate the procedures for establishing the owners’ assembly, its rules of procedure, and the selection of property service providers.

The subjects and objects of co-management rights

1. Scope of the subject:

(1) Owner:A civil subject that has lawfully acquired ownership of the exclusive portion of a property or has registered a change in its property rights (including natural persons, legal persons, and non-corporate organizations).

(2) Exceptional circumstances:A person who, although not registered as the owner, actually occupies and uses a house pursuant to a civil legal act such as a sale, shall be recognized by judicial interpretation as having the status of a property owner if they meet the requisite conditions, including structural independence (see Article 1 of the Supreme People’s Court’s Interpretation).

2. Object of the right:

(1) Common areas:This includes roads and green spaces within the building development area (excluding those designated as municipal public spaces or explicitly owned by individuals), property service facilities, and communal facilities and equipment as well as ancillary facilities (such as elevators, refuge floors, and equipment floors).

(2) Scope of management authority:The repair, use, distribution of proceeds, and decision-making on major matters concerning the common areas.

Mechanism for the Exercise of Joint Management Rights

1. Autonomy Framework:

(1) Homeowners’ Association:The supreme decision-making body is responsible for formulating rules of procedure, selecting property service providers, managing repair funds, and other related matters.

(2) Homeowners’ Committee:The executing agency represents the owner in signing the contract with the property management company and oversees its performance.

2. Voting Rules:

(1) Double majority rule:More than two-thirds of the owners by exclusive-use area and more than two-thirds by number must participate; for major matters (such as renovation or reconstruction), approval requires a “double-majority” among participating owners—more than half by both area and by headcount.

(2) Prohibition of the abuse of voting rights:Voting shall not infringe upon the exclusive ownership rights of other owners or the public interest (Article 280 of the Civil Code).

3. Special Restrictions:

Issue of restricting voting rights due to overdue payments:The provision in local regulations that deprives owners of their voting rights for unpaid property fees (as found in certain local ordinances) has been explicitly ordered by the Legal Work Committee of the National People’s Congress to be repealed, as it violates the principle of equal protection of property rights set forth in Article 207 of the Civil Code (see “Review Opinions of the NPC Legal Work Committee on Restrictions on Owners’ Voting Rights”).

Controversies and Key Points of Judgment in Judicial Practice

1. Typical Cases of Conflicting Rights

(1) Case of installing a cooling tower on the roof:A certain company installed facilities on a shared rooftop without the owners’ consent. The court determined that this constituted an infringement of the co-owners’ right to manage the common areas and ordered the removal of the installations (China Court Case No. 56, 2018).

(2) Disputes over the ownership of underground parking spaces:If a developer has agreed to retain ownership of parking spaces but has failed to register the division of property rights, the court will rule that such spaces are jointly owned by all property owners (Article 275 of the Civil Code).

2. Principles of Judgment

(1) Co-ownership takes precedence over commercial use:Commercial activities must comply with statutory procedures and shall not impair the common interests of all owners.

(2) Review of procedural legality:The legality of a resolution adopted by the owners’ assembly must satisfy procedural requirements, such as proper notification and voting thresholds; otherwise, the resolution may be revoked (Article 278 of the Civil Code).

Frontier Developments and Practical Recommendations

1. Changes in the Era of the Civil Code

(1) Transparency of public revenue:The distribution of income from common areas (such as advertising fees and venue rental) must be made public and shall be subject to the management of the repair fund or decisions by the owners’ assembly.

(2) Simplified procedures for the use of emergency repair funds:Clearly stipulates that the voting procedure may be omitted in emergency situations.

2. Guidelines for Legal Practice

(1) Review of the compliance of procedural rules:Ensure that the procedures for convening and voting at the owners’ assembly comply with statutory quorum requirements and public notice obligations to prevent the resolution from being invalidated.

(2) Documentation of ownership rights to common areas:Review and organize planning documents, property ownership certificates, and as-built survey reports in advance to clearly define the scope of common areas.

(3) Dispute Resolution Path:First, seek resolution through the owners’ self-governance procedures; where necessary, file a lawsuit to rescind the infringing resolution or claim damages for infringement.

Conclusion

China’s system of condominium ownership is centered on the protection of owners’ common rights and interests, with the right to joint management serving as a key mechanism for balancing individual and collective interests. In practice, it is necessary to strike a balance between procedural fairness and substantive rights, and, in light of judicial interpretations and evolving case law, to provide precise legal support for owners’ self-governance.

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