Key words: Joint facilities, joint property unit, association,
SUMMARY
The Swedish Joint Facilities create a common
resource system for externalities of the individual property, such as common
roads, bridges, residential services (waste disposal, car park, community
places), irrigation and drainage schemes, and hunting ground. In a historical
perspective, such facilities belonged to the village community, and remained as
externalities when the society forced an internalisation into individual plots.
The individualisation of property rights could not include such common resource
systems. Today, the society demands a well-defined number of appropriators of
common facilities.
The Swedish Joint Facilities Act operates
efficiently with the landowners as legal appropriators. The Governmental
Cadastral Officer creates an association as legal owner of the joint
facilities, and hands it over to their own management. Only landowners with
positive total outcome of cost and benefits are included, defined by the
cadastral officer. The individual expectation value might occasionally reach
negative values, but the cadastral officer estimates the general market value of
the benefits of facility for each property. The estimation is done only once –
when the joint facility is created.
A study of 9 aged associations in
A detailed analysis of the associations shows
exceptions from the legal set-up of individual shares for fees and liability.
The self-management of the association overtakes the legal basis, dated decades
ago. A current landowner’s sense of injustice has one legal and one practical
way to be attended, within the association and application to the cadastral
services, both with high threshold costs. Self-management in a landowners’
association is viable, if structures for changes are provided efficient and
smoothly. Both justice and efficiency need high priority.
Joint facilities are a common resource aim for
a group of properties. The rationale is that the resource cannot easily be
achieved as an individual asset of one property. There is a logic need to
search a way to join with other properties in order to make the facility
achievable.
The facilities could include a variety of
resource systems, e g, roads, bridges, residential services (waste disposal,
car park, community places), irrigation and drainage schemes, grazing areas,
and hunting grounds. Some of them could be facilities without land ownership,
i.e., with servitude on another property, while others could be as joint
property units. An individual property owner would benefit from joining with
other owners, instead of trying to keep the facility as an individual asset.
The Swedish system of joint facilities will be
analysed from different perspectives. This paper will analyse the efficiency
and equity of the system. The crucial questions are when we need to join
properties to increase the benefits of the cadastral system. The gatekeeper of
the legal system – the legislator – has to provide a system that integrates the
economic benefits with the demand of equity for the landowners.
A description of a system of joint facilities
requires an understanding of the historic development, the legal system
including the Enforcement Administration, the concept of property, fixtures,
the cadastral unit, externalities, transaction costs, associations and human
behaviour. Some examples of Swedish joint facilities will illustrate the
efficiency and equity of the system.
The Swedish cadastral system has developed
during centuries, from a fiscal system and in parallel a legal system for
conveyance. The title registration system was introduced early and partly as a
demand of the agrarian tenure reforms during the 19th century. The
two cadastral systems merged gradually into one unified system. The
establishment of the Swedish Land Data Bank System was initiated in the 1970’s
and completed in 1995. Since then, the improvement of the system has continued,
and it works as an efficient multipurpose cadastral system. The previous manual
land registers had many records of cadastral procedures, including registered
joint facilities. Table 1 describes the actual cadastral situation in
|
|
Property
units (PU) |
Joint property units (JPU) |
Joint
facilities (JF) |
|
Total
number |
3,146,298 |
96,082 |
70,748 |
|
No of properties in JPU/JF |
|
388,986 |
963,848 |
|
Property units with shares in JPU/JF (%) |
|
12.4 |
30.6 |
|
No of shares in JPU/JF |
|
4,956,722 |
1,293,365 |
|
|
36,119 |
||
Table 1: The cadastral situation in
The cadastral system has not included all
details of property units and joint facilities, partly due to the historic
remains of joint property units. The statistics on shares are incomplete. The
real number of joint property units and joint facilities is higher, eventually
much higher, in particular in
The joint property units (JPU - samfälligheter)
are property units, owned in common by several properties. The joint facilities
(JF- gemensamhetsanläggningar) refer only to the created facilities,
owned by several property units. The facilities do not necessarily need to
include ownership to the land, as servitude on another property could guarantee
the right of access to the land, i.e. as a joint dominant property unit. At
some joint property units there are specific facilities, e.g., traditional
village roads, being remains from the individualisation in the village. Today,
all land in
The figures indicate that most people are
landowners, and that there are a lot of joint facilities and joint property
units. This means that many citizens in
The fundamental question is not if joint facilities
exist, but how they work in the cadastral system. Are they useful, and do the
landowners fully understand and manage the joint facilities in an efficient
way?
