As a member of a unit owners’ association or condominium association, you are actually a bit of an involuntary partner in the company, i.e. a housing entrepreneur. What does this role entail and what should you prepare for?
As a member of a unit owners’ association or condominium association, you are actually a bit of an involuntary partner in the company, i.e. a housing entrepreneur. What does this role entail and what should you prepare for?
If you are even a member of the body of an apartment building, you are a director or a member of the board of directors of such a company, so you are responsible for the events in the building.
And it’s not an easy task at all. It is necessary to know your rights and obligations, as well as the rights and obligations of your apartment building and its bodies. It is important whether the flats are “cooperative flats” or so-called “privately owned” flats.
Co-operative members only own a membership share in the co-operative, which carries with it the right to rent the flat. However, the flat itself remains the property of the cooperative. The cooperative then exercises the ownership rights (but also the obligations) of the flat and usually manages the whole building. The members pay a rent (contribution) to the cooperative, which, among other things, pays for the management of the house and the functioning of the cooperative.
The highest body of the cooperative is, of course, the meeting of all members. However, practical issues are decided by the statutory body, i.e. the board of directors. This usually has three members, but the statutes may specify a higher number. Another important body of the cooperative is the control committee. As the name implies, this committee controls all the activities of the cooperative, especially those of the board of directors, hears complaints from members and can consult all cooperative documents. Of course, no one can be a member of both the Audit Committee and the Board of Directors.
The situation is different for privately owned flats. Each owner owns not only his apartment but also a share in the common parts of the building. These are defined in more detail in the so-called owner’s declaration, which divides the house into specific units – a legal abbreviation for the flat and the share in the common parts. But what are the common parts? According to the law, they are the parts of the house which, by their nature, are intended to serve the unit owners together. However, it does not matter whether they actually serve, it is their “nature to serve together”. The common parts are then always the land on which the house stands. The common parts are also the structural parts essential for the maintenance of the house. These are in particular the main structures, supporting columns, walls, corridors, etc.
However, we can also include cellars, loggias, balconies and terraces, facades, terrace railings or pergolas. In the case of terraces and balconies, the common ownership is usually only formal and only the specific members whose flats they belong to may use them exclusively. Since it would be difficult for the owners to agree on joint management, the law creates a special association in which it is compulsory for them to come together and decide on joint matters.
This is the so-called unit owners’ association (SVJ). Its supreme body is the owners’ assembly, which must be held at least once a year and decides on the most important issues such as the modification of the statutes or the method of charging for services. This assembly is convened by invitation, which must be sent to all members of the HOA. The bylaws may specify the specific form. It is very practical to stipulate that this can be done e.g. by e-mail or text message. The invitation must be accompanied by all the documents to be discussed. Or at least it must be specified where they can be obtained.
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.
Tip: A cooperative is a specific type of corporation that is worth forming for many reasons. Typically, if you need to manage an apartment building, but also perhaps if you want to provide social services or join together for agricultural activities. What should you do if you intend to form a cooperative?
An example from practice: we encountered that a musician, Mr. Olda, as the chairman of a Prague SVJ, called meetings informally by telephone in a small collective of seven units. This possibility was not enshrined in the statutes, although no one has questioned it so far. One day, however, a new neighbour sent him a letter questioning all the conclusions of the last meeting, even though everyone but him agreed with them. We recommended to Mr. Old to reconvene the meeting with a formal invitation, and in the meantime a concrete decision was delayed.
Indeed, an informally convened meeting without any record could be challenged. It must always be clear what documents are being voted on and if the meeting is confused, the court can invalidate everything. In recent years, however, the courts have tended to side with the SVJ officials, even “upholding” a wrongly convened meeting or other decisions against the formal objections of some querulants.
It is the aforementioned officers who act on behalf of the community, i.e. the statutory body elected by all owners. Most often it is a committee, which has at least three members, or the statutes may stipulate that it is only one person, i.e. the chairman of the HOA. The HOA may also set up an inspection committee, but unlike a cooperative, this is not an obligation.
In addition to the above-mentioned bodies, there may also be an administrator in the house. He/she carries out the actual management of the building, for example, he/she ensures the actual cleaning in the house, deals with repairs of the lift and other equipment, collects service charges or collects rent in the cooperative. Today, there are many companies on the market dealing with the day-to-day management of the building, accounting and related administration.
One of the biggest problems related to the management of the house, the problem of non-payers, has also been alleviated today. That is to say, the residents of flats who do not pay the house management fees and other mandatory charges. These debts first had to be recovered in court and only with a final court decision could enforcement proceed. It used to happen that by the time the trial was over, there was nothing left of the debtor’s property, as it had been dismantled by the lending banks. The debts had de facto to be paid by the other occupants of the house.
However, an amendment to the Code of Civil Procedure has brought a novelty. At the auction of a property, an HOA or cooperative has the possibility to submit its claim even without a writ of execution. 10 per cent of the auction proceeds is reserved for its satisfaction.
The amendment implies that the bailiff conducting the execution will notify the SVJ that it can claim satisfaction of its claim. He may register it directly in the execution, but no later than the start of the auction hearing.
This article was prepared for the Lidové noviny series “Law & Housing”. See also other articles from the series:
Tip: Co-operatives work on the principle of membership and democratic control, allowing members to share profits and decide the direction of the business. But how exactly do cooperatives work and what are their benefits? That’s what we look at in our separate article. We’ll reveal why a co-operative could be the right choice for your business or community project.
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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.
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.
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