Community of owners

What the community of owners is

When a building or a district is divided into separately owned units, the owners of those units form a community of owners by law. In Spain it is the comunidad de propietarios; Lithuania and most other European countries have an equivalent body under a different name. Nobody joins it by choice and nobody leaves it while they own a unit.

Each unit carries a participation quota, fixed in the deed of division of the building and expressed as a share of the whole. The quota decides how much of the common cost the unit pays and how much weight its vote carries. It is derived from the size and the position of the unit, and it does not change when the flat is sold.

The community elects a president from among the owners. Districts of any size also appoint a professional administrator, who keeps the accounts, issues the bills and prepares the meetings. The administrator is engaged by the community and answers to it, not to the developer or to any single owner.

What the monthly charge pays for

The charge is not a service bought from the developer: it is the community's own budget for the year, approved by the owners and divided between the units by quota. In a district with a pool, lifts and planted grounds it usually covers:

• cleaning and lighting of entrances, stairs, corridors and the car park;
• lift maintenance and the statutory inspections that go with it;
• the pool: water treatment, cleaning, supervision where local rules require it;
• the grounds: irrigation, planting, pruning and the gardening contract;
• electricity and water drawn by the common areas;
• building insurance, the administrator's fee, bank and legal costs;
• the contribution to the reserve fund.

Two things move the figure more than anything else: how much equipment there is to keep running, and how many units share the bill. A heated pool, several lifts and mature planting cost more than a staircase and a bin store, and the same installations divided between fewer flats raise the charge on each one. Ask for the budget approved for the year, not an average, and whether the pool runs in winter.

Bills that are not community business reach the owner directly: power, water on individual meters, internet, the refuse fee and property tax.

Decisions at the owners' meeting

The community meets at least once a year. That meeting approves the accounts for the year that has ended, sets the budget and the charge for the year ahead, elects the president and decides on repairs and improvements. Extraordinary meetings can be called in between by the president or by a group of owners.

How much support a decision needs depends on what it is. Routine matters are carried by a majority; work that touches the structure of the building or adds a service that was not there before needs a wider majority; and a few matters need every owner to agree. The thresholds are set by national law and they differ, so ask the administrator which majority applies to the decision in front of you.

An owner may attend in person or send someone with a written proxy. The minutes are circulated afterwards and bind every owner, including those who stayed away. An owner in arrears can usually still attend but loses the vote. If you are buying, read the minutes of the last few meetings: they show the planned works, the disputes, the state of the lift and whether the charge is about to rise.

Arrears, the debt certificate and the reserve fund

Unpaid charges attach to the flat as well as to the person who ran them up, to an extent set in law. Before completion, ask the administrator for a certificate of the current debt position on the unit. The seller is normally required to produce it at the deed, and a buyer can only do without it by waiving it expressly. Ask your notary to keep it on the file.

The reserve fund is a pot the community must maintain, funded as a share of the annual budget and held for repairs and maintenance of the common elements. What interests a buyer is what stands in it against what is coming: a lift due for replacement, a flat roof at the end of its life. A community with a healthy fund replaces a pump without a levy; one with an empty fund bills every owner, and whoever holds the flat then pays.

Ask two further questions: how many units in the district are behind with their charges, and whether the community is in court with any of them.

From developer to community in a new district

In a new district the developer starts as the owner of every unit, and therefore as the whole community. As flats are sold the developer's quota shrinks, and at a constitutive meeting the owners approve the first budget, elect a president and appoint the administrator they want.

SAVO sets up the community in its own districts, places the first maintenance contracts for lifts, pumps and irrigation, and hands the papers over to the administrator the owners choose: the deed of division, the as-built drawings, the equipment manuals and the running contracts. A buyer in a district at that stage should ask who the administrator is, what budget was approved, and when the next meeting falls.