In a block of flats, residents are responsible not only for their own flat, but also for the management of the shared areas of the building. It is a fundamental right of the residents to choose between the different forms of management of their apartment building. The choice of the form of management of the building usually depends on the mutual agreement between the owners of the flats or other premises themselves, the type of building and other factors.
Residents can choose to have their apartment building managed by a multi-apartment building maintenance company, register a joint-activity agreement or create a building society.
What services can residents expect from the administrator of their apartment building? What is the difference between maintaining a block of flats and having a housing community take care of the house? What is the principle of the management of a joint operating agreement? Giedrius Eidimtas, Head of Civinity Lithuania, answered these and other actual questions.
Why choose a multi-apartment building administrator?
In order to make the management process of an apartment building smoother and to reduce the hassle for apartment owners, the maintenance of the building is assigned to an apartment building management company, and the selected administrator is appointed by the municipal administration. If no administrator is chosen by the owners, the municipality decides on the appointment of the administrator.
It is important to understand first of all that the administrator is impartial. The needs and rights, concerns and wishes of all the occupants of an apartment building are equally important and relevant to the administrator. There are many situations in the care of the common property where an impartial mentor is very useful and necessary to help the co-owners to reach an agreement amongst themselves.
If residents wish to change the administrator of an apartment building, at least ¼ of the apartment owners must apply in written form to the municipal administration, which organises the procedures for changing the administrator. The apartment owners vote on the replacement of the administrator. If a majority of 50% + 1 of the votes of the apartment owners is obtained, the administrator shall be replaced.
What services does the building manager provide?
The services provided by the administrator are related to the management of the whole building and its environment. The administrator responds 24/7 to emergencies and localizes them immediately, communicates regularly with the residents about the condition of the building, organizes meetings and voting of the owners of the apartments – premises on all issues related to the management of the common property of the building, solves problems that arise, and implements the residents’ wishes related to the improvement of the living environment.
The administrator of a multi-apartment building shall regularly assess the condition of the building, carry out a comprehensive assessment of the condition of the whole building twice a year, and draw up annual and long-term maintenance plans for the multi-apartment building. The findings and plans are communicated to the occupants and the renovation and repair works that need to be carried out immediately in order to preserve the common property, improve the quality of life and ensure the safety of the occupants themselves are discussed. The first step shall be to carry out the works approved by the residents as a matter of first necessity, e.g. repair or replacement of the roof, filling of facade seams, renewal of the plumbing or sewage systems.
An important service provided by the administrator is the correct allocation of the costs for the maintenance of the apartment building or, in other words, the correct distribution to the residents of the costs that have been allocated for the maintenance of the building. Any renovation or repair of the common areas is a cost for all property owners, and is therefore shared by the building manager in proportion to the area of the property owned and reported to the residents.
These are the most important functions of the administrator. But alongside them, the administrator also carries out a wide range of day-to-day tasks, providing services for the convenience of the residents, such as the renovation of the apartment building, decisions on the renewal of the building’s heating systems or the declaration of the residents’ electricity meter readings for them.
Why choose a JAA (Joint Activity Agreement)?
The residents of any apartment building who want to maintain the building on their own can conclude a joint activity agreement. This form of management must be approved by a majority of 50% + 1 of the owners of the apartments – premises in the apartment building. One or more JAA authorised person is elected from the owners of an apartment – premises in the apartment block. The JAA must be registered in the Real Estate Register of the Centre of Registers.
The authorised person represents the interests of the owners of the apartment building and decides whether the building will be maintained by the residents themselves or whether they will sign a contract with administration and maintenance service provider to the building.
In many cases, the authorised person of the JAA calls on the assistance of a multi-apartment building management company to ensure the quality of the maintenance of the building. By signing a contract with the administrator of the apartment building, the JAA representative can agree on the scope and price of the work to be carried out. After signing the contract, the building manager becomes responsible for the condition of the common areas of the apartment building, for the works carried out and for the financial accounting, so that these works no longer need to be carried out by the JAA representative.
Before signing a JAA contract, the purpose of the contract must be stated and the powers of the authorised person decided upon in relation to the implementation of the ownership right.
If the person authorised by the JAA decides to carry out the maintenance of the building independently, he/she is obliged to carry out the organisation of the maintenance of the apartment building and the preparation, documentation and management of the maintenance documents. Maintain and preserve the technical and legal documentation of the building and the land assigned to it. Drawing up an annual and long-term plan for the renovation of the common facilities and submitting it to the meeting of the owners of the premises. Keeping the accounting records. Submitting an annual report on its activities and an annual set of financial statements to the owners of the premises at the end of the calendar year, no later than 3 months after the end of the year. To conclude contracts and other transactions on behalf of the owners of the premises and to issue invitations to tender for works. The conclusion of a contract with an auditing firm once the decision of the Contracting Parties to carry out a financial audit has been taken and the submission of documents to the auditor. Ensuring control over the fulfilment by the owners of the premises of the building of their obligations relating to the maintenance and use of the common facilities.
Who controls the management of the JAA representatives?
It is important to understand that other unit owners in the apartment building can supervise the actions of the JAA authorised person. If the JAA representative abuses his/her position as manager, the residents of the building must contact the municipal administration, which supervises and controls the managers.
If the JAA representative has signed a contract with a company providing management and maintenance services and considers that the manager is not performing the functions as intended, the JAA representative must take the matter to the consumer rights or the court. It may also terminate the contract with the service provider.
If the decision to terminate the contract with the service provider or to change the form of management of an apartment building is taken, a majority of 50% + 1 of the apartment owners must approve it in a vote.
What are the advantages of a building community?
Setting up a building community requires a steering group of 3-5 people. The initiators of the community convene a meeting of the residents of the building to decide and approve the statutes of the community, elect a chairman, an accountant or an accountancy firm, a board of directors (at least three persons) and an auditor who will take care of the apartment building. The chairman of the community does not have to be the owner of the apartment – premises in the apartment building.
The chairman and the accountant are paid a salary when the community is set up. Experience shows that this comes at a considerable cost to residents. Of course, every situation is different, but practice shows that, from a purely economic point of view, a housing community is not a cheaper form of house management than an administrator of an apartment building.
The statutes of a multi-apartment community must be approved by a notary and the community must be registered in the Register of Legal Entities. Once all these requirements have been fulfilled, the housing community assumes full responsibility for the care of the common areas of the building, its condition, financial accounting and the organisation of works.
However, it is often the case that, once the building community has been established, the maintenance of the apartment building is taken care of by a company providing administration and maintenance services, as the administrator has qualified professionals and is in regular contact with different service providers.
In recent years, a new trend has emerged: residents who have chosen to manage their building on a community or joint-ownership basis are increasingly turning to the administrator to provide specific services. These include not only building maintenance services, emergency localization, but also accounting services and even the role of house chairman.
Civinity Namai, a Civinity Group company with many years of experience in the maintenance and management of apartment buildings, recommends that residents actively participate in meetings to decide on the maintenance of the apartment building, regardless of the form in which the residents’ property is managed. Active residents who take care of their property make an effort to be better not only the administrator of the apartment building, but also the JAA representative or the chairman of the community.