We could also compare the number of
joint property management associations (36,119) with the 25,644 sport
associations (of 69 registered sports in
Private roads are one of the main purposes of
joint facilities. They amount to 284,000 km, representing two thirds of all
roads. Municipal roads amount to 98,000 km and governmental public roads 37,000
km. About half of the private roads are for forest use. 25 % of the private
roads qualify for public subsidies, being the public policy for keeping rural
roads open to public use, though with private management. The subsidies amount
to € 75,000,000 and should cover 70-85 % of the construction cost and 40-80 %
of maintenance (Österberg 2004), but the subsidies do not always amount to
these values (REV 2006). A governmental report proposes that 16,000 km of the
public roads could be changed to private roads, and 5,000 km of the private
roads change to public roads (SOU 2001:67). The joint property management
associations are recognised to administer rural private roads in a satisfying
way. The intended increase of private roads shows that the Government finds it
more feasible to hand over the administration of rural roads to private joint
property associations. There is a national association of private roads (Riksförbundet
Enskilda Vägar - REV). The members are the joint property management
associations for the private roads.
Joint property management could be analysed in
a historical perspective. Ancient production systems required collaboration of
people in order to survive. Joint production schemes developed prior to the
cadastral system with individual properties. Binswanger, Deininger & Feder
(1995) trace back the current land tenure systems to its territorial rights to
hunting and gathering, before the emergence of agriculture. The evolution of
production relations has defined the property rights, as mankind developed its
production systems through forest fallow, bush fallow and finally permanent
cropping. Owner-operated family farm successively phased out joint production
schemes. In practice, one can find joint facilities for specific production
schemes, but the main idea emphasizes the farm as operated by the owner, i.e.,
without external interference.
Historical examples of joint production schemes
are easily available. Svensson (2005) describes one of the three agrarian
tenure reforms in
Binswanger et al (1995) also describe the
parallel production schemes in the agricultural development, ending up in
landlord estates, hacienda and wage plantation. Normally, we don’t consider
these production schemes as strategic in a dynamic society. Our priority is to
provide conditions for individualisation of property rights. We define rules
for ownership, e g, Snare’s (1972) concept of property. We try to find the very
true nature of ownership, including the constraints in property rights, held by
the society, or other people. But such constraints are not linked to the
production schemes in some kind of joint facilities. Another analysis of the
emergence of the individualisation of property rights is the classical Demsetz
(1967) theory. His basic assumption is based on Leacock’s anthropological study
of American Indians on hunting and fur trade, as basis for the Indian’s
production schemes. We understand that the need of protection of a certain
asset (the fur and tail in his example) required a step towards
individualisation, being the first evidence of property rights. The key concept
is internalization of externalities: you need to define your interest in
specific assets – external benefits and external costs – and bring them to
yourself by internalisation. The physical delimitation of the property right is
defined for a specific benefit, added with a specific cost, in order to claim
an exclusivity of these costs and benefits. Demsetz emphasises that the
internalization is only covering a specific externality, while other
externalities remain open and accessible for everybody. The evolution scheme of
Binswanger et al (1995) supports the idea of a successive internalisation of
assets.
Demsetz (1967) also defines the conditions for
an internalisation of externalities, “when the gains of internalization become
larger than the cost of internalization”. This means that we could expect members
of a society, or members of a village, to proceed with internalization of
externalities when they understand the individual benefit of an asset, reduced
with the cost of establishing such an individual right. Svensson and Binswanger
et al provide useful examples.
