Collective bank borrowing of a condominium

Verified 16 February 2022 - Directorate for Legal and Administrative Information (Prime Minister)

Changes to bank borrowing rules

Published on 12 April 2024

The law no. 2024-322 of april 9, 2024 amends the collective borrowing rules.

A decree must be issued to specify certain information (notably, the borrowing capacity of the condominium syndicate).

Our page will be updated as soon as the text is published.

A condominium syndicate can make a bank loan to finance work within the condominium. This loan can be made for all co-owners or for the only co-owners who decide to participate. The decision to borrow must be taken by a vote in the general meeting.

A bank loan may be made in the name of the condominium pool to finance the following projects:

The bank loan is made in the name of the condominium union on behalf of all the condominiums or only those condominiums that decide to participate.

The use of bank loans is subject to certain formal rules.

Agenda of the General Assembly

The general meeting of the co-owners may decide to take out a bank loan in the name of the co-owners' union.

The general and specific conditions of the draft loan contract must be communicated by the liquidator at the same time as the agenda of the meeting.

Voting Rules

In principle, the decision to take out a loan is taken at unanimity the voices of the co-owners.

By way of exception, the decision may be adopted by the same majority as that required for the vote on the work concerned, in two cases:

  • Where the loan is used to pre-finance public subsidies granted to the syndicate of co-owners for carrying out voted work
  • When the loan benefits only the co-owners who decide to participate

Notification of participation

Co-owners participating in the loan must notify their decision to the trusteeby any means, specifying the amount of the loan they wish to request within the limits of their share of expenses.

This notification must be made within 2 months of the notification of the minutes of the general meeting, without its annexes, to all the co-owners.

Subscription

The loan agreement must comply with the general and specific conditions attached to the agenda of the general meeting.

The loan contract must be signed by the trustee.

It shall take place after the two-month period following notification of the decision of the general meeting concerning the use of bank loans.

Please note

in principle, the condominium must be guaranteed by a surety, i.e. by a third party (insurance company or other bank), to prevent unpaid repayment of the co-owners' loan. This guarantee is optional where the loan is used to pre-finance public subsidies.

Only co-owners who have taken out the loan must repay it within the limit of their share of expenses.

In the event of a default on the loan, the trustee must send a formal notice to the failing co-owner.

If this notice fails, and at the end of a period of 30 days, the trustee may ask the guarantor to reimburse the co-owner's unpaid bills.

The guarantor can then approach the defaulting co-owner to obtain reimbursement of the payment.

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