Why not underestimate the statutes in an apartment building

Voting on the statutes

When an HOA is established, new bylaws must be approved. This requires the legal consent of the owners of all the units in the building and a notary must attend the meeting. This raises the question of whether this extremely strict majority is also necessary to amend the bylaws. Practice has shown that 100 per cent of the votes are not required, so a simple majority of those present or a qualified majority, if the applicable statutes so provide. Indeed, it is clear that a 100 % majority requirement would completely block any change to the statutes in many communities of owners.

The bylaws themselves may then require more than a simple majority for any decision (e.g., 60 percent of all or three-fifths of those present). However, such a modification is usually questionable or even problematic as it may cause the community to be blocked in the future.

In the case of a cooperative, the approval of 100 per cent of all members is also required to approve new bylaws. In the case of amendments to the statutes, 100 % of the votes are not required, but an absolute majority of the members present at a membership meeting of the cooperative is sufficient. However, in the event that the statutes provide for different voting rules, the statutes shall apply.

It is necessary to amend the statutes when changing the name, relocating the headquarters, adjusting the rights of the members, adjusting the bodies, changing the basic rules of the management of the house, land and use of common parts, changing the rules for the formation of the budget of the community, for the contributions of unit owners for the management of the house and payment of the prices of services and for the method of determining their amount.

Confusion in the change of the SVJ statutes

Unit owners’ associations faced an unpleasant question after the new Civil Code came into force. Does every amendment to the statutes have to be certified by a notary as is the case with condominium associations?

The source of confusion was the “new” Civil Code itself. The latter introduced the obligation to have a notarial record of changes to the articles of association of an HOA as of 2014. However, the question arose as to whether this obligation would also apply to the older SVJs, which were used to a less strict regulation. However, these were completely omitted by the Civil Code, so the law did not give a clear answer. The classic joke that two lawyers make three legal opinions could have come into play. No one was sure, so out of caution it was recommended to make notarial entries even for older JVUs, even though it was very time-consuming and financially burdensome. The cost of notaries can be in the tens of thousands of crowns.

Nevertheless, some SVJs did not use the notary and risked the failure of the registration. The courts took different approaches. Some accepted the change of the statutes, others did not. For example, in Prague or Ostrava, such statutes were rejected by the courts and the SVJ had to repeat the whole process. Even the High Court in Olomouc and the High Court in Prague differed completely in their opinions.

Therefore, the judges of both High Courts met at a working session and agreed to proceed consistently, friendly to older SVJs. The prevailing opinion was that the participation of a notary is only necessary for SVJs established under the new Civil Code, i.e. after the first of January 2014. The others did not have to invite a notary, unless they had such an obligation directly in their old statutes.

This dual approach was removed by the 2020 amendment. Currently, all JVUs do not need a notarial deed to amend their statutes, regardless of the date of their establishment.

What the statutes can modify

The articles of association of an SVJ may expressly provide for the possibility of representation by proxy or the possibility of convening meetings by e-mail. The statutes may also allow for voting outside the meeting by means of a circular (called per rollam). This works by “letting the draft decision circulate”, the neighbours agree to it by signing and they do not have to meet in one place. However, this option assumes, of course, a general consensus and excludes discussion. If the co-owners do not express their agreement within a certain time limit, it is assumed that they do not agree with the proposal.

The HOA statutes may also regulate the house rules and the rules of conduct in the house. They can also specify the fines that can be imposed on a unit owner who violates the rules in the house.

It is important to note that the statute cannot prohibit the unit owner from determining what to do with the unit. It is up to each individual to decide whether they choose to rent out their unit, even on a short-term basis to tourists. Problems can arise when units do not have their own gas or water meters. Condominium associations may then impose higher lump sum payments on owners who rent their flats on a short-term basis. This leads to these people not reporting such rentals. However, observant neighbours can easily detect such activity.

The situation is easier for the housing association. The co-operative as a whole owns the flats, the individual members only rent the flats. Therefore, according to the statutes, the cooperative does not have to grant consent to subletting at all.

A general problem of owners’ associations and housing cooperatives is often the lack of discussion. They are actually platforms for deciding common issues. The management is not in opposition to the members, they usually live in the building as well. That is why there are sometimes heated meetings where one “faction” just wants to vote, not discuss anything.

This article was prepared for the Lidove noviny series “Law & Housing”. See also other articles from the series:

1. What to watch out for when buying a property
2. How to get a mortgage
3. What to check before buying a property
4. Who pays the property transfer tax and how?
5. What should be included in the property purchase contract
6. The most common mistakes when drafting a proposal to the Land Registry
7. Buying a property from a developer
8. Keeping the purchase price when buying a property
9. The difference between a condominium and a freehold
10. What is an annuity?
11. How to properly gift a property
12. What is the purpose of an easement or servitude?
13. Making a will and settling an estate
14. What is a collation
15. What shouldn’t be missing from a lease agreement
16. When rent increases can be made
17. Termination of the lease
18. Agreement to end the tenancy
19. How to draw up a work contract with a tradesman
20. Hidden defects and cancellation of a works contract
21. When do you need planning permission to renovate a property?
22. Home Rules
23. What does serving on a condominium board entail?
24. Why not underestimate the bylaws in a condominium
25. Common areas in a block of flats
26. What is involved in refurbishing a block of flats
27. Can a condominium or housing association go into debt?
28. How to renovate a house or cottage
29. What to watch out for when dealing with a construction “company”?
30. Building a house on a “green field”
31. How to remove land from the agricultural fund