Our concept of joint facilities is based on the
concept of individual properties that join for a specific facility. We do not
base the right on membership in a community, but on a group of properties. We
do have remaining externalities, not born within the current property right, e
g, the right of view, air and noise (though with some limitations). In
The Coase theorem (Coase 1960) emphasizes the
rationale of individuals in search of benefits, in a market-oriented
perspective. He focuses on the negotiation process in a theoretical
perspective, claiming that any kind of change in property rights between
landowners is conditioned by the marginal cost and benefit. The equilibrium is
obtained when the marginal cost and marginal benefit is the same for all the
stakeholders. Coase adds the transaction cost to the pure economic equilibrium
model, as the market cannot work without these costs.
A joint facility is an evident example of an
achieved benefit of a common resource system that requires quite some
transaction costs, both for the establishment and for the maintenance. But we
could also consider the joint facility from the Coase idea of equilibrium after
a negotiation process, i.e., the optimal benefit is theoretically reached for
all stakeholders. We expect all the landowners to make an analysis of the costs
and benefits of joining the facility, and in a negotiation process reach the
optimal benefit, including compensation between the landowners. In similar
fashion to the basic example of Coase of number in herds and annual crop loss,
we will use a simple example of two situations of a joint facility and four
landowners. Three properties, A, B, and C would need an access road (or a
bridge) that requires servitude on a residual property unit, E. A is most eager
to construct the road, while C expresses his lack of interest, as he has got a
supportable alternative solution. B is interested, but not as eager as A. The
shortest access road would pass by property C, but there is also an alternative
access, though longer and more costly. E wants some compensation, as servient
property. The figures in table 2 below illustrate the situation.
|
|
Case 1 – long access
road |
Case 2 – short
access road |
||||
|
|
Benefits |
Costs |
Total c/b |
Benefits |
Costs |
Total c/b |
|
Construction cost |
|
6 |
|
|
3 |
|
|
E (servient property; granted access to land) |
|
2 |
|
|
1 |
|
|
Total costs |
|
8 |
|
|
4 |
|
|
A |
5 |
4 |
1 |
5 |
2 |
3 |
|
B |
3 |
4 |
-1 |
3 |
2 |
1 |
|
C |
-2 |
No part. |
No part. |
-1 |
0 |
-1 |
|
E (compensation) |
2 (comp.) |
-2 |
0 |
1 (comp.) |
-1 |
0 |
|
Total output |
|
|
0 |
|
|
3 |
Table 2: Cost and benefits of access roads to
properties
The participation of costs could be done in
various ways. The figures above illustrate only one alternative in each case
that could be argued for in a real situation. In case 1, C states that he/she
will not participate, as (s)he does not find any meaning to join the access
road. A and B share the costs equally, which is satisfying for A, but B finds
it too costly (negative individual output). An optimisation would be to divide
the total costs according to the estimated individual benefits (5 and 3 units
respectively), but would require that personal preferences to be applied. The
total output is only = 0, which means a total status quo. In case 2, A and B
offer C to participate, without any cost, but C is still not in favour of the
solution (negative output = -1), though with less reluctance. This means that C
still would object to participate. The market solution would be that A, or A+B,
offer C a compensation of 1 unit to participate. This is not the same as
begging C to participate. A would be the most eager to offer such a solution.
The total output = +3, which means that there is a margin for negotiation.
The Coase theorem makes it clear that any kind
of solution could occur, if the market is working smoothly. The first action,
necessary for a solution, is to offer C at least 1 unit to participate. A and B
have a positive output of 3+1 units, but we don’t need to define if both of
them or only A would pay compensation to C. The remaining 3 units could be
claimed, and negotiated by any of the four participants. An equalitarian
perspective would contain an individual output at +0.75 units each, which means
that all participants will assess that they have gained something. But this is
based on the personal estimations of the individual benefit, i. e., the
expectation value. It would probably be very hard for A and B to accept more
expenses/compensations to C and E, i.e., above 0 for them (even though all
values are held individually and in privacy). B could also argue for a
diversified participation between A and B, i.e., that A with a stated interest
would participate more, e.g., pay the compensation of 1 unit to C, instead of
sharing it equally.
