Issues related to association of co-owners of multi-apartment building

Extracts for legal literacy News

The creation, activities and prerequisite for the elimination of an association of co-owners of a multi-apartment building are governed by the norms of the Law of Ukraine No. 2866-III of 29 November 2001 “On the association of co-owners of a multi- apartment building” (hereinafter referred to as the Law), wherever it is not contrary to the Constitution of the Donetsk People’s Republic.

Thus, according to Article 1 of the Law, the association of co-owners of a multi-apartment building is a non-profit legal entity created by apartment owners and / or non-residential premises of a multi-apartment building for the joint use of their common property, maintenance and use of indivisible and common property.

The main activity of the association of co-owners of a multi-apartment building is aimed at performing functions that ensure the realization of the rights of owners of premises to own and use common property of the members of the association, the proper maintenance of the house and adjoining territory, assistance to the members of the association in obtaining housing and communal services and other services of the proper quality for reasonable prices and fulfilment of their obligations related to the activities of the association.

In order to create the association of co-owners of a multi-apartment building, an owner of the house or an initiative group (which must consist of at least three owners of apartments and / or non-residential premises) convene a constituent assembly.

At the same time, all owners of residential and non-residential premises of the house must be notified of the meeting no later than 14 days without fail. The specified notification must be drawn up in writing and handed over to the owners against signature or sent by registered mail.

A chairman is elected by a majority of votes at the meeting, for whom at least 2/3 of all present must vote. It is important to note that this meeting will be eligible if more than 50% of the owners of apartments and non-residential premises in the house are present. In the absence of the required number of citizens present at the meeting, it is postponed to another date and time, but not earlier than after 14 calendar days.

If at the constituent assembly a decision is made to create an association, then all who wish (since joining an association is voluntary), the owners of apartments and / or non-residential premises, become its members. It is possible to join the association later by writing a statement for this to the chairman of the above organization.

The association is considered to be created from the moment the certificate of state registration is issued.

Also, members of the association adopt a Charter that corresponds to the Model Agreement, which is approved by the central executive authority, which ensures the formation of state housing policy and policy in the field of housing and communal services.

The charter should specify the following:

  1. name and location of the association;
  2. the purpose of creation, tasks and subject of activity of the association;
  3. a list of property in common joint ownership (indivisible property), rights and obligations of members of the association against it;
  4. a list of property that is in partial joint ownership (common property), the rights and obligations of members of the association against it;
  5. the procedure for calling and holding general meetings;
  6. frequency of meetings;
  7. the procedure for voting and decision-making at meetings;
  8. rights and obligations of members of the association;
  9. the procedure for accepting the estimates, creating and using the funds of the association, the payment procedure of common costs;
  10. grounds and procedure for the elimination, reorganization of the association and the solution of related property issues.

Any other provisions may be spelled out in the Charter if they are essential for the existence of the association.

However, it should be noted that the supreme governing body in the association is not the elected chairman, but the general meeting, the decision of which may be appealed only in court.

The exclusive competence of the general meeting, in particular, includes:

– using of objects in joint proper, including their lend-lease;

– approval of estimates, balance sheets and annual report of the association of co-owners of a multi-apartment building;

– determination of contribution levels and amount of payments of the members of the association of co-owners of a multi-apartment building;

– determination of the size of material and other incentives for members of the association of co-owners of a multi-apartment building and the management;

– making decisions on the reconstruction and renovation of the house.

The general meeting elects the management, which is endowed with the following functions:

– control over the timely payment of contributions and payments by members of the association of co-owners of a multi-apartment building;

– estimation of costs, balance sheets and annual reports of the association of co-owners of a multi-apartment building;

– commitment of funds of the association of co-owners of a multi-apartment building in accordance with the estimate;

– conclusion of contracts with business entities performing work and providing services;

– maintaining office work, accounting and reporting on the activities of the association of co-owners of a multi-apartment building.

In addition, the owners of an apartment and / or non-residential premises – members of condominiums have the right to:

  • take part in the management of the association of co-owners of a multi-apartment building;
  • elect and be elected to the statutory bodies of the association of co-owners of a multi-apartment building;
  • get acquainted with the protocols of the general meetings, make extracts from them;
  • receive information on the activities of the association of co-owners of a multi-apartment building in the prescribed manner;
  • demand the protection of their rights and the observance of good-neighbourliness by the members of the association of co-owners of a multi-apartment building;
  • leave the association of co-owners of a multi-apartment building in accordance with the procedure established in the Charter;
  • request documents and all financial statements for review;
  • have a dispute on the realization of the rights of the owners that is solved by mutual consent or in court.

