Owner Partnership

Partnership of owners in a unit of apartments
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Written by Richard Gürlich
of GÜRLICH & Co.

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Partnership of owners of units

The law on the ownership of flats explicitly stipulates that a partnership is a legal entity with legal identity. The legal identity is limited to activities connected with administration, operation and repairs of the common parts of the house.

It is advisable to point out that it does not refer to administration, operation and repairs of the individual units in the house because that is the matter of each respective owner of a unit. Legally the partnership may acquire the goods, rights, other property issues of value, flats or non-residential areas. The partnership is obliged to keep accounts.

Extent of the competence of the partnership of owners

The partnership is entitled to act in order to secure deliveries of services connected with the use of units, insurance of the house and lease( in the case of a lease of common parts of a house) and further to lease the units in co-ownership with all the owners of units.

Services connected with use of the units include delivery of energy, water, etc. The partnership is entitled to decide about the distribution of costs for services to individual owners of units and simultaneously is entitled, in its own name, to recover fulfilment of obligations imposed upon the owners of units.

The owners of units guarantee the obligations in a proportion that corresponds to the size of the co-ownership shares within the common parts of house. All the owners of units are guarantors and, on the basis of written demand by a creditor, are obliged to fulfil the debt of the partnership.

The origin of partnership of owners of units

The partnership is specifically defined in law. It should refer to a house where at least 5 units are defined and, at the same time, three of the units have to be owned by different owners.

The partnership starts upon the delivery of a deed, with a clause about the designation of entry into cadastre of real estates, or another document by which the cadastre office verifies the ownership of unit and the relationship to the previous owners. In practice it refers to the contract between the owner of a unit who has defined units in house and a new owner – the purchaser.

The units within the house are defined by a statement of the owner. The exception is applied where a housing cooperative is established that functions as an administrator of the house. The partnership then commences on the first day of calendar month after the month in which the documents, proving that co-ownership share on common parts of house has been lowered to less than one fourth, be delivered to the cooperative.

Bodies of the partnership

The law also stipulates the composition of the partnership – general meeting of the owners of the units, the committee of the partnership or such owner of units entitled to perform function of the committee in the event that no committee is elected.

General Meeting

The general meeting is the highest authority of the partnership. The law stipulates the obligation of completion of the first meeting, namely within 60 days after the commencement of the partnership. Non-fulfilment of this does not attract sanctions. The first general meeting is set up by the original owners of the building and they approve the statutes of the partnership and the bodies of the partnership are elected, i.e. mainly the committee and ultimate owners.

The first general meeting may take place with a notary present, who will prepare the notary records; consisting of the running of meetings, election and composition of the partnership bodies as well as approval of the statutes.

The approved statutes of the partnership have to include; the office of the partnership and its designation (ie details about the house and the reasons for the partnership) and it should contain the word “partnership”. The  subject matter of the activities, relating to the  administration of the house, bodies of the partnership, their rights and duties and method of agreement, the  rights and duties of the members of the partnership, method of payment of costs connected with the house administration and the handling of the partnership property must all be included.

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Should the statutes not be approved by the general meeting, the law reverts to model rules.

General Meeting can pass a resolution based upon a majority decision of the members.

The size of the co-ownership shares decides the amount of votes the members have. The law also stipulates that a qualified majority is also necessary for the adoption of a resolution about significant matters of the Partnership. A unanimous vote is required to change the purpose of use of construction and change of construction.

Committee

The committee, ultimately the owner, is the executive body, i.e. the statutory body. According to the law, the minimum number of committee members is equal to 3 members. The life of the committee is determined by statute, but it must not exceed 5 years. The committee decides upon matters connected with the house administration, provided such decisions are not delegated to the general meeting.

Entry of the partnership into register of partnerships of owners of units

The partnership is recorded in the register of partnerships of the owners with the regional Courts. The only significance of this is as a declaration.

The proposal is submitted by the person being recorded in the register, thus the partnership.

An extract from cadastre of real estates for house with flats and non-residential areas must be attached to the proposal together with; a notary record about the running of the first general meeting (during which the statutes of the partnership have been approved and the partnership bodies have been elected, including a document verifying the presence of owners of units at this meeting and the approved statutes of the partnership).

Furthermore, the partnership is obliged to submit the application for registration to a regionally competent tax administrator within 30 days of the day when the incomes levied by tax have started to be received or when the obligation for deduction of tax or tax advance payment has originated.

Membership of partnership of owners of units

The membership of partnership is connected to the ownership right of the unit and therefore originates and becomes extinct together with transfer or assignment of the ownership of the unit. Provided the unit has the co-owners, then such co-owners are joint members of the partnership.


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