Knowing where dues are spent is the most natural right of every property owner. However, in practice, many managers do not keep regular income-expense records, do not document expenditures, or avoid accountability to property owners. The site manager’s financial transparency and accountability obligation is clearly regulated by Law No. 634 on Condominium Ownership (KMK), and its violation leads to severe consequences. In this article, we examine in detail the manager’s financial responsibilities, property owners’ audit rights, legal remedies against a non-accountable manager, and the critical importance of discharge of liability.
What Are the Manager’s Financial Obligations?
The manager’s duties and responsibilities are explicitly listed in the law (KMK Art. 35-39). The manager’s main obligations regarding financial transparency are as follows:
Keeping a ledger: The manager is obliged to record all income and expenses of the main property in the ledger in chronological order and to keep the supporting documents (KMK Art. 36).
Keeping a resolution book: The decisions of the board of property owners are written and signed in a resolution book approved by a notary public (KMK Art. 32).
Using collected advances for their intended purpose: Advances collected for common expenses are used only for their foreseen purposes and in a transparent manner (KMK Art. 20).
Rendering accounts at the end of the accounting period: The manager provides the property owners with the operational results and accounts at the times specified in the management plan, and in any case, at the end of the accounting period (KMK Art. 39).
Storing and Handing Over Documents: The manager whose term has ended is obliged to hand over the books and documents to the new management. We have discussed this issue in detail in our article “What to Do If the Former Manager Fails to Hand Over Books and Documents?”
You can review its legal basis from the official text of Law No. 634 on Condominium Ownership on mevzuat.gov.tr.
Right of Inspection of Apartment Owners
The board of apartment owners has the authority to audit the manager’s accounts (Article 41 of the Condominium Law). If the board wishes, it can have this audit performed by an auditor chosen from within or outside its members, or by a three-person audit committee (Article 41 of the Condominium Law). The auditor examines the accounts, presents the results and any faulty transactions, if any, to the board in a report, and records the report in the decision book (Article 41 of the Condominium Law). Furthermore, unless there is a contrary provision in the management plan, the audit can be conducted quarterly and must in any case be performed at the end of the accounting period (Article 41 of the Condominium Law).
Every apartment owner can request to inspect the books and documents from the manager; the manager’s obstruction of this inspection is a reason for liability in itself.
What Remedies Can Be Pursued Against a Manager Who Fails to Provide Accounts?
The legal remedies that apartment owners can pursue against a manager who fails to provide financial transparency are as follows:
1. Dismissal of the manager: The manager can be dismissed for just cause at any time (Article 34 of the Condominium Law). Failure to provide accounts, withholding documents, and financial irregularities are among the most typical just causes for dismissal. If the board does not decide to dismiss, one of the apartment owners can request the dismissal of the manager from the civil court of peace (Article 34 of the Condominium Law).
2. Compensation lawsuit: If the main real estate has suffered damage due to the manager’s negligence or fault, compensation can be claimed from the manager; as the manager is liable like an agent (CL art. 38). In judicial precedents, situations such as the manager embezzling electricity bills by not paying them and showing fictitious expenses have been subject to lawsuits; the decision of the Supreme Court 20th Civil Chamber 2017/1976 E., 2017/6394 K. (11.07.2017) included in the documents falls within this scope.
3. Criminal proceedings: If acts such as embezzlement, breach of trust, or forgery are involved, a criminal complaint can be filed with the Chief Public Prosecutor’s Office.
Importance of the Issue of Acquittal
A concept closely related to the obligation of accountability is “acquittal”. As a rule, the financial acquittal of the manager at the general assembly terminates their liability for that period. However, the acquittal decision does not cover irregularities concealed by fraud or discovered later. Therefore, it is extremely important for the accounts to be examined by an auditor before the acquittal vote is held (CL art. 41).
Frequently Asked Questions (FAQ)
Which books must the manager keep? The manager is obliged to keep an operating ledger (CL art. 36) and a resolution book (CL art. 32); and to preserve all income-expense documents.
The manager is not showing me the account documents, what can I do? You can request an audit, ask for an auditor to be appointed by a board decision (CL art. 41), and if necessary, initiate the dismissal of the manager (CL art. 34) and file a compensation lawsuit (CL art. 38).
Can an administrator who has been discharged be held accountable later? Discharge, as a rule, terminates liability; however, irregularities concealed by fraud or learned subsequently are outside the scope of the discharge and can be subject to legal action.
Is it a crime for the administrator not to render an account? Failure to render an account alone creates private law liability (Law on Condominium Ownership art.38); however, if there are acts such as embezzlement or breach of trust, criminal liability also arises.
How often can audits be conducted? Unless otherwise stipulated in the management plan, audits can be conducted every three months and, in any case, at the end of the accounting period (Law on Condominium Ownership art.41).
Why is Expert Legal Support Necessary?
Allegations of financial irregularities are technical lawsuits requiring document review, expert reports, and individual assessment of each account item. Just as an unfounded request for dismissal, a compensation lawsuit with insufficient evidence can also result in failure. For this reason, the process must be planned from the outset with a condominium lawyer.
As 2M Law Firm, we are by your side in condominium ownership disputes, not only during the litigation phase but also from the beginning of the process that gives rise to the dispute. Our main services include:
Within the scope of Istanbul complex and apartment consultancy, the lawful structuring of management audit and account review processes,
For management changes, preparation of calls and invitation letters for extraordinary general meetings of co-owners,
Preparation of invitations and meeting minutes for site meetings; proper drafting of regular and extraordinary meeting minute drafts,
Conducting meetings and votes in accordance with the Condominium Law, proper adoption of decisions, and correct calculation of quorums,
Litigation and representation in cases of manager dismissal, financial liability, and compensation.
With our experienced condominium lawyer and condominium law attorney staff; we are by your side for your needs for an Istanbul condominium law attorney and a Tuzla condominium lawyer. To get to know our team, you can review our team page, and to evaluate your case, you can contact us.
