The Co-ownership Association's Special Statutory Mortgage for Unpaid Charges

Recovering unpaid charges is the leading source of disputes for co-ownership associations (syndicats de copropriétaires), and a simple enforceable title obtained against a defaulting co-owner often proves ineffective where the co-owner is insolvent or brings repeated challenges. For professional property managers (syndics), the real issue is not obtaining a judgment but securing actual payment, particularly when the lot changes hands. The association's special statutory mortgage (hypothèque légale spéciale), the successor to the former real estate lien created by the reform of the law of security interests, provides precisely this security. This article analyses the conditions for registering the security, the decisive question of its ranking, and how it works in practice on a private or forced sale of the debtor co-owner's lot.

From the former hidden lien to the special statutory mortgage

Until 31 December 2021, the association had two separate security interests over the lots of debtor co-owners: a statutory mortgage provided for by Article 19 of Law No. 65-557 of 10 July 1965, securing claims of every kind, and a special real estate lien (privilège immobilier spécial) arising under former Article 19-1 of the same Law, covering the charges of the current year and the last four years that had fallen due. This lien had two powerful features: it was hidden, that is, exempt from any publicity, and it gave a preferential ranking ahead of most registered creditors.

Ordinance No. 2021-1192 of 15 September 2021 reforming the law of security interests, which came into force on 1 January 2022, abolished special real estate liens and converted them into special statutory mortgages, now grouped in Article 2402 of the French Civil Code. The association's claim is expressly listed there:

The claims [...] of the co-owners relating to the current year and the last four years that have fallen due are secured on the lot sold of the debtor co-owner.

This change is not cosmetic. By moving from a hidden lien to a statutory mortgage, the legislature made the security subject to the logic of land registration. For the professional property manager, this means that the effectiveness of the statutory mortgage for co-ownership charges now depends, in practice, on how diligently registration is requested. The security no longer operates automatically and discreetly: it has to be put in place.

The property covered and the claims secured

Two security interests now coexist, and the property manager must be able to tell them apart in order to build a coherent charges recovery strategy.

The special statutory mortgage under Article 2402 of the French Civil Code covers claims relating to the current year and the last four years that have fallen due. It applies specifically to the debtor co-owner's lot. Its coverage in time is therefore limited, but it fits most recovery situations, in which the accumulated arrears remain below five financial years.

The statutory mortgage based on Article 19 of the Law of 10 July 1965, for its part, retains a wider scope. It secures claims of every kind that the association holds against the co-owner, whether advance payments on charges, final charges after approval of the accounts, sums due for works, damages or costs. It is not confined to the five years of Article 2402 and makes it possible to secure older claims or claims arising from litigation.

These claims cover all the items of routine recovery:

• advance payments under the forecast budget called quarterly and left unpaid
• final charges fixed after approval of the accounts at the general meeting
• calls for funds for works voted outside the forecast budget
• late-payment interest, formal notice costs and recovery costs charged to the defaulting co-owner

Combining the two mortgages properly is a mark of good practice: the Article 2402 mortgage secures the recent core of the debt, the part most often called on in sales, while the Article 19 mortgage makes it possible to cover the whole debt, including its accessories and claims older than five years.

Registering the security at the land registry

Registration formalities

Registration is made with the land registry (service de la publicité foncière) for the place where the building is situated, on submission of a registration form stating the identity of the creditor (the association, represented by its property manager), that of the debtor co-owner, the precise description of the encumbered lot, the cause and amount of the secured claim, and the due date. The accuracy of these particulars determines the validity of the registration: an incorrect cadastral description of the lot or a wrongly calculated amount may weaken the security.

Registration requires a claim that is certain, liquidated and due. In practice, the property manager requests registration only after a formal notice has gone unanswered, once the advance payments or final charges have become due. A co-owner who has paid the debt, or who seriously disputes it, may apply for the registration to be lifted (mainlevée), if necessary in summary proceedings (référé).

Registration, a management step not to be put off

The professional property manager should build mortgage registration into the recovery protocol as soon as the arrears reach a significant amount, without waiting for the lot to be sold at some point in the future. Too many associations register only when the notary informs them of an imminent transfer, and then find that other creditors, in particular the lender that financed the purchase, rank ahead of them. Registering early means fixing a date and securing the ranking of the security before the debtor's assets deteriorate further.

