The participation rates in Spanish condominium law
Participation quotas are essential for the functioning and orderly management of the owners’ association. According to Article 3 of the Property Ownership Act (LPH), each individual property is allocated a participation quota, which is proportional to the total value of the property and expressed as fractions of a hundredth of the total. This means that all participation quotas of all individual property elements together constitute 100% and represent the entire property.
The distribution of the participation quotas is either determined unilaterally by the developer before proceeding with the sale of the individual property elements or by unanimous resolution of all owners. The participation quota can also be determined by arbitration or a court ruling (see Article 3 LPH).
Areas of application of participation quotas
The participation rate is used in Spanish condominium law in several respects. For example, this rate serves as a key to determining the share of individual private property elements in the community’s expenses and income. Even though Article 9.1.e.) LPH permits the distribution of community costs (which cannot be individualized, i.e., the causation of which cannot be assigned) among the community members to deviate from the participation rate, this can only happen if a deviating provision from the law has actually been made by means of a declaration of division, bylaws, or by resolution. According to Article 9.1.f.) LPH, the participation rate is also taken into account when determining the extent of the owners’ contribution obligation with regard to the reserve fund. The participation rate is particularly important because, alongside the owners’ vote, it is one of the two variables to be taken into account at the owners’ meeting: For the owners’ meeting to be held effectively, at least the majority of all votes and quotas represented in the community must be present at the first meeting. Otherwise, a second meeting must be called. At the meeting itself, when determining the majority ratios described in Article 17 LPH (but also Article 10 LPH), both the votes and the quotas attributable to them must be taken into account. For example, Article 17.3.1 LPH requires a 3/5 majority of both the votes and the quotas of all owners for the creation or elimination of communal facilities of general interest (such as porter, caretaker, or security services).
To determine the majority ratios, two variables must be used: the votes (head principle) and the quotas.
Even though more detailed information is provided in the chapter on the bodies of the community (section on the owners’ meeting), a brief overview will nevertheless be given here.
[pullquote]Even if an owner holds multiple pieces of special property, they are only entitled to one vote. However, all quotas allocated to their property are counted together. This way, while they may only have one vote in a single vote, their larger property is still taken into account in the quota calculation. [/pullquote]
It should be noted that each owner of a special property element has one vote. If a special property element is jointly owned by several owners, they can only exercise their voting rights jointly, i.e., they can only cast one vote in total. If an individual holds multiple special property elements, they still only have one vote. This prevents a single owner of multiple special property elements from undermining the community’s natural decision-making process and unilaterally dictating or preventing decisions by pooling numerous votes. In addition, each special property element is allocated a participation quota. This, as described, is also used to determine and count the respective majority, because every resolution must be supported by a certain number of votes and quotas. Each vote is allocated the participation quota assigned to its special property element. If an owner holds multiple special property elements, they only have one vote, but they have the participation quotas of all their special property elements. This prevents the extent of the general obligation to bear costs from being ignored. Otherwise, the owner of multiple private property elements would only have one vote, but would potentially have to bear the majority of the costs, without this circumstance being given the weight it deserves in the decision-making process. The two-track majority determination is intended to enable a fairer consideration of conflicting interests.
These distinct majorities are also important in another respect: The initiative to hold an owners’ meeting, pursuant to Article 16.1 of the LPH, is also subject to a majority requirement. The law requires that the initiative be initiated by a group of owners representing either at least a quarter of the votes or the quotas. Therefore, at least one of these two majorities must be found, regardless of which one.
The level of participation in Spanish law
Given the importance of the participation quota both in terms of its influence on determining the majority ratio and thus decision-making, as well as on the distribution of income and expenditure, the question arises as to the basis on which its extent is to be determined.
Since Article 3 of the Land Use Act sets the participation quota in relation to the total value of the community or urbanization, one might think that the quotas should only be distributed according to the value of the individual property elements. This means that one would first have to determine the total value of the property or urbanization and then determine the proportion of each individual property element to this value. Viewed the other way around, one could also add them together, starting from the original value of each individual property element, to obtain the total value of the property and thus be able to determine the percentage share of each property element in the total value of the community.
However, Article 5.2 of the LPH stipulates that the amount of the participation quota must be based on the area of each individual private property element in relation to the total area of the property or urbanization, its interior or exterior layout, its location, and the reasonably foreseeable use that will be made of the common facilities and common elements. Thus, in addition to purely value-determining factors, there are also factors that relate the participation quota to the actual use of the common facilities.
Participation ratios and co-ownership shares in Spain
As Castillo Guerrero quite rightly points out, the participation quota and the co-ownership share are often used synonymously, although each has a different meaning. While the co-ownership share, as the term itself makes clear, serves to express the percentage share in the shared property, the participation quota serves a different purpose. The latter performs the tasks described above with regard to cost distribution. The participation quota will usually be identical to the co-ownership share, which explains their synonymous use. Nevertheless, it should be emphasized that there can be a difference between the two. One example makes this particularly clear: If, for example, a natural disaster or the age of the property renders it ready for demolition or a ruin, each owner holds a share in the property equal to their co-ownership share, and not to the participation quota. Although there is indeed a difference between the two terms, they will be used synonymously below. On the one hand, this takes into account the fact that they mostly coincide, and on the other hand, the use of the term “co-ownership share” reflects the parallel to German condominium law and facilitates understanding.