The use and disposal of funds by the association of co-owners of a multi-apartment building is carried out in accordance with the charter and the approved estimate.

The annual estimate of income and expenses for the next financial year is drawn up by the board of the association of co-owners of a multi-apartment building until 25 December of the current year (clause 7.1 of the Model Agreement).

The estimate of the association of co-owners of a multi-apartment building should include the following items of expenditure:

– running costs;

– expenses for payment of utilities and other services;

– expenses for home renovation;

– other expenses.

Estimation of costs is approved at the next general meeting of members of the association of co-owners of a multi-apartment building.

In addition, in accordance with Article 21 of the Law, in order to repair the property of the association of co-owners of a multi-apartment building and urgently eliminate losses resulting from accidents or unforeseen circumstances, regeneration or reserve funds of the association of co-owners of a multi-apartment building are created without fail. The assets of these funds are used exclusively for their intended purpose.

Also, by decision of the General Meeting, special funds may be created, the expenses of which are carried out for the purposes stipulated by the Charter.

There is a certain procedure for creating such funds. They are created to carry out activities associated with a significant expenditure of funds, namely:

– equipping a house with means of metering and regulating thermal energy, cold and hot water, introducing energy-saving technologies;

– equipping entrances with places for security;

– carrying out work on the improvement of in-house engineering systems;

– major maintenance of the house;

– other events determined by the general meeting.

Particular attention should be paid to Article 22 of the Law, which deals with the procedure for paying utility bills by members of condominiums. Payment can be made in two ways:

1) Participants of the association of co-owners of a multi-apartment building have the opportunity to pay for utility bills by transferring funds directly to the accounts of enterprises, organizations that provide these services, in accordance with the established tariffs for each type of service in the manner prescribed by law.

2) The funds that are paid by the owners of apartments and non-residential premises for the services that are provided may, according to concluded agreements, be transferred to the account of the association of co-owners of a multi-apartment building for accumulation and subsequent recalculation to enterprises, organizations that provide these services.

Also, in the absence of the technical capability of apartment-based metering of consumption of water, heat, gas, electricity and other services, the manager is obliged to install general house metering devices at the expense of the asset holders.

Thus, it is important to note that, according to the aforementioned Law, if the functions of managing the house are transferred to the manager by the decision of the general meeting of the association of co-owners of a multi-apartment building, the management relations are governed by an agreement concluded between the association of co-owners of a multi-apartment building and the manager, the terms of which must comply with the terms of the Model Agreement.

However, if the latter does not actually fulfil its duties, then the association of co-owners of a multi-apartment building has the right to:

 – initiate termination of the contract;

 – make claims regarding the poor quality of services.

It should be noted that the Model Agreement provides for the possibility of making claims regarding the low quality of services only on the basis of the appeal of a certain (established in the agreement) number of residents and owners of individual premises of the house who do not live in it. The general meeting of the association of co-owners of a multi-apartment building, that is, the supreme body of its management, has the right to make a decision both on the conclusion of an agreement with a specific manager, and on the termination of such an agreement. If the general meeting made a decision to terminate the contract with the manager, then the manager must be notified of the upcoming termination of the contract within a month.

Also, on the basis of Article 28 of the Law, the association of co-owners of a multi-apartment building can be eliminated in the case of:

– physical destruction or destruction of the housing complex, as a result of which its restoration or repair is impossible;

– alienation of a residential complex by a court decision;

– acquisition by one person of the entire housing complex;

– make a decision on elimination by members of the association of co-owners of a multi-apartment building;

– a court decision to eliminate the association of co-owners of a multi-apartment building.

Elimination of the association of co-owners of a multi-apartment building is carried out by a liquidation commission appointed by the general meeting. The liquidation commission publishes an announcement on the termination of the activities of the association of co-owners of a multi-apartment building with an indication of the terms for the submission of their claims by creditors, makes calculations with debtors and creditors, draws up a liquidation balance and submits it to the general meeting of the members of the association of co-owners of a multi-apartment building.

It is very important that after the liquidation of the association of co-owners of a multi-apartment building, the funds that remained after the satisfaction of creditors’ claims are distributed among all owners of apartments and non-residential premises in proportion to the aggregate amount of their contributions and mandatory payments for the maintenance and repair of indivisible property, the corresponding part of the common property, as well as for other joint expenses in an apartment building.

The association of co-owners of a multi-apartment building, no earlier than two months from the date of publication of the announcement of the liquidation, must be submitted to the state registration authority the corresponding package of documents.

In addition, we explain that disputes over the exercise of the rights of co-owners (the association of co-owners of a multi-apartment building), as well as controversial issues regarding the content of a specific agreement, are resolved by mutual consent or in court.