The equilibrium is not easy to describe in a
real situation, as the changes are difficult to express in monetary (or some
other) units. There are also transaction costs that change the state of
equilibrium, as described by Coase. Binswanger & Deininger (1993) develop
further the concept of transaction costs in land relations, by departing from a
concept of perfect markets and perfect information (called level A) that is not
found in reality. Four successive levels are proposed: B - credit market
imperfections; level C - agency theory; level D – spatial covariance of
agricultural income risk; and level E – rent seeking and distortion. They
search for feasible explanations how the land markets work in contrast to the
perfect market model. Why do we have different land tenure systems that do not
reach the optimal efficiency in land use and production? They describe the
process in less developed countries (LDC), but the description is of general
interest. Kalbro (1997) also refers to market failures in his analysis of the
need of permit procedures for changes in land use in
Binswanger & Deininger (1993) state that
the additional levels of analysis are necessary, as the land market contains a
number of failing conditions to a perfect market, such as asymmetric
information, rent seeking, and policy distortions. The need of a legal system
and a governmental interference in the land market are assumptions that we
easily accept, including the inherent transaction costs.
In the two cases above (table 2) we could
expect a legal system that defines requirements for implementation of joint
facilities. The transaction cost would increase the total costs, and decrease
the total output. We could also expect that personal estimations of benefits
are by and large disregarded by the cadastral officer in charge of the legal implementation
of the joint facility, in favour of an objective assessment of the property
values of the facility. This implies that the negative attitude of C (total
output) is disregarded, and this property could be legally forced to join the
facility, with some participation of the costs. This would add the potential
risk of appeal to the court, which is another part of the (eventual) costs.
Joint facilities are production systems that
provide a better output at a theoretical equilibrium for all landowners. We
limit our description in this paper to transaction costs, as an additional
change of the perfect market equilibrium. We use the landowners as distinct
stakeholders, analogical to the herd and farmer of Coase. It means that we
depart from the landowners (described by Binswanger & Deininger 1993 as the
family farm – owner operated). The historic land tenure systems (e g family
farm in communal tenure) and parallel tenure systems (landlord estates, hacienda
and wage plantations) are not analysed in this context. In their report, they
consider the other tenure forms as some kind of distortions from a Pareto
optimal equilibrium, based on a theoretical concept of perfect markets and
perfect information. Their explanations of complementary levels of analysis are
due to the economic inefficiency of land markets. We need an analysis of the
efficiency of joint facilities. We do find a magnitude of joint facilities in
the legal systems, as well in informal tenure systems. Our aim with the legal
systems is to provide the best interpretation of efficiency in joint property
units. The internalisation of externalities is made, within a group of
properties, but excluding other properties. This could be compared with a
situation of customary land tenure, but it is based on property units, not on
membership in a village.
This means that we do not consider joint
facilities as remains of a historic land tenure system, but a current
production system based on interests of individual landowners. The land tenure
systems in
The 3.2 million property units in
A comparison could be done with some special
cadastral units in the Swedish system: the properties owned by tenant owner
associations. 16.2 % of the Swedish adult population are living in tenant owner
associations, situated mainly in the cities. It has increased from 11.6 % in
1980 (SCB 2006). The associations have a residential purpose, but might include
commercial areas at the bottom floor. The residents have individual tenancy,
i.e., a right of use and right of transfer a specific apartment. The
tenant-ownership contains the membership in the legal person – the tenant
ownership association, which is the owner of the property unit. The Tenant
Ownership Act provides the legal framework for the administration of the
association, which includes economic administration.
As legal owner of the property, the association
is liable to mortgage the property. (There is also mortgage available for the
individual tenant ownership.) The association is based on democratic rules.
There is no individual assessment of costs and benefits of joint facilities.
Every tenancy has the same weight, independently of the size or value of the
apartment, i.e., a uniform system: one tenancy – one vote. This is considered
to be simple and efficient. From the cadastral perspective, all joint
facilities within the association are internal issues that are supposed to be
efficient. Still, we have to admit that there are transaction costs of joint
facilities of the association. The choice of tenancy-ownership could be
understood as one solution of efficiency, including the transaction costs. These
costs include the efficiency of the association. Liedholm (1988) identifies
problems in efficiency and equity of the associations, but we still consider
them as feasible economic units. There is also a political perspective of
private ownership within a social system. We desist from analysing its real
efficiency. We might claim that the system could be efficient or not efficient,
which would imply a total implementation or extinction of this tenure system at
the market, i.e., approaching 100 or 0 % respectively, instead of the current
16.2 %.
