Tenement law: compulsory owners’ associations

The Scottish Law Commission has published its Report on Tenement law: compulsory owners’ associations, including a draft Tenements (Amendment) (Scotland) Bill.

An outline of the contents of the Report can be found in the Executive Summary and News Release. A Business and Regulatory Impact Assessment is also available.

On 10th January 2022, the Scottish Law Commission received a reference from the (then) Cabinet Secretary for Social Justice, Housing and Local Government. The reference asked us to make recommendations for reform to implement recommendation 2 of the Final Recommendation Report of the Working Group on Maintenance of Tenement Scheme Property.

We have now published our Report and draft Bill which set out an appropriate legislative basis for implementing this recommendation should the Scottish Government be minded to progress it.

Our recommendations include:

• The establishment of owners’ associations in tenement properties by operation of law at specified points in time; 

• The imposition of four “key duties” on each owners’ association, namely:
  • A duty to appoint a manager for the association;
  • A duty to hold an annual general meeting;
  • A duty to approve a budget in respect of association costs for each financial year; and
  • A duty to apply to have certain information noted on the property registers in respect of the tenement. 

• The power to enforce the “key duties” via a remedial management process following an order from the First-tier Tribunal for Scotland; 

• Having tenement disputes dealt with principally in the First-tier Tribunal rather than the sheriff court as at present; and 

• A default set of association rules governing the operation of the association, together with provision to move towards a more standardised form of tenement title conditions by which flat owners can modify the default rules.

Professor Frankie McCarthy, Lead Commissioner for this project said:

“The statistics on the state of disrepair of Scotland’s tenement housing stock cause considerable concern. Those statistics underpin the recommendations of the Working Group on Tenement Maintenance, one of which was to establish owners’ associations in all of Scotland’s tenement buildings. The Report we have now published sets out our proposals for reform in order to implement that recommendation should the Scottish Government wish to do so. The introduction of owners’ associations will represent a significant change for flat owners in a complex area of law, and there are a number of cross-cutting policy considerations discussed in the Report which the Scottish Government will wish to consider. While owners’ associations will not be a standalone solution to the difficulties encountered with the management of multi-owner buildings, we hope that, if pursued, they will be a positive addition to the effort to improve the condition of this vital element in Scotland’s housing stock.”

The Tenement law: compulsory owners’ associations project team would like to thank everyone who contributed to the project, including those who responded to our Discussion Paper and our Advisory Group members.