Governance of The Condominium Management Corporation: The Rights, Duties and Responsibilities

The Condominium Management Corporation is a committee consisting of all unit owners of an apartment complex as members and comes into being with the registration of a subdivided building as a condominium property. It has a constitution and bylaws and can sue and be sued like a corporate body.

This corporation is succeeded based on perpetual succession and is a compulsory requirement, as per the Condominium Management Authority law. 

Condominium Management Authority

The Condominium Management Authority regulates the Condominium Management Corporation. It is a state body that controls, manages, maintains, and administers the condominiums, the common elements, and the common amenities of the Condominium Property or Semi Condominium Property. The authority is also in charge of assisting the management corporation with its activities.

Following are some other roles of the Condominium Management Authority.

• Resolve disputes between the management corporation and the owner or owners, and occupier, or owner and purchaser of the condominium property;
• Enter any condominium property to inspect its progress or for inspecting non-maintenance of common elements or to remove or inspecting unauthorized constructions
• Levy fees or charges for any services rendered by the Authority
• Recover from any person, including an owner, expenses incurred in making good any damage caused by him to the common amenities or common elements of the condominium parcels

Common Amenities Board

The Common Amenities Board under the Act No. 24 of 2003 is also a part of Condominium Management Laws and governs the roles/activities of Condominium Management Authority towards corporation/council. It is established according to the Common Amenities Board Law and aims to control, maintain, manage, and administrate the common amenities and elements in a condominium. Some of the Condominium Management Corporation duties towards the Common Amenities Board shall be;

• After its general meeting, the council shall file with the Common Amenities Board-certified true copies of

• The audited accounts of the corporation
• The resolutions passed at the general meeting; and
• The minutes of the general meeting

• The council shall permit the Common Amenities Board or any person authorized by it to act on its behalf at all reasonable times full and free access to accounting and other records of the corporation and the permit the Common Amenities Boards or such person to make copies of a make extract from any such accounting or other records.
• The Common Amenities Board (C.M.A.) or any person allowed by the Board to act on its behalf may require any member to furnish the board with such information which such member possesses or has access to as the board or any such duly authorized person considers necessary for the purposes of discharging the functions of the Board under this Law.

Condominium Management Corporation (CMC)

Establishment

The Condominium Management Corporation (CMC) is established by all unit owners of a condominium parcel or complex. Each CMC is named based on the Management Corporation Condominium plan number when registering with the Condominium Management Authority and is controlled by the Management Committee of that CMC. According to the first schedule of section 20B (3) of the Act No. 45 of 1982 Apartment Ownership (Amendment), CMC’s office bearers have to be elected each year at the Annual General Meeting through member voting.

Members of the Committee

The unit owners of the condominium complex appoint the Management Committee, and the committee comprises a minimum number of three members to a maximum of fourteen. The first Annual General Meeting of the Management Corporation and the appointment of the council should take place within three months from the registration of the condominium property But if the first Annual General Meeting has not yet been held or there are fewer than three owners, the council will include all the owners as committee members. Later, once the Annual General Meeting is held, committee members elected can remain in position for 1 year until the next annual general meeting.  

Through a resolution at an Extraordinary General Meeting, council members can also be removed and replaced if the council consists of all owners. During this period, temporary members can hold office until the next annual general meeting. A member of the council may resign his office at any time by writing under his hand addressed to the corporation. Where a vacancy in the council’s membership occurs, the remaining members may appoint another owner to be a member until the next annual general meeting. The members of the council can also be re-elected or re-appointed.

Meetings of the Committee

Every meeting of the council is presided over by a chairman who is elected by the members of the committee present at the meeting and who has a casting and an original vote.

Since the CMC’s functions are similar to any other institution or committee, Annual General Meetings should be held every year and conducted for the consideration of accounts, the election of the council, and the transaction of other concerns.

The Condominium Management Authority, overlooking the function of the CMC, has a standard regulatory condition for them to follow when hosting their Annual General Meeting. 

 i. The 1st AGM shall be held within three months after registration of the Condominium Plan and subsequent annual general meetings shall be held once each year.

 ii. Provided that not more than fifteen months shall elapse between the date of one annual general meeting and the next.