We use the example of tenant-ownership to
illustrate that in an urban European context there are solutions in a legal
framework to provide an efficiency of ownership without a total
individualisation of the property units. This means in the Demsetz theory that
there is a need for internalisation of externalities, but it could be held
within an association of tenant-owners, with an internal individualisation of
economic units (supported by the Tenant Ownership Act). The cadastral property
unit exists only at the association level, which means that the association
holds the internalised assets. These assets are not externalities for
non-members of the association, but in an initial phase externalities within
the associations. The next phase implies an internalisation of the
externalities with the association. The Tenancy Ownership Act and the general
rules of management, as defined by verdicts, define the basic function of the
right of use and right of transfer of the tenancy of the apartment. However,
there is still an area of externalities within the association, which is
defined through the decisions of association, either by the board or at the
annual meeting.
The current Swedish Joint Facilities Act dates
from 1973, with successive amendments. It substituted previous acts on joint
facilities, including an act of private roads. The Act defines the three basic
conditions for establishing a joint facility (Julstad 2005): 1) importance, 2)
benefit, and 3) opinion. It means that a joint facility only can be established
if all of these conditions are verified. They protect the private rights of a
landowner. Referring to the example in table 2 above, case 1 does not qualify
for two separate reasons: the benefit is only at level 0, and B (one of two) is
not in favour. In case 2, we find benefits of A and B, and a total outcome of
+3. The reluctance of C could in this case be omitted and C be brought into the
joint facility. However, the values in the example are personal assessments,
i.e. expectation values, which are different to the objective property value,
assessed by the cadastral officer. If C has got a negative value in the
objective assessment, there would be a need for an official compensation to C,
or to exclude C from the joint facility. The example indicates that the
negative value is a personal assessment, while another landowner to C would
make a more positive assessment, at least = 0, i.e., indifferent to the
solution, accepting the request by A and B.
The benefit of joint facilities has to be
assessed in a long-term perspective. The legal requirement is expressed as
permanent, which is logic as being established for the property and not the
owner. Nevertheless, the condition of opinion is based on the personal
assessment of each landowner. In case 2 above, we find a positive benefit of A
and B, and a total output of +3. If we add the transaction cost to the example,
e.g. at a value of 1, the total value would still be positive (+2). The
benefits could be expressed as the capitalized values of future returns. The
values of remote future returns might be minimal for the landowners, and if
assessed in an economic perspective with interest rates, we understand that the
decision counts mainly the near future. The forthcoming owners to the
properties have other expectations and assessment of the joint facility. We
might understand that the most likely person to acquire the property has a
positive assessment of the joint facility.
However, we find quite a number of situations
in the real cadastral situation. Some joint property units are remains from
historic commons that have not been individualised, due to a negative total
output. The output could reach negative values due to the transaction costs,
while in other cases we could identify more benefits with continued joint
property. In the Demsetz perspective: the cost for internalisation exceeds the
benefits. The continued externalities (within the group of landowners of the
commons) are still an advantage compared to internalisation.
In the cases when a joint facility has been
established, the assessment of the benefits is expressed to be a permanent
solution, including long-term benefits. At the time of establishment, the
landowners identified the benefits of the joint facility and capitalized these
benefits to a present value. The cadastral officer identified the objective
benefits of each property, and distributed the cost according to these
benefits. The ways to calculate the benefits and costs are based on official
recommendations. They might have changed in a long-term perspective, but the
basic principles could be similar. The official report for calculation of
benefits for roads as joint facilities is based on default values of land use
and length of access road of each property. These are expressed as permanent
and vacation use of housing, area of agriculture and forest properties
(Lantmäteriet, 1995). The values are used as basis for determination of shares
in the joint facility. These shares could be different for construction and
maintenance of the facility.
