ADDRESSING THE UNFAIR NATURE OF THE CONVENTIONAL CLAUSE EXEMPTING THE SELLING COMPANY OF THE CONDOMINIUM BUILDING COMPLEX FROM THE PARTICIPATION IN CONDOMINIUM EXPENSES

Italian Supreme Court, Section II, judgment no. 5139 of 27 February 2024

With regard to the legal framework governing the distribution of common condominium expenses between condominium owners, the Italian Supreme Court - Second Section - with judgment no. 5139 of 27 February 2024, clearly stated the unfair nature pursuant to Article 33 of the Italian Consumer Code of the conventional exemption clause, drafted by the selling company of the condominium building complex and endorsed by individual condominium owners within the scope of their respective property purchase agreements.

As is widely known, in a condominium building complex each condominium owner's ownership right to a condominium unit includes a share in all the components of the common property.

This co-ownership share also entails that the common expenses related to the mantainance or renewal of the condomium common componets are generally borne by all condominium owners in proportion to the value and size of each one's ownership.

Accordingly, in compliance with the provisions of Article 1118 of the Italian Civil Code, an individual condominium owner cannot evade the obligation to contribute to the expenses for their maintenance, even by waiving their rights to the common property.

As further clarified in Article 1138 of the Civil Code, this obligation is imperative and cannot be excluded by condominium owners within the scope of a conventional condominium regulation, even by changing the intended use of their property unit.

Without limiting the generality of the foregoing, condominium owners are entitled to enstablish, pursuant to the principle of contractual freedom, a different distribution criterion for expenses compared to the general criterion provided by Article 1123 of the Italian Civil Code, and this, by virtue of a different agreement contained within a contractual condominium regulation or on the grounds of a unanimous decision approved by the condomium owners’ association in an assembly.

Nevertheless, as it common, the contractual condominium regulation drafted by the original owner - or by the constructor/seller of the building - and attached to the deeds of purchase of the individual condominium units, contains a clause that exempts the original owner of the building complex from the obligation to participate in condominium expenses for the unsold condominium units remaining under its ownership.

In the instant matter, the Court of first instance confirmed the judgment rendered by the Justice of the Peace, before whom the selling company raised opposition against the injunction issued by theowners’ association for the recovery of the condominium contributions assumed to be due.

The selling company contested the nullity of the condominium resolution by which the owners’ association had allocated, by majority, the condominium expenses also to the condominum units remained unsold and owned by the company in violation of the exemption clause signed by all condominium owners at the time of the purchase of their individual properties.

In this regard, the clause provided that the condominum units remaining unsold by the selling company would not contribute to the payment of condominium expenses until their sale, at which point they would begin to participate in the expenses "directly with the new condominium owners."

In its reasoning, the Court denied the alledged unfairness of the clause under consideration by excluding the applicability of the provisions set forth in Articles 33 et seq. of the Italian Consumer Code as it was not yet in force at the time of stipulation the property purchase agreements.

Furthermore, the Court underlined that the clause was included in a contract executed by public deed and therefore, even if consistent with the conditions set by one of the contracting parties, it could not be considered drafted by the same contracting party in accordance with Article 1341 of the Italian Civil Code. On these assumptions, such clause would not require for a specific approval, even if unfair.

Against the judgment rendered by the Court, the losing parties filed an appeal before the Court of Cassation, alleging, inter alia, its nullity for the violation of Articles 1469-bis and 1469-sexies of the Italian Civil Code, in consideration of the fact that these provisions were still applicable ratione temporis to the case under consideration.

Indeed, their prescriptive scope was considered to be identical with the one enshrined in the provisions set forth in Italian the Consumer Code, as they provided that: “In contracts entered into between consumers and professionals, terms shall be considered unfair where, contrary to good faith, they cause a significant imbalance in the rights and obligations arising under the contract, to the detriment of the consumer."

According to the Italian Supreme Court these grounds of appeal well-founded. Hence, in overruling the judgment of the Court of first instance, the Supreme Court recalled its well-established jurisprudence wherein the exemption clause from condominium expenses drafted by the original owner of the building within a contractual condominium regulation referenced in a property purchase agreement must be considered unfair and, therefore, shall be void in compliance with Article 33 et seq. of the Italian Consumer Code.

This specifically occurs when the unfair nature of the clause is contested by the consumer or is assessed individually by the judge in a proceeding where the contracting parties of a consumer relationship are involved, provided that the clause causes a significant imbalance of the rights and obligations arising from the contract to the detriment of the consumer.

The Supreme Court argued that such assessment should have been made by the judge of first level in order to properly determine whether or not the exemption clause in question pertained to a property purchase agreements contracts entered into between a professional and a consumer, and if could be considered unfair in the senses and within the limits specified.

And this, without regard to the fact that the property purchase agreements were concluded when the Consumer Code was not yet in force since Article 1469-bis of the Italian Civil Code was, in any case, still applicable at the time.

In conclusion, in the present case, the Italian Supreme Court confirmed the possible applicability of Articles 33 et seq. of the Italian Consumer Code to the distribution criteria of the condominium expenses enstablished by the original owner of the condominium complex.

This applies specifically to all those instances where property purchase agreements are concluded within the scope of the original owner’s professional activity, thereby allowing condominium owners to be recognized as consumers.

In this regard, under the provisions of the Italian Consumer Code, the unfairness of the challenged exemption clause shall be assessed in trial in all those cases where the burden related to the common assets is distributed among all other condominium owners, resulting in an evident imbalance of the obligations arising from the property purchase contracts to their detriment.

Author: Dott.ssa Francesca Rosa