Current Issues in Condominium Law: Legal Status of Site Administrations, Authority of Representation and Judicial Practices

CURRENT ISSUES IN CONDOMINIUM LAW: LEGAL STATUS OF SITE MANAGEMENTS, AUTHORITY OF REPRESENTATION AND JUDICIAL PRACTICES

1. Introduction

The radical transformation that urbanization practices in Turkey have undergone over the last half century has brought with it new phenomena that challenge the legal infrastructure. Law No. 634 on Condominium Ownership (KMK), which entered into force in 1965, was prepared based on the "single apartment building on a single parcel" model, which was the architectural and sociological reality of that period. However, urban transformation and "branded housing" projects that gained momentum with the 2000s have given rise to massive "site" and "mass construction" models accommodating thousands of independent sections, social facilities, commercial areas, and complex infrastructure systems.

This structural transformation has rendered classical property law concepts inadequate and has led to serious debates, particularly regarding the legal nature of site managements. On one side, site managements that manage budgets worth billions of lira and employ hundreds of personnel; on the other, the reality that these managements "have no legal personality" places law practitioners (judges, lawyers, and managers) in a challenging dilemma.

This article aims to examine in depth the "sui generis" (unique) structure of site managements in Turkish Law, the limits of representation authority, the problems created by the absence of legal personality, and the Court of Cassation's case law evolving from strict formalism to a functional approach.

2. Legal Status of Site Managements: The Problem of Legal Personality and "Sui Generis" Structure

In the Turkish legal system, the concept of person denotes eligibility to have rights and obligations and is divided into natural persons and legal persons. Site managements are neither an association, nor a company, nor a foundation. The KMK has avoided defining management as a legal person, instead structuring it as an "executive body" reflecting the will of the condominium owners.

2.1. Legal Basis and Nature of the Agency Relationship

Article 38 of the KMK is the fundamental norm determining the legal status of the manager: "The manager is responsible to the condominium owners exactly like an agent." This provision shows that the existence of management is ontologically dependent on the General Assembly of Condominium Owners. Management does not have an independent will; its will is shaped by General Assembly of Condominium Owners (KMK) decisions.

Unlike the agency contract in the Law of Obligations, the agency relationship here has a "statutory" character. From the moment the manager is appointed, they have a representational authority arising from law. However, this representational authority does not provide the protection afforded by the veil of legal personality. That is, for debts arising from a transaction made on behalf of the site management, as a rule, not the manager personally but the condominium owners (principals) who appointed them as agent are responsible.

2.2. Practical Consequences of the Absence of Legal Personality

The absence of legal personality does not mean that management is a "nonentity." The legal order has been compelled to recognize a status for site managements that we might call "partial capacity" or "functional subject":

• From a Tax Law Perspective: Site managements obtain a tax identification number and submit withholding tax declarations because they employ personnel such as doormen and security guards. The status of "employer" is at issue here.
• From a Social Security Law Perspective: Under Law No. 5510, site managements obtain a workplace registration number and operate with employer status.
• From an Enforcement Law Perspective: In accordance with KMK Article 35/i, the site management (in the capacity of manager) may directly initiate enforcement proceedings for maintenance fee debts.

This situation is examined in doctrine under the heading "communities without legal personality," and the legal status of site managements is accepted as a special type of representation with authorities limited by law.

3. Authority of Representation and Its Limits: Risk of Unauthorized Representation

The manager's powers are not unlimited. Article 35 of the KMK has specified the manager's duties through enumeration. These duties are: implementation of decisions, protection, maintenance, repair, and insurance of the main real property, collection of maintenance fees, and acceptance of notifications.

3.1. Distinction Between Ordinary and Extraordinary Affairs

When exercising representational authority, it is vitally important for the manager to distinguish between "ordinary management affairs" and "extraordinary affairs."

• Ordinary Affairs: For routine matters such as periodic maintenance of the elevator, purchase of cleaning supplies, and payment of invoices, the manager does not need to obtain a board decision each time. This authority derives directly from KMK Article 35 and the Operating Project.
• Extraordinary Affairs: Matters such as external facade insulation, major renovations, conclusion of an annual contract with a security company, or filing a lawsuit against a contractor are "extraordinary" in nature.

3.2. Source of Authority: Operating Project and General Assembly Decisions

For management to be able to enter into contracts with third parties and make expenditures, it must derive its authority from the Operating Project or a General Assembly of Condominium Owners decision. The operating project is the site's estimated annual budget and, once finalized, is considered a "document with the quality of a court judgment" within the meaning of Enforcement and Bankruptcy Law Article 68.

In Court of Cassation practice, it is emphasized that, in order for the manager not to fall into the position of an unauthorized representative, they should obtain special authority from the General Assembly of Condominium Owners, particularly regarding filing lawsuits or signing major repair contracts. For example, adopting concretized decisions such as "authority is granted to management to file a lawsuit against company X due to defective performance" instead of a general phrase such as "management is authorized to file lawsuits" at the general assembly increases legal certainty.