The assessment of benefits of a joint facility
could be done in details, but there is also a need of efficiency in the
cadastral procedure. The joint facility is the resource system, but it needs a
practical management. Ostrom (1991) describes the costs for the management in
several areas: exclusion of non-appropriators, compensation,
establishment of the management system, control system, punishment rules, and
the information function. The Swedish Joint Facilities Act is complemented with
the Joint Property Units Management Act. The management could be done by
unanimous decisions, normally when the members of the joint facility are
limited (less than 5-10). In facilities with more properties, there is a need
to create a legal and administrative framework, which is done in a joint
property management association, as defined by the Act. The association is the
legal person for the management of the joint facility. As mentioned above,
there are 36,119 registered associations. They could manage more than one joint
facility. The official number of joint facilities (70,748) and joint property
units (96,082; in reality many more) indicates that several of them are managed
without an association. However, the legal form of the association is a
solution that satisfies the need of administration of a joint facility or joint
property unit where different opinions could occur.
The
management of the joint facility is sometimes a practical easy agreement
between the members. A joint road has to be maintained properly, which the
members easily understand. However, sometimes there are diverging interests on
practical arrangements, including the economic responsibility. The two acts on
joint facilities and joint management are fundamental for the efficiency of the
administration. The joint property unit or the joint facility belongs to the
member properties, by shares, and these properties are committed to the
decisions taken in the administration of the joint property, being unanimously
managed or managed by the association. If one property owner does not comply
with the decisions for the joint facility, the association has got the legal
authority to proceed with legal means. (If disagreement occurs within a
joint/unanimous management, the owners could ask for a special deliberative
meeting with a cadastral officer). The economic liability of decisions by the
association is protected by the total value of the property. The association
could apply to the Enforcement Administration to attach the value. The
decisions of the association have to comply with the defined cadastral purpose,
i.e., not expanding ahead of the defined purpose. There is also a formal
requirement on annual meetings, with a formal estimate of expenditure and
income.
The rules
in the Joint Property Management Act follow the eight design principles of
common property resources, as proposed by Ostrom (1991):
o
Clearly defined boundaries
o
Congruence between appropriation and
provision rules and local conditions
o
Collective-choice arrangements
o
Monitoring
o
Graduated sanctions
o
Conflict-resolution mechanisms
o
Minimal recognition of rights to organize
o
Nested enterprises (part of larger
systems)
The
Swedish system of joint
facilities is operational, and satisfies with most of these requirements. The
limited attention to the associations (compared to e g sport associations)
could be a sign of the efficiency of the system. However, there is a need to
analyse if the system is working smoothly. Efficiency and equity are two
fundamental requirements. Using the example in table 2 above, we need to state
that 1) the total outcome is above zero, and 2) no property has a negative
(objective) value (if not required for the facility).
The reality of 70,748 joint facilities, 96,082
joint property units and 36,119 associations cannot be limited to statistics.
There is a reality in the administration of the commons. Some of the joint
property units are remains from previous common land. The membership was
historically defined by the village tradition, but nowadays property units
define the membership. We do find examples of huge joint property units and
properties with a huge number of memberships. The maximum number of
participation properties in one joint facility is 2,782, while the biggest
joint property unit has 3,812 member properties. On the contrary, one property
unit has shares in 23 joint facilities, and the maximum number in joint property
units is 480 for one property (Larsen 2006). The examples indicate that we have
a huge heritage in the cadastral situation, including the joint property units
not recorded in the cadastral system. We can hardly believe that membership in
480 joint property units to be efficient. The joint property unit with 3,812
participant properties requires efficient and clearly understood collective
choice arrangements. Even though extreme cases might be found, we need to
understand the efficiency of the system as designed by the Swedish acts.
