One of the series of lectures of the Post Attorney Diploma in Conveyancing and Real Property Rights conducted by the Institute of Advanced Legal Studies affiliated to the Sri Lanka Law College (2019 - 2020)

1. CONDOMINIUM PROPERTY LAW - Lecture III
For the Post Attorney Diploma in “Conveyancing and Real Property Rights”
conducted by the Institute of Advanced Legal Studies affiliated to the Sri Lanka Law College (2019 – 2020)
- Presented by Ajithaa Edirimane, LLB (Colombo) MLB (Hamburg)
Attorney-at-Law & Notary Public
No part of this slide presentation shall be
extracted, copied or used without Ajithaa
Edirimane’s permission

2.  SYLLABUS
 1. 21/9/2019 (11.15 – 1.15) Condominium concept and Preliminary Steps
 2. 12/10/2019 (11.15 – 1.15) Creation of a condominium property and Developer’s Role
 3. 19/10/2019 (09.00 –11.00) Seminar with resources persons from UDA, Land Registry
and Survey General’s Department
 4. 26/10/2019 (09.00 –11.00) Management of Condominium Properties, Condominium
Councils, By-laws and dispute resolution (lecture and a presentation from
CMA resource person)
5. 26/10/2019 (11.15- 01.15 ) Financial Issues – Sinking Fund, Management Fund and
recovery of Contributions from Unit owners
 6. 09/11/2019 (09.00 – 11.00) Revision of Condominium properties, Cessation of a
condominium property, Condominium property sales and transfers of title
 7. 23/11/2019 (09.00 – 11.00) Review of the areas covered in previous sessions, a
Mock negotiation between a buyer and seller, Discussion on
questions and problems on condominium related issues.

3. Management Corporations and
administration of the
Condominium Property

4. MANAGEMENT CORPORATION
SEC. 20B OF ACT NO. 45 OF 1982
 Upon the registration of the Deed of Declaration and the Condominium plan of the
subdivided property at the respective Land Registry, a body corporate referred to as a
“Management Corporation” comes into existence with the serial number of the respective
condominium plan as part of its name. (e.g. “Management Corporation Condominium Plan
No. 1234”) – Clause 2 of the First Schedule
 having its own common seal and the power to sue and be sued under its name for any
matter affecting the Common Elements or in connection with the condominium
property for which all owners of all units are jointly liable (Sec. 20B (1)(c)
 All owners of condominium parcels become a body corporate with perpetual succession
under the provisions of the Apartment Ownership Law.
 The Management Corporation can elect a Council at a General Meeting which can exercise
on behalf of the MC, all of its powers. (Sec. 20B (5)
This Photo by Unknown Author is
licensed under CC BY-NC-ND

5. LAWS AND REGULATIONS GOVERNING
MANAGEMENT CORPORATIONS
 Apartment Ownership Act No. 11 of 1973 and its amendments (Act No.
45 of 1982 and Act No. 39 of 2003)
 Regulations issued by the Condominium Management Authority under
Gazette No. 2026/25 of 5th July 2017
 Constitution of the Management Corporation as given in the 1st
Schedule of Act No. 45 of 1982 (statutory Constitution and any
additions thereto)
 Statutory By-Laws as given in the 2nd Schedule of Act No. 45 of 1982
and any additions thereto.

6. CONSTITUTION & BY-LAWS
 Statutory Constitution – 1st Schedule of the
Apartment Ownership Act No. 45 of 1982 (can only be
amended by an Act of Parliament)
 Statutory By-laws – 2nd Schedule of Act No. 45 of
1982 (HOUSE RULES)
 Additional provisions – adopted by a Special
Resolution of the MC
- To safeguard the rights of each individual owner in
the community referred to as a “Condominium
Property”
- To maintain, manage and administer the
Condominium Property