The committee meetings can be convened by the members at any time provided that a date for the meeting is set and 7 days notice is given to the other members. 

Decision making of committee

When making a decision at these meetings, it is based on a voting system and it is the majority’s vote that has a final say. 

Unless there is only one owner, the minimum number of members at the council meeting should be;

a. Two when there are less than four members.

b. Three when there are five or six members

c. Four when there are seven or eight members

d. Five when there are nine or ten members

e. Six when there are eleven or twelve members

f. Seven when there are thirteen or fourteen members

A resolution at a general meeting shall be determined on a show of hands unless a poll is demanded by a person entitled to vote.

On a show of hands or a poll, votes shall be cast either personally or by proxy. 

An instrument appointing a proxy (who need not be an owner) shall be in writing under the hand of the person making the appointment or his attorney and shall be either for a generator of a particular meeting.

The role of the management committee

The main function of the Management Corporation is to manage and maintain the common elements of the condominium in a manner that is in the best interests of all owners. The management corporation is also responsible for maintaining them in a working and good condition.

Sections 2 of the Second Schedule to Act No. 45 of 1982 specify the functions to be performed by the owner and the management corporation as follows:

1. Its primary purpose is to keep common elements in the condominium in excellent functioning order by managing and maintaining them.
2. The condominium property must be repaired and kept in good working order so that equipment and fixtures, such as elevators, that are used in connection with the use of common areas by multiple units are in decent working order.
3. Lawns and gardens should be set up and maintained on shared elements whenever possible.
4. Maintenance and renovation of cesspools and cables that may be used in connection with the enjoyment of more than one unit of common components.
5. At the written request of the owner or the mortgagee registered in his unit, at the appropriate time, the owner or the pawnbroker or the owner or the person authorized by the mortgagee must provide a final receipt for all insurance policies and premiums paid for those deeds.
6. The building should be insured against the prevailing value of fire and other hazards
7. Insurance received in respect to damage to the building should be used immediately to rebuild and restore the building.
8. Order to stop any harm done to public parts, or to make repairs or improvements to common parts or buildings of the condominium property in accordance with a notice issued by the Government or a public or statutory court.
9. Acting in accordance with an advertisement or order issued by the Government or any public authority directing the removal of any unauthorized construction affecting the condominium property (or) semi condominium property in violation of the approved building plan and the condominium management authority or province to assist in such removal. It is also a matter of requesting from the governing body or the Urban Development Authority.
10. Agreement with the National Water Supply and Drainage Board, Local Government, and certain other licensees to provide water, electricity, and other utilities for all condominium parts of the building and to charge service charges and monthly fees for all such condominium parts. Services must be provided.
11. The management committee should also properly manage utilities consumed by the unit owners, which shall be supplied by the National Water Supply and Drainage Board or Ceylon Electricity Board or Local Government Institutions Local Government, or any other Authority or Licensed entity. This shall disconnect personal connections to those utilities to charge monthly charges for water, electricity, and other utilities and by continuing to disconnect supplies to relevant locations until the unit owner pays the relevant fees to the management corporation.
12. Funds should be raised for the management of all the above functions by systematically charging a monthly contribution from the owners of all the condominium shares in the shares of the owners of the relevant condominium shares.
13. Management corporations must supervise and manage public components in a way that benefits all owners. Furthermore, the corporation may, in agreement with a specific owner, grant the owner the sole right to use or enjoy any portion of the public property, or the privilege of owning the public property or any part thereof.
14. The Management Committee shall keep the minutes of the meetings. Proper books of accounts to be kept in respect of all money received and spent by CMC.
15. The council shall prepare proper accounts for each annual general meeting and the accounts of the corporation shall be audited annually by auditors appointed by the committee.
16. After its general meeting, the committee shall file with the Common Amenities Board (C.M.A.) Certified true copies of the audited accounts of the corporation, the resolution passed at the general meeting, and the minutes of the general meeting.
17. The council shall permit the Common Amenities Board or any person authorized to act on behalf, at all reasonable times full and free access to accounting and other records of the corporation and the permit the Common Amenities Boards or such person to make copies of and make extracts from any such accounting or other records.