Some joint property units could illustrate the
inherent problem with common properties that were established some 50-100 years
ago, and have become remains of the cadastral system, without a practical use
today. A few examples: the joint property unit Höör Karlarp S:1 is owned by 18
agricultural properties. The area is only 1,200 m2. The cadastral
record states that the purpose is a gravel-pit. In reality, the gravel has
already been extracted, and the plot is just part of a forest area. Another
joint property unit, Trelleborg Östra Torp S:2, is an rural access road for two
properties (Östra Torp 6:66 and 6:228), close to the seaside in
A detailed analysis on 9 cases of joint
facilities in
|
Cadastral name |
Vellinge Hököpinge GA:6 |
Osby Gisslaboda GA:1 |
Finspång Hemmingstorp GA:1 |
Kävlinge Furulund GA:1-3 |
Karlskrona Bromålagölen GA:1 |
Högsbo Lilla Klobo GA:2 |
|
Kind of administration |
Association |
Joint administration |
Association |
Associations (not active) |
Association |
Association |
|
Kind of area |
Market town |
Rural houses and agroforestry |
Rural and vacation housing, agroforestry |
Urban residential area in township |
Agriculture, rural housing |
Rural housing, agroforesty |
|
Constitution year of JF |
1985 |
1979 |
1946 |
1981 |
1958 |
1954 |
|
Approximate origin |
1880’s |
1880’s |
|
|
1911 |
Previous private roads |
|
Formal purpose |
Space |
Road |
Road |
Parking lots, garage and green area |
Drainage and wells |
Road (incl. bridges) |
|
Real purpose |
Roads, gravel paths parking places, green
areas, football fields, playground |
Same as above (450 m) |
Same as above (3,200 m) |
Same as above |
Same as above |
Same as above (5,200 km) 7 separate parts of road system and bridges |
|
No of properties |
127 |
5 |
22 (19 owners) (originally 9 properties) |
6 in one JF 5 in two JFs |
14 (13 owners) |
54 (38 residential properties, 16 residential +
agricultural pr.) |
|
Shares |
Equal |
0, 5, 10, 15, 20 and 50 |
1 to 42 shares |
Equal |
50+20 % for main owner. 30 % for the other 12
owners |
34 % for forestry industry, 1-9 % for
agriculture |
|
Applied shares |
Same as above |
Equal for three properties (5, 20 and 50) |
Same as above |
Same as above |
Same as above |
Equal |
|
Yearly cost for property/ member |
€ 130 (€ 1,600 entrance fee for new members) |
Occasional costs € 30, 50 and 80 for other road for seasonal,
permanent housing and forest property |
€ 14 /share (€ 14-600/ property) |
€ 0 |
€ 0 Work required, with calculated value |
€ 8 each (Municipality in charge of maintenance) |
|
Yearly turnover |
€ 18,000 |
|
€ 8,900* |
€ 0 |
|
€ 425 |
|
Comments |
Widespread purposes. Local government activity very limited Additional purposes of JF |
Major need of improvement caused formal
constitution. One property uses another access road Property with share = 5 benefits of company
tax reduction |
New statutes in 2003. Statutes from 1946
lost. Agreement within associa-tion on shares, based on official
recom-mendation * Investment in 2004, with mortgage |
Proposed one association for all 3 JF.
Rejected by owners. Today 2 associations. No formal annual meetings. |
1958 statutes based on previous agricultural
use. Changed situation today. Main owner find shares unfair |
Municipality in charge of maintenance of some
parts with more public use |
Table 3:
6 exemples of joint facilities in
Some further comments on the associations and
joint facilities could be done. The association of Kävlinge Furulund GA:3 is
very small, and operates without formal annual meetings. Osby Gisslaboda GA:1
is also small, and decisions are taken informally as an ad hoc solution for a
special need of improvement. Högsbo Lilla Klobo GA:2 apply the same fee for all
members, despite the differentiated share in the cadastral record. Karlskrona
Bromålagölen GA:1 has a different land use today, but still uses the official
shares from 1958.
The examples indicate a satisfactory management
of the joint facilities. The landowners act within the associations, though
with some differences. As decades pass, the needs are changing, while the
associations might continue with the same statutes. An amendment of the Joint Facilities Act in
2001 admits that the Cadastral Authority could assign to the association itself
to decide on changes of the shares, in case of changed use of properties. The
change becomes effective by the formal registration at the Cadastral Authority.
Some of the joint property units are still
remains of the previous common production schemes, and continue as an
externality within the joint property unit. However, they are not externalities
for everybody, as the costs and benefits are restricted to the defined member
properties, according to the cadastral record. The establishment of the joint
property unit was done at a time when the process of internalisation gave a
positive output for the individual property units, leaving the remaining part
to a joint property unit. The production scheme indicated that the area would
need a joint property unit, instead of internalising the area to an individual
property. The areas had a specific use at the given time. The land use might
change as time passes, e.g. the case of the gravel-pit at Höör Karlarp S:1
mentioned above. The need of gravel was understood as a joint concern for the
18 landowners in Karlarp. After excavating the gravel, the remaining value of
the 1,200 m2 is very limited. The capitalization of the future
returns did not include the transaction cost for a change of the cadastral
situation when the gravel deposit came to an end.
