What are the pros and cons of an HOA?

You can find out how to create a partnership, in particular in an apartment building, register it with the tax authorities, enter into service agreements with the owners, as well as how to become a member of the partnership on our website. A sample application for joining this organization is available.

Description of HOA opportunities

The purpose of creating a legal entity is to give apartment owners the right to participate in the management process of apartment buildings. In addition to residents, economic entities can be participants in the partnership. The association of owners has the opportunity to use the following objects in its work:

elevator cabins and shafts;
corridors, staircases;
non-residential part of the apartment building: basements, attics;
other load-bearing and limiting structures;
electrical appliances, plumbing equipment, and other devices located in the common area of the house;
local area.

Charter

The main document of the association of apartment owners in an apartment building is the Charter. To adopt it, you will need to organize a meeting of the owners of residential premises. The official paper must contain the following provisions:

details of the legal entity being created;
tasks of an economic entity (management of a residential building);
types of permitted work;
belonging to the partnership of non-residential parts of the house;
the members of the board and the chairman of the HOA are indicated;
responsibilities of the chairman and other founders;
powers and obligations of participants, audit team;
liquidation procedure, etc.

The Charter is adopted by a majority vote. Owners of real estate that disagree can put their claims in writing.

During the meeting, it is necessary to keep minutes, which subsequently, together with the Charter and other necessary documents, are transferred to the fiscal authority for registration of the legal entity.

Founders

The advantages of this form of partnership include the fact that the owners of real estate who have joined the HOA are the founders. But only the governing structure of the legal entity is included in the charter and other documentation for registration. This need is dictated by a large number of property owners in MKD. The founders are the owners of the residential premises in the house. They, like other residents, are interested in the quality management of apartment buildings.

Another advantage for members of the management board of a partnership is withdrawal from the governing body. To do this you need to write applications. The consent of the other founders is not required.

Among the disadvantages of changes in the composition of the founders, the fact that this fact will need to be registered with the fiscal authority stands out. The founders are included in the Unified State Register of Legal Entities.

Register of HOA members

This documentation contains a list of the members of the partnership. The register will also need to indicate contact information, using which you can find each member of the HOA. The advantage of the register is the data that allows you to determine the percentage of common property owned by each member of the partnership.

The register contains the following data:

details of the partnership (name, address, TIN);
date of registration;
list of houses included in the HOA.

Responsibility

The management of the partnership is obliged to ensure:

organizing and carrying out repairs and cleaning of local areas;
ensuring cleanliness in the entrances;
efficient use of space related to the property of the house;
operation of facilities owned by a legal entity;
providing the home with quality utilities.

For property owners, these types of association obligations are a plus.

Decision making in a partnership

To eliminate the problems of an apartment building, board members must call together as many residents as possible. At meetings, decisions regarding the management of the property are made by a large number of votes.

Issues affecting the management of the house cannot be decided without the participation of the other owners of the living space in the apartment building. This fact is a disadvantage for the founders of a legal entity.

The advantage of the decision-making procedure is the possibility of meeting in person and in absentia. Absentee voting refers to the use of a written voting method. The initiator will need to notify all property owners in the house. The message must contain information about the purpose of the meeting of owners, its place, date and time. Before the meeting, the initiators will need to prepare an agenda. It should contain issues that need to be resolved at the meeting.

Each meeting must be recorded. The official paper is endorsed by the chairman, secretary and initiator. Citizens who were unable to attend the meeting must be notified of the decisions made within 10 days. This fact can be called a plus.

Procedure for reporting to residents

Based on current legislative norms, the owners who are part of the management must periodically submit a report to the other participants of the partnership.

The frequency of the report is determined by the provisions of the statutory documentation. For example, a report by the chairman of the HOA for the year on the financial condition, costs, work performed, funds spent on repairs, etc. An advantage for the members of the association is that the board is obliged to report on the first request.

How to change the management company for a HOA in 2021?

