HOME > CASES&JUDGMENTS > Judgments > Payment of condominium's administrative fee and the like in which the previous owner fell behind

[June 2013]

Payment of condominium's administrative fee and the like in which the previous owner fell behind

This case is concerned with arrears including condominium's administrative fee on which the previous unit owner fell behind. Regarding a condominium unit, an association of unit owners prescribed by Article 3 of the Act on Building Unit Ownership, etc. demanded payment of arrears including administrative fee against a person who purchased the unit from the previous owner and a second successor of the unit based on Article 8 of the Act.

The court construed that the purchasers of the unit (specific successors) as well as the previous owner were liable for paying the arrears and affirmed all the demand by the association on the grounds that (1) if the previous owner of the unit fell behind on his/her utility expenses including water and sewage fees specified by the bylaws, a person who purchased the unit was also liable for paying such expenses; (2) the intermediary owner who purchased the unit from the previous owner and resold it to another person was also liable for paying such expenses; and (3) these purchasers fell under the category of the successors affected by interruption of prescription prescribed in Article 148 of the Civil Code as well as the category of the successor subject to effect of final and binding judgment after the conclusion of oral argument under Article 115 (1) (iii) of the Code of Civil Procedure. (Judgment by the Osaka District Court on July 24, 2009)

  • Page 120 of Hanrei Times No.1328

Summary of the case

Plaintiff:
X (Condominium association)
Defendant:
Y1 & Y2 (Successors of a condominium unit)
Parties concerned
A1 & A2 (Previous owners of a condominium unit)

On January 11, 2007, Y1 obtained a condominium unit through a secured real property auction. This condominium unit had been jointly owned by A1 and A2 since prior to 1992. On February 27, 2008, Y2 purchased the condominium unit from Y1.

Concerning this condominium unit, an administrative fee had not been paid since 1992 and utility expenses including water charges had not been paid since October 2001.

With regard to "any claim a unit owner holds against another unit owner in relation to a common element, the grounds of the building, or ancillary facilities of the building that are other than a common element", and with regard to "any claim that a unit holder holds against another unit owner based on the bylaws or meeting resolutions" specified in Article 7 of the Act on Building Unit Ownership, etc., Article 8 of the Act states that these claims may be exercised against a person who succeeded the unit through trade, donation, or other ways (the specific successor of the unit owner) who is the obligor.

Therefore, the condominium association X demanded payment of about 6,000,000 yen from Y1 and Y2 including administrative fee, delay damages, reserve fund, water and sewage fees and hot water fee, on which A1 and A2 had fallen behind.

The following three were main points at issue in this suit.

  1. Water used in this condominium was supplied under a blanket contract between X and the municipal water department. Water used in the communal area and all of the private areas was measured by the main water meter. X paid the total water fee thereof and then collected individual fees from unit owners calculated based on the amount used measured by the sub water meters installed at individual units. Hot water was supplied to individual units through a boiler (hot-water supply installment) installed at the communal area. X paid the water and gas fees for the overall hot-water and then collected individual fees from unit owners calculated based on the amount used measured by the sub hot-water meters installed at individual units. Considering these points, the claim that X has against unit owners is a right to reimbursement regarding fees for water and hot-water used in individual units, and is not directly related to the administration of the communal area. Therefore, arrears of these fees might not be included in the category of claim specified in Article 7 (1) of the Act on Building Unit Ownership, etc.
  2. Y1 who is not a unit owner now (hereinafter called "intermediary owner") does not correspond to the specific successor of the unit owner prescribed in Article 8 of the Act on Building Unit Ownership, etc. Therefore, Y1 might not have to bear the obligation.
  3. Is it possible for Y1 and Y2 to invoke the extinctive prescription for the claims generated by omissions of A1 and A2 which were not exercised for 5 years or more from the due date based on Article 169 of the Civil Code? Before Y1 obtained the condominium unit, final judgment against A1, acknowledgement of obligation of A2, and acknowledgement of obligation after completion of prescription had been established. Are specific successors Y1 and Y2 affected by interruption of prescription?

