Our response to the Scottish Law Commission’s discussion paper on tenement law: compulsory owners’ associations

We think that the OA should be subject to a mandatory duty to hold an annual general meeting of members within 12 months of the creation of the OA, and in every 15 months thereafter.

As the discussion paper notes there’s currently no mechanism within the existing law that either encourages or compels owners to coordinate with each other on the maintenance of the building. And the establishment of a compulsory owners’ association doesn’t in any way guarantee that owners will actually meet or that they’ll make decisions about the upkeep of their building.

We therefore believe that any OA regime must be include a requirement that OAs meet at regular intervals.  

Yes, we think that the OA should be subject to a mandatory duty to approve an annual budget.  

Yes, after a fixed period, legislation should disapply existing title conditions to the extent that they modify the application of the OA scheme.

We think that this is important because this should make it easier for tenement owners to navigate requirements and for them to get advice on the rules that apply.  

Yes, maintenance should be defined to include any work required to ensure the compliance of scheme property with the duty currently set out in section 8 of the 2004 Act and should also include other routine works of maintenance as currently defined by TMS r 1.5.  

As the discussion paper notes, this should help to clarify the meaning of maintenance for the purposes of the OAS.  

We also think that greater clarity around the definition of ‘insulation’ for the purposes of TMS r1.5 would be helpful (although we aren’t clear whether it’s within the scope of this work to provide this) and subsequently for the purposes of the OAS.

The cost and level of disruption caused by installing different types of insulation can vary considerably – from installing loft insulation which typically involves little disruption and can be installed for little over £1,000, to installing solid wall insulation which can involve considerable disruption and cost tens of thousands of pounds.

Given the implications for how decisions are made and how the costs should be shared between the individual owners we think the provision of clarity around this issue is important.  

We aren’t aware of any changes to ‘maintenance’ as defined in TMS r 1.5 that are required at the time of writing.

However, we note that changes to the definition of ‘maintenance’ in TMS r1.5 will be required in the future to include the measures required under standards introduced by the forthcoming Heat in Buildings Bill.

We note that decisions about what measures will be included under any standard have still to be taken but that the Scottish Government’s current intention is to introduce a Heat in Buildings Bill during this parliamentary session and such the standard is likely to have been agreed (although possibly not have come into force) before legislation introducing the OA regime is introduced.  

We agree that decisions to exercise the powers of the OA generally should be taken by a simple majority of votes allocated.  

We agree with the proposal that where votes are tied so that 50% of votes are in favour of a decision that should be sufficient to allow the decision to be made.  

We agree with the discussion paper’s suggestion that “it is not desirable in policy terms for the law to produce an outcome in which the owner who chooses not to engage is preferred.”

In this context we agree that the introduction of a special majority rule in the OAS for decisions which may require unanimity under the current law would be appropriate. We also agree that a threshold of 75% of votes in favour may be reasonable.  

We agree that special majority decisions should be required in relation to:

• The improvement and alterations to, or replacement of scheme property.
• Making payments from any reserve fund maintained by the tenement.