Tenement law: compulsory owners’ associations

Please see below for details of webinars that we are running on 9 and 29 May 2024 following the publication of our Discussion Paper in this project.

Commissioner

Professor Frankie McCarthy

Team Members

Stephen Crilly, Project Manager
Georgia McCuaig, Legal Assistant

This project will consider changes to the law in order to establish compulsory owners’ associations for tenement properties.  The legal term "tenement" covers all buildings containing flats, for example, a converted villa, "four-in-a-block" or a modern, high rise development.

The project follows from a reference under the Law Commissions Act 1965 received on 10 January 2022 from the Cabinet Secretary for Social Justice, Housing and Local Government (Shona Robison MSP).  The reference asks the Commission:

 “To review the law of the tenement in Scotland, including the Tenements (Scotland) Act 2004, and make recommendations for reform to implement recommendation 2 (establishing compulsory owners’ associations) of the Final Recommendations Report dated 4 June 2019 of the Working Group on Maintenance of Tenement Scheme Property.

Your recommendations should include proposals on the establishment, formation and operation of compulsory owners’ associations and the rights and responsibilities to be imposed on them, including, insofar as you consider appropriate and desirable, such rights and responsibilities in relation to recommendations 1 (building inspections) and 3 (establishment of building reserve funds) of the Report.”

As stated, the reference follows the Final Recommendations Report of the Working Group on Maintenance of Tenement Scheme Property.  A copy of the Report can also be downloaded here.

Background

In March 2018, a Scottish Parliament Working Group was convened to consider difficulties with the state of repair of Scotland’s tenement properties.  The Working Group consisted of a number of MSPs and various individuals and organisations with expertise in property management and maintenance.  The Working Group set out three primary recommendations for reforming the law of the tenement in order to improve matters:

1.  a requirement for tenements to be subject to a building condition inspection every five years;

2.  the establishment of compulsory owners’ associations; and

3.  establishment of building reserve funds. 

The essence of the second recommendation is that the owner of every tenement flat in Scotland should be required to enter into an association with the owners of the other flats in the same building.  The key purpose of the association would be to manage maintenance and repair of the building.  Our project aims to set out an appropriate legislative basis for implementing this recommendation.

The Working Group described some key features of the proposed owners’ associations as follows:

    • the association would have legal personality which would allow it, among other things, to enter into contracts;
    • the association would be required to hold an annual meeting, which would prevent absent or apathetic owners holding up repairs;
    • the association would have the ability to control an annual repair plan and budget;
    • the association would be empowered to delegate certain rights and responsibilities, including the right to pursue non-paying owners, to a manager.

The Working Group considered a body of this kind to be “an essential element of tenement maintenance by providing leadership, effective decision-making processes and the ability of groups to enter into contracts”.

Given the complex policy and legal issues connected to the introduction of owners’ associations (notably around the interaction of any proposed legislation with existing property titles and human rights concerns), the Working Group recommended that the matter be referred to the Scottish Law Commission for further consideration and development.

Scope

Our project aims to implement the Working Group’s recommendation that all tenements should have an owner’s association. It is important to note that our role here is not to review the law of the tenement in general, and while we are keen to hear where the current law is thought to fall short in dealing with matters relating to tenement repairs and maintenance, we are not able to provide advice or assistance on specific cases or disputes.

The introduction of owners’ associations in tenement buildings is one aspect of a significant programme of work being taken forward by the Scottish Government in relation to disrepair and energy inefficiency in Scotland’s buildings, with a particular focus on Scotland’s housing stock.  While these Scottish Government objectives, including Housing to 2040 and the Heat in Buildings strategy, lie outwith our scope, we have had regard for how our proposals could interact with future work carried out in this respect throughout.

Progress so far

Work began in 2022 with a preliminary scoping exercise to identify the key legal issues arising from the Working Group Report. We established an advisory group of legal experts to support our work on the project as it develops. Throughout spring and summer of 2022, we held a series of scoping meeting with (principally non-legal) stakeholders.

In the autumn of 2022, we ran three webinars as part of an international comparative law series. In the first of those, Dr Lu Xu spoke about the lessons that can be learned from the introduction of commonhold tenure in England.  Dr Xu's slides are available here, and his presentation can be viewed here. In the second webinar, Professor Cathy Sherry discussed the lessons to be learned from the Australian law of strata title and considered when the powers of owners' associations go too far.  Professor Sherry's talk is available to view on our YouTube channel at this link. The third and final webinar looked at how the law in a number of European countries deals with enforcing payments that are due for tenement maintenance and improvements.  Professors Sergio Nasarre Aznar, Magda Habdas, Sandra Passinhas and Vincent Sagaert tackled the law of Spain, Poland, Portugal and Belgium respectively.  The recording of the webinar can be found here.  Slides from three of the presenters can also be found here: Professor Passinhas' slidesProfessor Habdas' slides, and Professor Sagaert's slides.

From late 2022 to the summer of 2023, we carried out a detailed data capture exercise in relation to title conditions regulating building maintenance and management in approximately 350 tenement title deeds. This research provided us with an indication of the types of maintenance arrangements currently in place in multi-owner properties across the country. The anonymised deeds covered a wide range of building types, ages and geographic locations. The findings of this research were included as an Appendix to the Discussion Paper.

Following our engagement with stakeholders, the comparative law discussions, and our own detailed research, we published a Discussion Paper on 25 April 2024. An executive summary and an open letter to consultees were published alongside the Paper. The Discussion Paper asks 79 questions and is open for consultation until 1 August 2024.

The Paper sets out our provisional proposals for the introduction of owners’ associations. It suggests new legislative provision for the creation and enforcement of an owners’ association in every tenement. It also consults on the introduction of a new default management scheme, named the Owners’ Association Scheme, intended to replace the Tenement Management Scheme currently set out in the first schedule to the Tenements (Scotland) Act 2004. The paper seeks views on these proposals as well as a number of related questions.

The Discussion Paper considers in detail various matters, including:

    • The functions, powers and duties of the owners’ association, including the role of an association manager.
    • How decisions to exercise the powers of the owners’ association will be made by members, as well as how these decisions can be challenged.
    • The liability of owners for costs, and the implementation of an annual budgeting system.
    • Whether the court should be empowered to appoint a manager to run the owners’ association where owners have failed to keep it operational.
    • Whether any types of tenements should be exempt from the scheme, and how the scheme could be disapplied from a tenement.
    • How any new laws made to give effect to the scheme will interact with pre-existing title conditions.

We have arranged two online webinars at which Professor Frankie McCarthy (the lead Commissioner for the project) will talk through the most important aspects of the paper with a short opportunity for questions.

The webinars will take place on:

    If you wish to attend either webinar please click the relevant link above to access the registration form. Registration is required to attend, but otherwise the webinars are free and open to all. Each webinar will cover substantially similar material, so there is no need to attend both.

    A recording of the presentation given by Professor McCarthy at the webinar on 9 May 2024 is available on our YouTube channel.

    Please note that we intend to record the presentation parts of both webinars with a view to making a recording available on our YouTube channel at a later date. There will be an opportunity for questions after the presentation, but we do not intend to record that part of the seminar.

    When we have analysed responses to this Discussion Paper, and carried out any further research required, we hope to be in a position to provide the Scottish Government with a report detailing our recommendations and providing a draft Bill for their consideration.  We currently estimate that this will be in spring 2026, as requested in the reference letter.

    Contact

    We are always keen to engage with stakeholders who may be affected by the subject matter of this project and would be happy to hear from anyone who wishes to input.

    For further information, please contact Stephen Crilly at info@scotlawcom.gov.uk.