Before deciding how to move from a management company to an HOA, you need to understand that an HOA is a high organization of owners, therefore, in order to make the transition to another form of management, the residents of the house must mature.

If there is no council in the house and the owners are not accustomed to self-organizing, holding meetings, taking care of the house, then the creation and functioning of the HOA may end in failure.

To make the transition from a management company to a HOA, it is necessary that 50% of the owners (or higher) vote for the creation of an HOA, and also become members of the HOA. Then this form of management is considered legitimate and working.

The remaining persons who have not joined the HOA must comply with all the rules and carry out the will of the majority. Experts strongly recommend becoming a member, because in this way you can influence the decisions of the general meeting of owners.

So, we will consider below how to abandon the management company and create an HOA:

Step 1. Analyze what the management company didn’t like

If the residents’ money is spent for unknown reasons, the management company does not provide reports on the work done, or the residents of the building are dissatisfied with its work, then they have the right to change the form of government to an HOA, but they need reasons for this.

There are two ways to change the management company of an HOA:

Upon expiration of the contract with the management company. If neither party has expressed a desire to terminate the contract, then it is renewed automatically. Therefore, if residents want to change the management company, then they must send a written notice to the management company about the termination of the contract due to its expiration.
In advance. This can be done by agreement of the parties or in court (but in order to go to court there must be evidence that the management company is not working well: it does not repair roofs, does not change pipes in basements, does not maintain temperature conditions in apartments, etc.).

Step 2. Formation of the HOA initiative group

If the residents of the building have decided that their building will switch to a new form of HOA governance, then they assemble an initiative group of several owners of apartments in the building, who find evidence and documents confirming the need to change the management company. These should be documents such as: certificates of work performed, service agreements, etc.

Step 3. Convening a meeting of owners of an apartment building

In order to change the management company, residents must terminate the service agreement with it. Such a decision is made at a general meeting of all owners or a majority (at least 50%).

If the issue of changing the management company is supported by more than 50% of all owners, then the decision is made regardless of whether the remaining 50% of citizens like it or not. If a decision to change the Criminal Code is made, then within 10 calendar days a copy of the protocol must be posted in a place publicly accessible to people.

The management company must be notified of the residents' decision within 5 days from the date of the meeting. Within 30 days of the Criminal Code, she is obliged to transfer to the HOA all the necessary documentation related to the maintenance of the house. In case of loss of any documents, the management company is obliged to restore them within 3 months and transfer them to the HOA.

Step 4. Selecting the chairman of the HOA board

In order for the new form of management of the house to begin to work, the initiative group for the house must initiate a meeting at which to invite residents to consider the candidacies of those persons who apply for the role of chairman of the board.

The selection of one or another candidate takes place through open voting and further drawing up of a protocol . The elected chairman must receive from the management company all documentation for the house, equipment belonging to the house, technical means, keys to all common areas, a register of all apartment owners, etc.

Homeowners association functions

The powers and obligations of the association of owners are determined by the norms of housing legislation and the statutory documentation of the legal entity:

Registration of contractual relations with contractors. For example, concluding an energy supply agreement, cleaning the house, etc. This fact can be a plus if you choose a reliable service provider.
Control over the work of contractors providing any service to property owners. The advantage is that control is exercised by residents.
Monitor compliance with maintenance and operation requirements for residential buildings.
Making decisions about renovation work in the house. This can be a disadvantage if an incompetent citizen is chosen as chairman.
Respond to and comply with requests from residents of the house. For example, to an application to the HOA about leaks. If professionals are hired to carry out the work, then this function is one of the advantages of the association.
Approve and implement the project for the improvement of the apartment building and the adjacent area. If an incompetent person is chosen to be responsible for the acceptance and execution of the document, then the work will be performed poorly. This fact can be a disadvantage.
Monitor compliance with sanitary requirements for waste removal and cleanliness of the area near containers. Due to the fact that this can not always be done, this function can be classified as a disadvantage.
Arrange a parking lot and a playground for residents of the apartment building. It is worth choosing reliable contractors so as not to earn a minus in the evaluation of the work.
Issuance of necessary receipts and certificates to apartment owners.
Other obligations provided for by the provisions of the Charter.