In discharging the responsibilities, CMC has the following rights;

• To inform unit owners if a government authority requests compliance with regard to general components and repairs of a unit of the condominium property.
• If there is any money spent by the management corporation, the management corporation has the legal right to recover it from the owner.
• To purchase, rent, or otherwise acquire movable/immovable property for the common use of unit owners.
• If a unit owner fails to comply with any of the terms or notices given by the management corporation within a unit within a reasonable period, it has the power to take legal action against the owner of the unit or act in accordance with that notice or order and recover the amount spent on it.
• To employ persons for and on behalf of the corporation as it thinks fits in connection with the exercise of the powers and the performance of the duties of the CMC (Ex: a manager, security staff, maintenance staff, etc.)

Act No. 45 of 1982 Apartment Ownership (Amendment) section 20F (1) provision provided, where the Common Amenities Board is not satisfied with the management corporation carrying out its duties or performing its business unsatisfactorily and is of the opinion that certain duties must be carried out urgently or immediate action must be taken with respect to matters of concern to the management corporation and the owners of all the units, the Common Amenities Board shall have the power and may perform the duties of the management corporation until such time an administrator is appointed under section 20E.

The Management Fee

A management fee is collected quarterly from all the owners of the condominium and deposited into a management fund and sinking fund which is used for the operation of the CMC.

In terms of section 20 C 1 (bb) of the Apartment Ownership Law as amended by subsequent amendments, monthly contribution (maintenance) fees should be calculated in proportion to the share value of the respective Condominium Parcel as per the registered Condominium Plan.

However, CMA had found some Management Corporations charge the Monthly maintenance fees according to the uniform system from the date of establishment of the Management Corporation. To regulate this, the Ministry of Housing and Construction, under section 24 of the Apartment Ownership Law No 11 of 1973, published in gazette notification of 05.07.2017. An extract of section 11 (g) under (part iv) of the regulation and is as follows.

‘’Where any management corporation has charged the management fees in equal installments, the management corporation from the date of this regulation shall charge the management fees in proportionate to the share value of the Condominium Parcels’’.

This management fee collected from the owners of the condominium units shall be used to create,

1. Management fund

This fund will be used to function the day-to-day management, maintenance, and administration of the condominium common elements. In addition to the Management Fee collected further, this fund shall be credited with fines, interests, penal charges, disposal proceeds of any properties owned by the CMC, any other money earned by CMC by exercising, discarding, or performing of its powers.

Further, any loans, gifts, grants, and donations also can be credited to the management fund.

2. Sinking fund

In order to meet emergency expenses and major repairs to common elements, CMC has the obligation to have a sinking fund, and it is mandated by the Apartment Ownership Law. However, the sinking fund works only as a reserve. 

According to the Apartment Ownership Law, the amount of contribution to the sinking fund should be agreed upon in the Annual General Meeting of CMC. To utilize funds for major repairs, renovation of common elements, or any other expense of capital nature, the CMC should have a special/general resolution with the consent of the Condominium Management Authority.  

Dispute resolution 

Apartment Ownership Law has provided rules and guidance on how to use the condominium parcels and common elements. Besides that, the CMC can implement additional bylaws as required, but they can’t be inconsistent with the Apartment Ownership Law. These mostly apply to the common areas and some others include unauthorized changes to the structure, garbage disposal, security guidelines, keeping pets, making noises, disturbing other owners, etc. In case of violations by an owner, it is the responsibility of the CMC to warn, charge, or resolve the matter. 

If an owner has a problem with regard to the conduct of the CMC, he/she can complain to the Condominium Management Authority. The Condominium Management Authority Law empowers the Condominium Management Authority to inquire and order to resolve the dispute.

Further, any breach of Apartment Ownership Law can be taken up to the court by the Condominium Management Authority, CMC, or any owner of the condominium parcel.