Registration of the association, a prerequisite of good management

Effective exercise of the association's rights presupposes that it is duly registered in the national register of co-ownerships. When a building is placed under the co-ownership regime, Article L711-4 of the French Construction and Housing Code requires the notary responsible for publishing the descriptive statement of division and the co-ownership rules to file the declaration registering the association. Article L711-5 allows the notary to register the association of its own motion and to report any error noted. Failure to register is not neutral: Article L711-6 deprives the association of public grants and exposes it to a daily penalty (astreinte). An unregistered association is in a weak position, which is incompatible with a rigorous recovery policy.

The ranking of the mortgage: the decisive issue in recovery

Ranking determines the order in which creditors will be paid out of the sale or auction price of the lot. Where a property is encumbered with several security interests, the one registered earliest takes priority. The ranking of the special statutory mortgage is determined, in principle, by the date of its registration in the land register.

This is where the 2021 reform has its most concrete effects for property managers. By removing the hidden nature of the former lien, it made the effectiveness of the security depend on diligent registration. An association that registers late risks being outranked by the money lender (prêteur de deniers) that financed the purchase of the lot, whose mortgage was registered from the outset, or by other creditors that came earlier. The security of the acquisition lender and the question of its ranking are analysed in our article on the money lender's lien in the context of real property seizure.

In practice, competing creditors frequently set the association against:

• the credit institution holding a mortgage securing the property loan
• the Treasury, under its privilege for recovery of direct taxes
• other creditors that have taken a judicial mortgage following a judgment

The operational lesson is straightforward: the amount the association can recover depends not only on the existence of the security but on its ranking, and therefore on the date of registration. An unpaid debt secured by a last-ranking mortgage, on a lot whose sale price is absorbed by repayment of the bank loan, will produce no actual recovery. The security is worth something only if the price remaining after the earlier creditors have been paid is enough to cover the charges claim.

How it works on a private sale of the lot

The sale of the lot is the point at which the statutory mortgage shows its full usefulness, provided that the property manager masters the chain of formalities.

The état daté and informing the property manager

Before the sale deed is signed, the notary asks the property manager for an état daté (a dated statement of the sums owed), provided for by Article 5 of Decree No. 67-223 of 17 March 1967, which lists the sums that the selling co-owner owes to, or is owed by, the association. This document governs the financial allocation of the transaction and allows the notary to know the exact amount of the arrears of charges.

Article 20 of the Law of 10 July 1965 then requires the notary to inform the property manager of the transfer, by a notice of transfer (avis de mutation), as soon as the deed transferring ownership is signed. This notice triggers the objection mechanism.

The objection on the sale price

On receipt of the notice of transfer, the property manager has fifteen days to lodge an objection (opposition) to payment of the price to the seller, by an act of a commissaire de justice (bailiff), in order to obtain payment of the sums still owed to the association. The objection makes the price unavailable up to the amount of the claims declared and requires the notary to hold the corresponding funds until the debt is cleared.

This objection is the quickest and most effective recovery lever for the property manager, because it captures the sale price directly before it is handed to the seller. Strict compliance with the fifteen-day period and with the required content of the objection is imperative: a late or irregular objection allows the price to be released to the seller, leaving the association to pursue a debtor who has become insolvent. The objection and the mortgage are complementary: the first blocks the price of the sale in progress, while the second secures the claim over time and, where necessary, allows the lot to be followed.

The right to follow the property and clearing of mortgages

The mortgage gives the association a right to follow the property (droit de suite): the security encumbers the lot itself, so that the purchaser receives a property subject to the registration. If the debt has not been cleared at the time of sale, the association keeps the right to have the lot seized in the hands of the new owner, within the limits of its registration and ranking.

It is precisely to avoid this situation that the purchaser, or the notary on its behalf, clears the registered mortgages (purge) by paying the registered creditors out of the price. A property manager who registered in good time is thus paid on the sale, since the purchaser cannot obtain a title free of registrations without having settled the secured charges claim.

How it works on a forced sale

Where amicable recovery fails, the association may start a real property seizure (saisie immobilière) of the lot on the basis of an enforceable title, or intervene in proceedings begun by another creditor. The auction price is then the subject of a distribution procedure. The conditions under which the association may bring a real property seizure to recover the unpaid charges of a lot are dealt with separately.

In this distribution, the statutory mortgage gives the association a right of preference: it is paid out of the price according to the ranking of its registration, before unsecured creditors and after creditors registered earlier. Here again, ranking determines the result. An association registered in first rank, or ranking ahead of the mortgage creditors, will be paid in full up to the amount of the price; an association registered in a later rank will receive only the balance available.