4. The Problem of "Standing" in Judicial Practices (Active and Passive Standing)

The most controversial area of Condominium Law, most shaped by case law, is whether site managements can file lawsuits (active standing) or whether lawsuits can be filed against management (passive standing).

4.1. Classical View: "Management Cannot File Lawsuits"

According to the classical civil procedural law view, standing is the procedural counterpart of civil legal capacity. A structure without legal personality also has no standing. According to this strict view, in a lawsuit concerning a site (for example, a defective performance lawsuit against a contractor), the lawsuit had to be filed jointly by all condominium owners (compulsory joinder of parties) or had to be filed against all condominium owners.

4.2. Modern Court of Cassation Approach: "Procedural Economy and Necessity"

Waiting for 2,000 owners in a site with thousands of apartments to individually grant power of attorney for a common area elevator malfunction or external facade insulation makes legal protection practically impossible. The Court of Cassation has developed the law through the "functional interpretation" method to overcome this impasse.

Important Case Law Analysis: In the decision numbered 2018/13432 of the Court of Cassation 8th Civil Chamber, the court placed sociological reality above legal formulas: "Failure to fill the legal gap arising in terms of management and standing to be a party to a lawsuit...results in leaving disputes without resolution." The court stated that, in line with the requirements of modern urban life, site managements should be recognized as having standing under certain conditions.

Similarly, in the decision numbered 2017/260 of the Court of Cassation General Assembly; "Although the apartment management has no legal personality; the manager can enter into contracts that will create debt and receivable relationships with third parties based on their authority arising from the Law and the management plan" — thus accepting that management that is a party to a contract can also be a party in lawsuits arising from this contract.

4.3. Cases Where Management Can File Lawsuits and Exceptions

In light of Court of Cassation decisions, site managements have standing in the following situations:

1. Common Expense Receivables (Maintenance Fee Lawsuits): In accordance with KMK Article 35/i, the manager can directly file a lawsuit against a condominium owner who fails to pay their maintenance fee debt and initiate enforcement proceedings. A general assembly decision is not even required in this regard; the law directly grants authority.
2. Prevention of Interference with Common Areas: In the event of unlawful occupation of common areas (for example, conversion of the shelter into a storage room), the manager may file a prevention of interference action within the scope of the duty to "protect the main real property."
3. Service Contracts: In disputes arising from contracts to which management is a party (security, landscaping, elevator maintenance, etc.), it may file a lawsuit as a party to the contract.
4. Defective Performance and Incomplete Works (Critical Area): Lawsuits to be filed against contractors for defects in common areas are the most sensitive matter. The Court of Cassation makes it a requirement in these lawsuits that the manager "be specifically authorized by the General Assembly of Condominium Owners" (See Court of Cassation 3rd Civil Chamber 2024/3912 Case). If there is no general assembly decision, courts give the manager time to remedy this deficiency (to obtain a decision and return).

Cases Where Lawsuits Cannot Be Filed: In lawsuits directly concerning property rights (land registry cancellation and registration, right of preemption, etc.), the site management has absolutely no standing. These lawsuits must be filed directly by the owners.

5. Problem of Transition to Mass Construction Management and De Facto Managements

The transition to "Mass Construction" (Site) management regulated by KMK Articles 66 and subsequent presents major problems in practice. Many sites, although managed in practice like mass construction, do not have an "Mass Construction Annotation" in the title deed or have not registered a "Mass Construction Management Plan."

As stated in the decision of Istanbul 16th Commercial Court of First Instance; "Since condominium ownership provisions will apply in sites and apartments at the stage of construction servitude where construction has actually been completed," the fact that the site has not yet officially transitioned to mass construction management does not completely eliminate the authorities of the de facto management. The Court of Cassation tends to accept, within the framework of good faith and the prohibition on abuse of rights, the decisions of managements that have actually formed and been adopted by owners despite formal deficiencies. However, for full legal certainty, the registration of the mass construction annotation in the title deed is essential.

6. Conclusion and Evaluation

Turkish Condominium Law is in search of a balance between the static structure of legislation and the dynamic structure of social life. Although site managements do not have legal personality, through the Court of Cassation's "functional interpretation" method, they have acquired a "limited standing" capable of protecting the interests of the community of condominium owners.

This "sui generis" structure places great responsibilities on managers. Managers, while acting on one hand as agents of condominium owners, are on the other hand managing an organization operating with business logic. For legal certainty, it is of vital importance that site managements obtain a clear, unambiguous, and detailed "authority to pursue lawsuits" from the General Assembly of Condominium Owners, particularly in lawsuits they will file against third parties or contractors. Otherwise, the risk of the lawsuit being dismissed due to "lack of active standing" always exists.

In future legislative arrangements, granting a legal personality status, even if limited, to site managements above a certain size (for example, above 500 independent sections) would be the most fundamental solution to resolve the current confusion.