Municipality wakes up 'dormant' VvE

It remains a recurring phenomenon: the so-called "sleeping" Owners' Association (hereafter: "VvE") that is guilty of overdue maintenance of the apartment building. The maintenance of apartment buildings is a matter for the VvE itself. This means that, in principle, the owners themselves may decide whether and how to carry out maintenance. However, apartment owners who neglect their maintenance obligations should be aware that the municipality may intervene. In extreme cases, this can lead to enforcement. A recent ruling by the Administrative Law Division of the Council of State (hereinafter the "Division") on February 13 (ECLI:NL:RVS:2019:437) is a good example of this.

In this blog, I briefly discuss what municipalities can do to interfere with the maintenance obligation of CoEs.

Overdue maintenance by 'dormant' CoEs

In particular, it is the so-called "dormant" CoEs that are guilty of overdue maintenance of apartment buildings. Often these are small inactive BoEs with less than five apartment rights. These small BoEs typically do not hold annual meetings and do not make maintenance plans, let alone establish a reserve fund. Problems then arise when maintenance is actually needed. This can even lead to such overdue maintenance that a situation arises that violates the Housing Act and forces municipalities to intervene administratively. However, municipalities can also take preventive action.

Preventive measures municipality

Since July 1, 2011, municipalities have been granted additional legal powers to activate dormant CoEs. These are the following five powers:

1. The municipality may request a substitute authorization from the subdistrict court if one or more apartment owners refuse to cooperate in, or authorize, management or maintenance actions. At least half of the number of votes in the meeting of owners must support this action.

2. The municipality may convene a meeting of owners and gain access to the meeting of owners with the authorization of the cantonal judge. At the meeting, the municipality can make proposals regarding the management and maintenance of the apartment building. However, the municipality does not have the right to vote, so the owners decide for themselves.

3. With a substitute authorization from the district judge, the municipality may proceed to amend the subdivision deed to include arrangements for the management and maintenance of the apartment building. Again, at least half of the number of votes will have to support this amendment.

4. The municipality may impose an obligation on the VvE to have a maintenance plan drawn up by an expert. The municipality can make use of this power only if the municipality has convened the apartment owners in an owners' meeting and the VvE has not drawn up a maintenance plan within three months.

5. The municipality may oblige the VvE to take measures by which the condition of the apartment building will again comply with the Housing Act. The municipality can only impose such a maintenance obligation if it is necessary in the (justified) opinion of the municipality.

The aforementioned powers have a preventive character and can be used by the municipality if a situation that violates the Housing Act 'threatens' to arise. These powers are intended to keep 'sleeping' VvEs awake and force them to carry out overdue maintenance.

Administrative enforcement: repair costs to be borne by VvE

The February 13 Division ruling cited above illustrates that a municipality can take enforcement action in addition to preventive measures. The case involved the following. A VvE neglected its maintenance obligation, causing the apartment building to be in such poor condition that it was in violation of the Housing Act. The municipality of Rotterdam repeatedly ordered the VvE to make repairs to the apartment building, but the VvE repeatedly failed to comply. Subsequently, the municipality of Rotterdam itself engaged a contractor who carried out the repairs. The costs were recovered from the VvE by means of an administrative order.

Conclusion

In short, overdue maintenance by dormant VvEs can lead to unpleasant financial surprises for the apartment owners of those VvEs. The municipality will use its preventive powers to try to keep dormant condominium associations 'awake', whereby, in extreme cases, it will shake condominium associations awake by imposing administrative sanctions. My advice: apartment owners should realize that it is essential to properly maintain the apartment building of which they are joint owners and make clear agreements about this with the other apartment owners in the VvE.