Combining the mortgage under Article 2402 of the French Civil Code, for the last five financial years, with the mortgage under Article 19 of the 1965 Law, for the remainder of the debt, allows the property manager to maximise the amount secured in the distribution.

How it fits with the other ways of recovering charges

The statutory mortgage does not replace the other tools of charges recovery by the property manager: it complements them. Court recovery, by payment order (injonction de payer) or a claim on the merits, remains necessary to obtain an enforceable title allowing seizure. The accelerated procedure for recovering advance payments that have fallen due, available where an advance payment is not made, makes all the advance payments still owed for the financial year immediately due and makes it easier to obtain a title quickly. On how these steps follow one another, see our presentation of the property manager's procedure for recovering unpaid co-ownership charges.

The mortgage operates both before and after these procedures: before, as security that preserves the chances of payment while the dispute runs its course; after, as a preference mechanism ensuring that the sale or auction price is allocated to the association. An effective recovery system therefore combines formal notice, mortgage registration, court action on the merits and, when the time comes, the objection on the sale price.

Conclusion

For the professional property manager, the association's special statutory mortgage is not an incidental formality but a tool of ranking, and ranking is won by acting early. The reform of the law of security interests ended the comfort of the former hidden lien: the security now protects only the party that registers it in time. An association that waits for the notary's notice of transfer before reacting too often discovers that the purchaser's money lender or the Treasury ranks ahead of it, and that the sale price leaves nothing to distribute.

Good practice consists in building mortgage registration into the recovery protocol as soon as the arrears become significant, in combining the mortgage under Article 2402 of the French Civil Code and that under Article 19 of the 1965 Law to cover the whole debt, and in securing the objection on the price within the fifteen-day period from the notice of transfer. Before starting any recovery procedure, have an adviser check the date and ranking of your existing registrations on the debtor lots: it is this mapping, and not the enforceable title alone, that will determine your actual recovery rate.

Frequently asked questions

What is the difference between the former real estate lien and the association's special statutory mortgage since 2022? Ordinance No. 2021-1192 of 15 September 2021, in force since 1 January 2022, abolished the association's special real estate lien and converted it into a special statutory mortgage, now provided for by Article 2402 of the French Civil Code. The main difference concerns publicity: the former lien was hidden and ranked ahead of most creditors, whereas the statutory mortgage must be registered with the land registry (service de la publicité foncière) to have its full effect and ranks, in principle, from the date of its registration.

Which charges are secured by the association's statutory mortgage? The special statutory mortgage under Article 2402 of the French Civil Code secures claims relating to the current year and the last four years that have fallen due, on the debtor co-owner's lot. The statutory mortgage based on Article 19 of the Law of 10 July 1965 covers claims of every kind held by the association, including advance payments, final charges, works, late-payment interest and recovery costs, without the five-year limit.

Can the property manager register the mortgage without a court decision? Yes. The association's statutory mortgage does not require a prior enforceable title in order to be registered, provided that the charges claim is certain, liquidated and due. In practice, registration takes place after a formal notice has gone unanswered. A co-owner who has paid the debt or seriously disputes it may apply for the registration to be lifted, if necessary before the judge hearing summary proceedings (juge des référés).

What must the property manager do when a debtor co-owner sells its lot? The property manager sends the notary the état daté provided for by Article 5 of the Decree of 17 March 1967, which lists the sums owed. On receipt of the notice of transfer sent by the notary under Article 20 of the Law of 10 July 1965, it must lodge an objection to payment of the price in order to obtain settlement of the unpaid charges, while making sure that its mortgage is duly registered so as to preserve its right to follow the property and its ranking.

Within what period must the property manager lodge an objection on the sale price? The property manager has fifteen days from receipt of the notice of transfer to lodge an objection, by an act of a commissaire de justice (bailiff), in the hands of the notary. After that period, the price may be released to the seller and the association loses the benefit of this blocking. Compliance with the period and the formal regularity of the objection are therefore decisive.

Does the mortgage follow the lot on a resale? Yes. The mortgage gives a right to follow the property: the security encumbers the lot itself, so that the association can have the property seized in the hands of the new purchaser if the debt was not cleared on the sale. It is to avoid this situation that the purchaser or its notary clears the registrations by paying the registered creditors out of the price.

How long does the registration of the mortgage remain effective? Registration preserves the mortgage for the period stated in the registration form, within the limits provided for by the French Civil Code, and must be renewed before it expires in order to maintain the ranking obtained. A diligent property manager monitors the expiry dates of its registrations to avoid a security ceasing to have effect for lack of renewal, which would cause the association to lose its priority in the distribution of the price.