7. ADDITIONAL PROVISIONS IN THE CONSTITUTION
AND
BY-LAWS
 Additional provisions can be incorporated in the Constitution as
long as there is no conflict with the statutory provisions. (eg.
Appointment of Chairman, Secretary and Treasurer)
 The statutory by-laws given in the 2nd Schedule of Act No. 45 of
1982 should be added to any new By-laws adopted by the MC
without any amendments thereto. (Sec. 20G (4) amended by Sec.
32 (3) of Act No. 39 of 2003.
 “The MC may, subject to the provisions of this Law…by special
resolution make additional by-laws for safety and security, keeping of
pets, parking, floor coverings, garbage disposal, behaviour,
architectural and landscape guidelines to be observed by owners…”
 Requires adoption by a Special Resolution -14 days notice –
approval of holders of ¾ of share value representing not less
than ¾ of the owners
(Sec 25 (h) of the principle act amended by Act No. 45 of 1982)

8. WHAT ADDITIONAL PROVISIONS CAN BE ADDED TO THE
CONSTITUTION OF A MANAGEMENT CORPORATION?
 Name and office address of the Management Corporation,
 Number of Members and maintaining a Register of Members
 Conducting meetings and procedures
 Disclosure of Interests of Council Members
 Duties and Powers of the Management Corporation - The duties for which the
Corporation is established are contained in statutory provisions of Sec. 20C (1) and
powers in 20C (2) of Act No. 45 of 1982 as amended by Act No. 39 of 2003)
 The Office Bearers of the Council and rules relating to their appointment
 Minutes of General Meetings and Council Meetings and maintaining records
 Maintaining books of accounts, financial year and annual audit

9. MANAGEMENT CORPORATION AND MEETINGS (1)
 First AGM – within 3 months of registration of subdivided building convened by Condominium
Management Authority. (Sec. 20B of Act No. 45 of 1982 amended by Sec. 27 (3) of Act No. 39 of 2003)
 EGM – can be convened by the Council OR members holding 25% of the share values OR by the CMA
 Matters taken up at an AGM – Election of a Council, Audited Accounts, Budget, Resolutions, any other
matters
 Subsequent Annual General Meetings – (not later than 15 months of previous AGM) – convened by
Management Corporation (Sec. 9 (1) of the First Schedule of Act No. 45 of 1982)
 Notice – 7 days notice to every owner and 1st mortgagee
 Quorum – One half of the persons entitled to vote – If not present within ½ an hour postponed to the
same day of the following week and those present at that meeting shall constitute a valid quorum.
 Votes of members – each Owner entitled to one vote on a show of hands. On a poll equivalent to
shares assigned to the unit.
 Proxy – to be appointed by the Owner or his Power of Attorney holder
 Votes of Co-owners – can vote only under a Proxy. On a Show of Hands no right to vote. On a Poll
each Co-owner entitled to a proportionate no. of votes.
 Common Seal – can be used only under the authority of the Council and should be attested by at
least two members of the Council

10. MANAGEMENT CORPORATION AND MEETINGS
- (2)
 PROCEDURE AFTER AN ANNUAL GENERAL MEETING
 The newly appointed Council should file the following documents with the
Condominium Management Authority –
 Audited Accounts adopted at the AGM
 Certified copies of the Resolutions passed at the AGM
 Minutes of the AGM
Non statutory but important duties after an AGM -
 To forward to each unit owner the information relating to the newly appointed
Committee and copies of the Minutes of the Meeting, update the Register of Council
Members
 Record the Minutes of the Meeting in the Minute Book
 Implement the decisions taken at the meeting

11. INTERNAL MANAGEMENT
 Council – represents the decision making body of the MC
 The Management Corporation can elect a Council at a General Meeting which
can exercise on behalf of the MC, all of its powers. (Sec. 20B (5) of Act No. 45
of 1982
 Election of Council Members at the AGM and filling of casual vacancies
(maximum 14 and minimum 3)
 Quorum at a Council Meeting – (Sec. 5 of the First Schedule)
 Chairman – presides at the meeting
 Changing Procedural Rules require majority approval of the Council
(Clause 5 (4) of the statutory Constitution) – holding of Council meetings
and method of voting, etc.
 Key Responsibilities of Council Members – Financial (Sinking Fund,
Management Fund and collecting Services Charges) and property
management (Common Elements)
 Delegation of Authority – Can delegate its authority to a Managing Agent
and employ staff for management purposes
This Photo by Unknown Author is licensed under CC
BY-SA

