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Personal liability of SVJ and BD bodies

In our legal practice we often encounter a gross underestimation of the duties of a member of the committee of the association of unit owners or, for example, the chairman of a housing cooperative. This is a huge responsibility which can have personal and financial consequences.

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Responsibility of the statutory body of the JVU or BD

We always tell our clients: Count on the fact that if you accept the position of a statutory body in a JVU or cooperative, you must become a proper manager. You must take care of the common property as your own. If you don’t have the strength, education or time, don’t take the position. The risk is also personal liability and therefore loss of property, in extreme cases even criminal prosecution.

In one small SVJ in Prague’s Vysočany district, we encountered the fact that the committee decided that there would be no fire extinguishers or other fire-fighting equipment in the building, that fire regulations would not be observed, and that the doors in the stairwell, which provided the only emergency access to the flats, would be permanently locked with no other emergency exit. We warned them that if a fire broke out, the members of the HOA committee could be held liable not only for damages, but theoretically for criminal negligence. Yet they didn’t take the hint, they were afraid of thieves and didn’t want to invest in any measure, however simple. The fire hasn’t broken out yet, but by then it will be too late.

Tip: Co-operative building is starting to boom again. Some cities, including Prague, are launching projects based on cooperation between local government and the private sector to make housing more affordable for citizens. In our separate article, we look at how such cooperatives work and what the advantages and disadvantages of cooperative housing are.

For the elevator lawsuit

Another example is the case of Mrs. Milena from Brno. She accepted a position on the board of directors of a housing cooperative, but she did not have the time to do so and only considered it her duty to convene a meeting once a year. What was her surprise when a neighbor who was a querulous person attacked her at the meeting for an overpriced investment in the repair of the elevator, in which she had not actually participated much. He even filed a lawsuit against her, demanding payment for the damage she had caused. Eventually the matter was settled out of court, but it cost her a lot of time and effort, and even money out of her own pocket.

By accepting an office, a person becomes personally liable for damage caused in connection with the performance of that office. This is basic information for any officer of an owners’ association or condominium. He or she cannot absolve himself or herself of this liability by any contract or by hiring a professional management company.

Lawyer for HOA and housing cooperatives

We will provide you with a lawyer for HOA or housing cooperative for 6 or 12 months. He or she will be available at any time to represent you in court or with the authorities and help you with any legal issue. All this for a price you know in advance and the option to pay after the service is completed.

Don’t forget about debt recovery

A typical example of a property risk for the statutory bodies of a unit owners’ association or housing association is procrastination in the recovery of debts. If a claim becomes time-barred due to their fault, for example, this can turn against the pocket of the committee or board member in question. As a member of the statutory body, he is obliged to perform his duties with due care, including the necessary loyalty and the necessary knowledge and diligence.

Moreover, there is no excuse for ignorance, lack of education or lack of time. “The ‘statutory officer’ is also responsible for being aware that he is not qualified for the post by his knowledge or for other reasons. Careful consideration must therefore be given as to whether he will have sufficient time and the necessary concentration to perform the function. In principle, the representatives of the JVU or BD are required to be experts in each area they decide on (construction, law, finance, insurance, etc.) or to arrange for experts in case of a decision. Given the not-for-profit nature of the JVU and the fact that the performance of the function is often not paid horrendously or at all, this requirement is quite ambitious.

Tip: Do you have unpaid invoices on your desk? We’ll advise you on how to deal with overdue debts so you can get your money back as soon as possible. What is the step-by-step recovery process and what to look out for? Find out in our previous article.

A lawyer will help

It is a good idea to consult with a lawyer or other specific professional and have all significant actions and decisions confirmed by a membership meeting or assembly. This will save a lot of unnecessary stress, expense, paperwork or other problems. If you choose an Affordable Lawyer for HOAs and BDs, you can get your lawyer at any time. The service can be used to review a submitted contract or its drafting, represent you in court or in negotiations with the authorities, analyze a thorny legal problem, or draft the minutes of a membership meeting or assembly.

In addition to having your own lawyer, we also recommend archiving all communications and having everything relevant confirmed in an email so that it can be proven in the future. This is the basis for a sound sleep.

You can also get insurance

A properly taken out insurance policy can also be a solution. Insurance companies offer it, for example, to members of the board of directors or the inspection committee of a housing association or the committee of a condominium association when they perform their duties in connection with the management, operation and repair of the building. However, as with all insurance policies, it is essential to study the terms and conditions precisely. Even with an insurance policy in place, the performance of the function in question cannot be ‘off the table’, so to speak, as an exception would certainly apply in the event of a completely lax approach.

Tip: An important part of managing the HOA is bookkeeping, which by far does not only include billing for services, but also, for example, an overview of the repayment of HOA loans, management of HOA receivables and much more. What should unit owners be concerned about and what should they look out for? This is the focus of the next article.

Committee members and chairs have a huge responsibility for managing the common property and fulfilling the duties of their positions. As you may have seen in the case studies, poor decisions can lead to serious consequences, including lawsuits and personal financial losses. It is therefore worthwhile to focus on minimising the risks associated with exercising functions in JVU and BD bodies, which primarily involves consulting lawyers and other professionals. We will of course be happy to help you with this.

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Lawyer for HOA and housing cooperatives

We will provide you with a lawyer for HOA or housing cooperative for 6 or 12 months. He or she will be available at any time to represent you in court or with the authorities and help you with any legal issue. All this for a price you know in advance and the option to pay after the service is completed.

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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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