Reasons

(1) Water and sewage fees & hot-water fee

Article 30 of the Act on Building Unit Ownership, etc. does not limit the area of the building subject to the bylaws to the communal area. Moreover, the plumbing equipment and the hot-water supply equipment are ancillary facilities of the condominium, which shall be administered by X under the bylaws. In light of the above, it can be said that the bylaws can specify that the condominium association temporally pays for the amount used in the overall condominium and then charges unit owners for individual fees for the amount used as a rule among unit owners about administration and use of the building and ancillary facilities of the building, although water/sewage and hot-water services are used in private areas. Therefore, arrears of these fees fall under the category of claim prescribed in Article 7 (1) of the Act on Building Unit Ownership, etc.

(2) Intermediary owner

Article 8 of the Act on Building Unit Ownership, etc. states that the claims provided for in Article 7 (1) of the Act may be also exercised against the specific successor of the unit owner who is the obligor.

It should be construed that once Y1 assumed the obligation to pay arrears including administrative fee of the previous unit owner as the specific successor of the unit owner who is the obligor under Article 8 of the Act, Y1 cannot be exempt from the obligation even after transferring the unit ownership to another party. It is because Article 8 of the Act intends to ensure performance of obligation by specifying that the obligation may be assumed by the specific successor of the unit owner, and never appears to envisage that the specific successor of the unit owner would transfer the ownership and avoid the obligation. The description of a statutory lien in Article 7 (1) of the Act just intends to ensure performance of obligation in the same way, so it does not support the idea of limiting the category of obligors by which the obligation shall be only assumed by the current unit owner.

(3) Claim of extinctive prescription

It should be construed that Y1 and Y2 who assumed the obligation of the previous unit owner as the specific successors of the unit owner under Article 8 of the Act on Building Unit Ownership, etc. correspond to the successors affected by interruption of prescription under Article 148 of the Civil Code in light of the intent of the Article 8 of the Act, which tries to enlarge the category of obligors to ensure performance of obligation, and also correspond to the successors affected by the final judgment after the conclusion of oral argument under Article 115 (1) (iii) of the Code of Civil Procedure.

Explanation

If a person buys a used condominium unit and the previous owner fell behind in payment of administrative fee and the like, the new owner also becomes liable for payment of the arrears.

While the previous owner has been liable for payment of arrears under the bylaws, the new owner is liable for it under Article 8 of the Act on Building Unit Ownership, etc., which is difficult to be avoided.

Consumers should confirm whether or not arrears remain prior to purchase, and if it does, they should try to reflect the disadvantage in pricing. It is troublesome if arrears are found out after purchase.

Among the items addressed by the judgment on this article, utility expenses including water charges and intermediary owner were also addressed by a precedent (Judgment by the Osaka District Court on June 23, 1987 / Page 218 of Hanrei Times No.658). In this precedent, the court judged that utility expenses were included in the scope of claim and that the intermediary owner was not liable for payment thereof.

Both the precedent and the judgment on this article affirmed the claim for utility expenses on the grounds that payment thereof was specified by the byelaws as stated in Article 7 of the Act on Building Unit Ownership, etc.

On the other hand, it was construed in the judgment on this article that the intermediary owner cannot be exempt from liability for payment of arrears even after losing the unit ownership because Article 8 of the Act intends to ensure performance of obligation by placing liability particularly on the specific successor.

This judgment is important in terms of maintaining and sustaining condominium associations as well as in terms of preventing resale aiming at exemption from liability (although liability for payment of administrative fee and the like cannot be avoided while owning the unit in any way), but it must be too strict for successors who purchased the unit without knowing the existence of arrears. Concerning persons affected by interruption of prescription, it is unlikely for a new owner to know the existence of interruption of prescription, which cannot be simply judged based on length of time.