12. FIDUCIARY DUTIES OF COUNCIL
MEMBERS
(WHEN UTMOST TRUST AND CONFIDENCE IS PLACED TO
MANAGE PROPERTY AND MONEY)
• Duty of Care
(Business Judgement
Rule) – knowledge used by
a prudent person in like
circumstances
• Duty of Loyalty
(No Conflict of interest)
• FIDUCIARY
DUTIES owed to
units owners
Business Judgement Rule
Levandusky v. One Fifth Ave. Apt.
Corp., supra, 553 N.E.2d at 1322,
“board members will possess
experience of the peculiar needs
of their building and its residents,
not shared by the court.”

13. ISSUES THAT IMPACT ON OWNERSHIP AND
ON THE VALUE OF A CONDOMINIUM
PROPERTY
 The absence of proper by-laws for management and
administration.
 No sinking Fund or lack of funds for major renovations and
maintenance.
 Significant number of unit owners defaulting on their dues to
the MC
 Disinterested Council Members or inefficient Council.
 Pending court cases and escalating costs.
 Construction defects not covered by warranty and not
addressed by Developer.
 Inadequate insurance cover for the building.

14. IMPLEMENTATION OF THE “BUSINESS JUDGEMENT
RULE”
 POSEY v. LEAVITT (1991) 229 Cal.App.3d 1236) – Breach of fiduciary duties
This case was instituted by Mr. Posey against an adjoining unit owner (Mr. Leavitt) and the Management Corporation,
against the extension of a balcony into the Common Elements. The Management Corporation was held to have
breached its fiduciary duties by not preventing the encroachment into Common Elements.
POINT OF VIEW MARKETING & MANAGEMENT INC. v CONDOMINIUM CORPORATION NO.001 1661 (Nov.6, 2003
Calgary) – unreasonable by laws :West Point Plaza is a mixed high rise condominium property in Calgary, Canada.
There are several condominium units on the main floor, which are accessed from the outside of the building. The second
floor consists of a recreational area accessible only to owners, a foyer and one commercial unit. All units on the floors
above are residential units. The residential owners were concerned about security in relation to visitors to the second
floor commercial unit (i.e. clients of the business). The Corporation enacted by-laws which placed restrictions on access
for the business clients. The Court ruled that the by-law was oppressive and prejudicial to the commercial owner’s
interests.
 GRAHAM vs RIVEREDGE VILLAGE CONDOMINIUM ASSOC., No. 03A01-9404-CH-00137, 1994 WL 597009
(Tenn. Ct. App. Nov. 2, 1994),
The Council passed a by-laws requiring unit owners who were renting their apartments to pay $100/- more in common
expenses (service charges ) than the non renting unit owners. The Court held that the Board (Council) lacked authority
to pass such a by-law without first amending the Master Deed, which provided that “no amendment shall discriminate
against any unit owner or against any unit or class or group of units.” The court held that the new by law was in conflict
with the Master Deed provisions (which were not amended) and discriminated against those renting their apartments.

15.  Keerthi Galapatty & another vs Emperor Management Corporation (01/2015
DSP Colombo District Court – decided on 11 March 2015)
 Petitioners (two unit owners ) sought an Injunction to prevent Emperor MC from
adopting a new By Law preventing unit owners from giving out units to customers on
daily basis. They maintained that it is -.
 against the rights of “absolute ownership” (AG vs Herath 62 NLR 145).
 Against the Sec, 20G of Act No. 45 of 1982 which disallows by-laws that prohibits
or restricts “assurance” of any unit.