We also have opposite situations, when the
joint property unit obtains an additional value, as in the case Trelleborg
Östra Torp S:2 (see above). Even though the practical use changed long ago, the
change of the formal cadastral situation was not effectuated. The cost for
making the change is less than the benefit, as the (personal) expectation value
to make the change is low. The critical increase of the expectation value to a
total positive benefit occurred several decades after the change of use of the
joint property unit. However, the transaction cost for the change restricted
the previous landowners to act. It is an evident example of market failures.
The examples of the student reports indicate
that there are similar problems in adapting the cadastral situation to the
reality. The two cases with changed shares, equalizing the annual fee to the
association is a practical action within the association. The low fee is
certainly a reason for the members to disregard the formal shares. The concept
of equity is easily understood if the fees are low.
If the public subsidies would decrease or cease
totally, we could expect more attention of the members on distribution of
costs. The formal shares would become a more active concern. On the other hand,
if the public subsidies would cease and the costs for the association increase
substantially, we might face more problems in maintaining the joint facilities.
We could eventually expect some facilities to reach the point of internalisation
into individual assets.
The huge number of joint property units and
joint facilities is by and large a good example of an internalised asset within
a community of properties. The membership by property units is a fundamental
condition. However, the examples above indicate that there are also examples of
ancient joint property units and joint facilities, with uses totally out of
date. The transaction costs for making a formal change are too high. The
National Land Survey of Sweden has identified the problem of these outdated
situations (Gränssnittet 2005). Governmental and European funds have become
available to revise the cadastral situation. Such funds might be necessary as
incentives for the association joint owners to take initiative to make a change.
However, it is not logic if public funds are used to intervene in a situation
where the land market does not act. The capitalization of future returns when
the joint property unit or joint facility was created might have included too
much of future returns, which has caused the effect of negative output at a
change today.
The joint facilities have a crucial function
for the property units. The legal framework creates the rules, supported by the
enforcement procedure. If a member of a joint property management association
would neglect to pay the annual fee, the board of the association has access to
the Enforcement Administration, without cumbersome procedures. Usually, the
associations do not use this legal action, and occasionally accept non-payment
of members. A similar situation occurs when fees are decided, diverging from
the formal share. However, the legal framework with enforcement procedure
prevents quite a number of neglects.
Normal human behaviour might explain absence of
neglects towards the association. People do not simply want to create problems
in the local environment. Neglect is also a sign of disrespect of the formal
system. For this reason, it is important that legal actions are easily
accessed. Human relationships are not always working smoothly. Without an
operational legal system, there would be less interest to comply with the
duties of the association.
The attitudes towards a compulsory system in
joint property management are also supported by the general behaviour of the
Swedish population. An international survey (World Values Survey) indicates
that the Swedish population has a top world position on confidence towards
other people: 66 % of the population state that one could rely on other people.
The world average (of 81 countries) is 28 %, and Brasil has got the lowest
value with 3 %. Another indication on the attitudes is that 87 % of the Swedish
population try to be fair to other people, while the world average on justice
is 43 %, and
The values of the survey might have various
reasons. The system of joint facilities is benefiting from the general
attitudes of the Swedish population. Eventually, we could also reverse the
implication, by stating that an operational legal system creates good human
behaviour.
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BIOGRAPHICAL NOTES
Klas Ernald Borges is
Senior Lecturer in Real Estate Science at
CONTACT
Senior
Lecturer
Dr. Klas
Ernald Borges
SE-221 00
Phone +46
46 222 01 54
Fax +46
46 222 30 95
Email:
klas.ernald.borges@lantm.lth.se
[1] Based on student
reports of Anders Skoog, Elin Neckén, Lina Björk, Mattias Hägg, Michael
Mårtensson and Sofia Iderheim in the course VFR130 Common Property, December
2005.