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One of the most complex provisions regulating condominiums is the one set forth in article 1127 of the Italian Civil Code which requires the owners of the top floors of buildings (or sun terraces) who build new floors or buildings on top thereof to pay an indemnity to the other members of the condominium.

The United Sections of the Italian Supreme Court has recently analyzed (United Sections judgment no. 16794/2007) the most important features of such provision, establishing that:

– the obligation of the owners of the top floor of a building (or sun terraces) who build a new floor or building to pay, pursuant to article 1127, paragraph 1 of the Italian Civil Code, an indemnity to the other members of the condominium;

– the reason for which such indemnity is to be paid is not to be identified in the use of the air space above the condominium building – which is to be construed as belonging to the collectivity (cfr. C. 22032/2004) – so much as in the necessity for compensation to be paid for the fact that the value of the portions of the condominium building belonging to the other members of such condominium will be reduced as a result of the construction of a new floor/building (cfr. Italian Supreme Court judgment nos. 12880/2005 and 7956/2003);

– the most important thing in deciding what indemnity should be paid to the other members in relation to the building on top of the last floor is to analyze the increased use which will be made of the area on which the building is situated.

This means that – on the basis of the premise that the value of the ground floor will remain the same (i.e. the dividend) – the number of floors, as well the volume used of the condominium block of flats (divisor) will increase, with the result that the value of each portion in the condominium held by the members thereof will decrease.

The purpose of the indemnity is, therefore, to re-establish the previous economic situation (Italian Supreme Court judgments nos. 12880/2005 and 1697/1982);

Article 1127 of the Italian Civil Code is, therefore, is applied to any situation in which the surface or volume of a building is increased, regardless of whether or not the height thereof is increased. To this effect, another judgment has been handed down according to which the members of a condominium are entitled to be paid an indemnity in those situations in which the owner of the last floor of a condominium builds new floors or new buildings or transforms pre-existing premises, increasing the surface or volume thereof (C. 2865/2008).

It follows therefrom that, as set out in the aforementioned United Sections’ ruling, article 1127 is not applied to the internal restructuring of an apartment which takes place within the original structural limits of such apartment and which does not entail the surface of volume thereof being altered (Italian Supreme Court judgments 7764/1999, 10568/1998, 1498/1998.

Notwithstanding the authoritative nature of the judgments handed down by the United Sections of the Supreme Court, there are dissenting opinions according to which, pursuant to article 1127, the members of a condominium will only be entitled to an indemnity in those situations in which the roof of a condominium building is raised, leading to the air space above a condominium building being occupied (cfr. Italian Supreme Court judgment no. 19281/2009, as well as BENACCHIO, Condominium buildings, Padua, 1964, page 133 and ff.).

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