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Attention to the new statutes of the cooperative

The new Business Corporations Act (BCA) has been in force for almost two years. According to this law, all housing cooperatives had to adapt their articles of association to the requirements of the Act by 30 June 2014 at the latest.

3 minutes of reading

In the extreme case, housing associations that fail to do so face liquidation. Although the legislative changes have brought a looser regime and many opportunities for housing associations, they have caused major disputes in some associations and legal uncertainty for their members. We will show this in the story of one Prague cooperative.

Under the pretext of the requirements imposed by the new ZOK, the majority of members in one of the housing cooperatives in Prague 8 – Bohnice recently pushed for a change in the statutes by “force”.

The bylaws of this cooperative de facto illegally prevent the transfer of a cooperative apartment to persons other than the existing members of the cooperative, prohibit keeping animals in the apartment and contain other invalid provisions. Moreover, the bylaws were adopted only by majority, not unanimous, vote, in violation of the law. That is also why many members are suing the housing association.

“It is unbelievable where we have come. The new statutes also sanction us for not appearing on the carpet whenever we are summoned by the board of directors,” complains one of the co-op members who has lived in the building for many years. “It reminds me of authoritarian practices that belong to a bygone era, adds another complaining member.”

While the new legislation requires cooperatives to adapt their bylaws to some of the changes resulting from the CCL, it gives them more freedom to adjust their internal affairs to their liking.

Statutes for HOA or housing cooperatives

We will review your HOA or housing cooperative bylaws or we will write them up for you from scratch. We will always ensure that they comply with current legislation. Our bylaws are always tailored to the needs of the residents of the building. We can also set up your HOA or housing association on a turnkey basis. We will arrange everything quickly, flawlessly and at pre-determined prices. You can pay only after the service has been provided.

However, some amendments to the bylaws must be approved by the unanimous consent of all members of the cooperative, so they cannot be enforced by force against the will of the members of the cooperative who do not agree to such an amendment. Such changes include, for example, the modification of the conditions under which a member of a housing cooperative has the right to conclude a contract for the lease of a cooperative apartment.

In general, the new statutes are an opportunity. However, it is up to the co-operative members to decide what to do with it.

In this context, it should be noted that members of the elected bodies of housing cooperatives (typically the board of directors) should not forget that they must act with due care (i.e. with the necessary loyalty and ability). In the event of a breach of this obligation, the law provides for sanctions, such as the obligation of the member of the body to hand over to the cooperative the benefit gained from such conduct. In the extreme case of a breach, such a person may even face criminal prosecution.

In some cases, the court may even provide that the member of the body is personally liable for the obligations of the cooperative. This can become very costly, for example, in the event of a failed reconstruction or a lost dispute with minority co-operators. The court can also prohibit a particular person from serving as a statutory body of a housing association for up to three years. People who only perform their co-operative functions “half-way” should be aware of this.

It is therefore advisable for cooperative representatives to consult a specialist in good time.

Download the free, easy-to-read ebook for condominium and HOA presidents and their members and avoid the legal risks that accompany the management of your building.

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Statutes for HOA or housing cooperatives

We will review your HOA or housing cooperative bylaws or we will write them up for you from scratch. We will always ensure that they comply with current legislation. Our bylaws are always tailored to the needs of the residents of the building. We can also set up your HOA or housing association on a turnkey basis. We will arrange everything quickly, flawlessly and at pre-determined prices. You can pay only after the service has been provided.

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Author of the article

JUDr. Ondřej Preuss, Ph.D.

Ondřej is the attorney who came up with the idea of providing legal services online. He's been earning his living through legal services for more than 10 years. He especially likes to help clients who may have given up hope in solving their legal issues at work, for example with real estate transfers or copyright licenses.

Education
  • Law, Ph.D, Pf UK in Prague
  • Law, L’université Nancy-II, Nancy
  • Law, Master’s degree (Mgr.), Pf UK in Prague
  • International Territorial Studies (Bc.), FSV UK in Prague

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