Since 1949

Don't lose your patio!

Don't lose your patio!

By Claude D Zacharias

Translated by James Hurst (Authorised Translator), ELT - English Law Translations

This recommendation calls for buyers of tenant-owned apartments to be aware of the rules and regulations. Unfortunately one buyer of a tenant-owned apartment was unaware of these rules and like a letter in the post, albeit delayed, this tenant-owner lost their patio. This is the effect of a ruling from Scania and Blekinge Court of Appeal by a judgment of 26 January 2015, Case no. T 1357-13.

1. Background

1.1 This ruling involves a tenant-owner who applied for, and was granted, permission to build a patio adjacent to their tenant-owner apartment. This was approved by the board of the tenant-owners' association. At an annual general meeting of the association, 16 years later, use of the patio was prohibited on the grounds of drainage work. Later that year all private use of patios at the property was prohibited. The tenant-owner instituted proceedings against the association, claiming that the land was part of the tenant-owner apartment, and that the decision taken at the meeting was therefore ineffective.

2. Tenant-owner Property Act

2.1 Under Chapter 1, Section 3 of the Tenant-owner Property Act (BRL), a lease of an apartment with a tenant-owner right may only be granted to a person who is a member of the tenant-owner association. If a tenant-owner wishes to make a significant change to their apartment, then permission is required under Chapter 7, Section 7, item 3 BRL. However, according to its second paragraph, the tenant-owner should not be refused such permission if the measure is not of manifest harm or inconvenience to the association. This relates to the apartment leased and its internal parts (cf. Government Bill 2002/03:12, p. 62 f.) The Court of Appeal concluded that this provision did not apply to grants of land, but instead related to changes inside the apartment itself.

2.2 The provision contained in Chapter 9, Section 16, first paragraph, item 2 BRL relates to restrictions and similar impairments to the apartment.The Court of Appeal considered in its judgment that in the case of a supplementary lease of land, an additional area is instead added through a voluntary agreement to the tenant-owner apartment previously leased. On the other hand, a supplementary lease of land may mean, among other things, that some other apartment is altered in the manner referred to in Chapter 9, Section 16, first paragraph, item 2. In that event the same provisions must be observed vis-a-vis such other apartment. According to these rules even in the event that a tenant-owner does not concede a restriction, the restriction is nonetheless valid supported by at least two-thirds of those voting and also when approval is granted by the regional rent tribunal (cf. Zeteo, legislative comments to Chapter 9, Section 16 BRL as worded 9 February 2015). The tenant-owner asserted in this case, among other things, that the decision to remove his patio involves such a restriction as was covered by the relevant provision in Chapter 9 BRL.

2.3 This presupposes that the land outside the tenant-owner apartment was added to the original lease, something which should have been formalised at the time by some kind of agreement, usually a lease agreement. Chapter 4, Section 5 BRL prescribes certain requirements on form for such agreements. These requirements on form should be interpreted restrictively (cf. RH[1] 2005:11). It is indicated by Chapter 4, Section 5 BRL, among other things, that the lease of a tenant-owner apartment shall be made in writing. Consequently one of the formal requisites prescribed by the Act – to be in writing – is already lacking in the present case.

2.4 As regards the case of lease of tenant-owner properties through a 'supplementary lease', a patio may be granted after the lease of the actual apartment, but even then a lease agreement must be drawn up in writing. If there is no agreement, or there is nothing in the agreement to indicate that it is the land referred to, then there is not valid grant of tenant-owner property (cf. Chapter 4, Section 7 BRL concerning an invalid grant in the case of deficient requirements in respect of form and cf. blog entry on 5 June 2014 at http://bit.ly/1vcT2VC). In such a situation, this may involve a licence or right of use instead. In this context, there is cause to draw attention to the fact that rights of use within the area of a detailed development plan only apply for 25 years at a time (cf. Chapter 7, Section 5 of the Land Code).

3. The case in question

3.1 The District Court attached less importance to the requirement for written form contained in Chapter 4, Section 7 BRL and revoked the decision made by the annual general meeting of the association, considering that the grant constituted a lease of land. The District Court attached even greater weight to the permission having been granted prior to 1996 and that no objections had been presented over the 16 years, for which reason the circumstances suggested that the grant had been accepted. The District Court consequently applied a general rule of passivity combined with what could be deemed to be reasonable or fair.

3.2 The Court of Appeal amended the judgment of the District Court, stating that the plaintiff's application for the building of a patio in 1996 did not also include a lease of the land. The Court of Appeal states:

The Board [...] approved that the [tenant-owner] was allowed to build a patio. [The tenant-owner] and certain other tenant-owners have actually used a certain area of land as a patio for a certain period of time. Certain rules to maintain general order in respect of patios were finally laid down at an annual general meeting of the association. However, none of this immediately leads to the conclusion that the land was leased with a tenant-owner right. The Tenant-owner Property Act does not actually involve any impediments to a tenant-owner association leasing certain areas (e.g. the apartment itself) with tenant-owner rights and other areas (such as a shed or land) with other rights, i.e. such as a licences, ordinary tenancy right or general right of use.

3.3 The action of the tenant-owner was consequently rejected.

4. Comments

4.1 The judgment of the Court of Appeal shows, as is often the case, how important it is to word agreements with care and consideration, particularly as this grant relates to real property, which generally falls within the ambit of rules imposing requirements on form. The District Court's pragmatic approach and liberal interpretation of the circumstances may as such be deemed reasonable but hardly compatible with the current law (cf. judgment of the Court of Appeal for Western Sweden 13 June 2014, Case No. T 3080-13 and RH 2005:11).

4.2 Another possible solution, instead of granting the land with a tenant–owner right, could possibly have been to draw up a land use agreement, clearly describing the subject of the right of use – the land. As already mentioned above, a limitation of time then applies within the area of the detailed development plan. I mention this as the Court of Appeal's reasons for judgment, in fine, include the following sentence:

[...] [If the Court of Appeal has no reason], set against the background of how the parties have formulated their action, to adopt a position on what other right than the tenant-owner right [the tenant-owner] may have had to use the land or whether the decision of the general meeting on 29 May 2012 means that such right has ceased.

4.3 The reasons for judgment in this respect should serve as a reminder that the tenant-owner should, but failed to, assert against the association that the land was granted with a right of use, probably a 'licence to use property' owing to the tenant-owner having been permitted to build and have a patio on the land for such a long period of time. There is no requirement for a licence to use property to be in writing (cf. Chapter 8, Section 3 of the Land Code) if the parties so agree. In this way a decision in the minutes of a board meeting may suffice as long as one of the parties has not requested that a special leasehold agreement be drawn up between them.

4.4 This ruling also shows that a tenant-owners' association can simply terminate the use of land that has not been leased in the proper way. The fact that the Court of Appeal stated that requirements on form should be interpreted restrictively will not be surprising for people with any experience, but on the other hand will be annoying to the man on the street in a case such as this.

4.5 One issue that was not considered was whether the association, through its passivity and by allowing the tenant-owner to live under a misconception that should most likely be deemed to be evident, may have committed an act that rendered them liable to pay damages owing to their action at the time the agreement was concluded and the way it was structured (rightly absence of structure) and the subsequent passivity that ensued.

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[1] Translator's note: Court of Appeal Cases - a renowned Swedish law report series

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