Owners' Association in a New Building: First Steps and Management

An owners' association in a new building usually comes into being only after the developer has transferred the first units to buyers and the building has been formally divided into flats. Until then, the building is managed by the developer or by a company the developer has appointed. The most important first steps are to convene the founding meeting, elect a committee or chair, approve the articles of association and choose a manager. Always check the specific terms with a lawyer.

When and how the association is formed

The association consists of all the unit owners in the building. It generally arises at the moment when several units have been defined in the building and at least one of them has been sold to an owner other than the developer. The owner's declaration, by which the developer divided the building into units, is the basic document everything is based on: it determines what counts as a flat, what counts as a common part of the building and what share each owner holds.

Before buying, read the owner's declaration and the draft articles of association, ideally with a lawyer. In the buying guide you will find which documents to focus on when buying a new flat. If any provision does not suit you, it is better to deal with it before signing the contract than after moving in.

The first owners' meeting

The first assembly is usually convened by the developer. In practice, several key matters are decided at it:

• approval or amendment of the articles of association,
• election of the committee or chair,
• choice of a building manager, or a decision on self-management,
• the amount of advance payments for building management and for the repair fund,
• insurance of the building and the common parts,
• how owners communicate and vote.

Bear in mind that the meeting is often held at a time when some of the flats still belong to the developer. The developer may then hold a significant share of the votes. Find out in advance how the voting rules are set, and do not let important decisions be put off until later.

The committee, the chair and the manager

The statutory body of the association is the committee or, in smaller buildings, the chair. It is responsible for the running of the association, convenes the assembly, keeps the documentation and acts on behalf of the owners. The role is time-consuming and carries responsibility, so it pays to elect someone reliable and to consider reasonable remuneration.

Most owners use a professional manager. The manager handles the accounts, the billing of services, minor repairs, inspections and communication with suppliers. When choosing, compare:

• the scope of services in the contract and what is charged separately,
• references from similar new buildings,
• how the contract can be terminated and the length of the notice period,
• whether the manager has any link to the developer,
• how often, and in what form, the manager reports to the owners.

If the developer chose the manager before the first assembly, you do not have to accept that contract automatically. The owners decide how things proceed.

The association's money

The association is funded by regular advance payments from the owners. The advances are usually divided into a part for services connected with living in the building (water, heating, lift, cleaning, lighting) and a part for building management, including the repair fund. The specific amount is set by the assembly and governed by the articles of association, which is why we do not state it in this article.

For your own budget, it is important to include the advances in your monthly housing costs. Try modelling them together with your mortgage repayment in the calculator, and consult a mortgage specialist about the impact on your loan. When assessing an application, banks may ask about the monthly costs associated with the flat.

• The repair fund should have clear rules on how it may be used.
• Advances are reconciled regularly, most often annually.
• The association's accounts must be available to owners on request.

Warranty defects and taking over the common parts

In a new building, the handover of the common areas from the developer is particularly important. Corridors, the roof, the technical room, the lift, the façade or the cellars may have defects that need to be claimed within the warranty period. The association should:

1. take over the common parts according to the handover protocol,
2. have their condition checked, ideally by an independent technician,
3. report defects to the developer in writing and keep track of the deadlines,
4. keep the design documentation, inspection records and instructions for the equipment.

Warranty periods and the claims procedure differ depending on the contract and the type of defect. Consult a lawyer about any uncertainties. When choosing a new flat, it is worth finding out how the developer approaches warranty repairs. You will find an overview in the developer catalogue and the range of buildings in the project catalogue.

What to watch out for

• Do not underestimate the first meeting; it sets the arrangements for many years.
• Ask for written minutes and resolutions.
• Have it explained who pays for energy in the common areas until all the flats are sold.
• Depending on the location and type of building, other costs may differ, for example for parking or shared facilities. The overview of locations offers a comparison.
• If you are looking for a flat and want advice on choosing, you can use the housing enquiry.

Frequently asked questions

Do I have to be a member of the association?

Yes, the owner of a unit is automatically a member of the association and cannot renounce membership. It arises together with ownership of the flat.

Can the developer influence decision-making?

As long as the developer owns some of the units, it has voting weight corresponding to its shares. It is therefore advisable to know the voting rules in the articles of association and the owner's declaration and, if necessary, to turn to a lawyer.

When is it appropriate to change the manager?

When the services do not match the contract, the billing is not transparent or the same problems keep recurring. Discuss the change at the assembly and check the termination conditions in the contract.