Advantages

With correct calculations of funds, knowledge of housing laws and all utility nuances, there can be a lot of advantages from the work of an HOA:

Each owner can take part in the management of the partnership and express his opinion.
The ability to reduce the financial costs of maintaining a home.
Choose your own service providers and monitor their work.
Landscaping the local area: installing small forms, sports facilities and play complexes in the courtyards.

Real estate experts note that the price of housing in an HOA is higher than in ordinary housing.

Pros of creating an HOA

The advantages of this form of management of multi-apartment buildings are as follows:

Prompt action to solve problems at home after the vote;
Use of real estate and objects related to common property to generate profit and more efficient maintenance of apartment buildings;
Availability of control over financial expenses and profit making for each resident of the house;
Providing and paying for the services that a home needs, without imposing additional services (for example, in new buildings, homeowners pay for cleaning and garbage collection services);
Choice of utilities.

If the contractor does not fulfill his obligations properly, then you can enter into an agreement with another company.

Advantages

First, let's clarify - what is an HOA?

This is a non-profit organization created to manage a particular home.

It consists of the owners of square meters related to a given house.

In general, this is a legal entity with all the attendant rights and obligations. And like any legal entity, it can make profit .

So, what are the advantages of this method of management:

business is allowed;
all issues are decided at the meeting of owners;
Any home owner can speak out and his opinion is guaranteed to be taken into account;
residents can choose their own contractors;
there is an opportunity to organize the work on your own;
transparency of activities - any citizen, even not living in this house, can request the necessary information about activities and his request will be satisfied.

Find out from our articles about how absentee voting of owners is carried out, what membership, insurance and other fees should be used for, as well as what the procedure for adopting the charter of an HOA is.

Thus, it turns out that if there is such an organization, you don’t have to worry about the cleanliness of the lawns, the availability of playgrounds, or parking lots. All this will happen because it is aimed at the benefit of the apartment owners of this building.

Realtors have long noted a peculiarity - square meters in those houses where a homeowners' association rules are always more expensive.

Pros and cons of methods of managing an apartment building: comparison table.

Read about issues of reorganization, liquidation and bankruptcy of a partnership on our website.

Disadvantages of creating an HOA

The disadvantages of an HOA in an apartment building include:

A complex procedure for registering a legal entity, consisting of several steps.
Insufficient amount of equity capital to pay off emerging debts, which can provoke a conflict with contractors.
The association is a non-profit structure, which does not allow registration of ownership of real estate.
Responsibility of residents for decisions made of a financial nature: accounting, storage of documents, amount of membership fees.
Lack of strict liability measures for debtors and other violators.

Below is a comparative table of the advantages and disadvantages of the chosen form of management.

Pros of HOA

Cons of HOAs

First advantage: property owners, to save money, can carry out some types of work themselves. 2nd plus: the absence of a higher management body, which minimizes the corruption component.
3rd plus: higher real estate value with this form of management.

4th plus: minimizing costs and the possibility of debt to contractors by transferring money from a bank account.

5th plus: when concluding civil contracts, a legal entity can act as an intermediary. This will reduce costs and promote self-sufficiency. The association is given such powers by Article 152 of the housing legislation.

First disadvantage: if the activists include residential property owners who do not understand the problems at home well, then difficulties will arise in organizing work and making the right decisions.
2nd disadvantage: if the residents of an apartment building incur a debt for services provided, its amount must be distributed and paid by the remaining owners. Otherwise, the HOA will not be able to pay for the services of contractors.

3rd disadvantage: due to the fact that for some types of work the contractor’s services are used once, you cannot count on a discount.

4th minus: the presence of preferential categories of citizens and lost income.

5th minus: the inconstancy of legislative acts relating to the public utilities sector.

6th minus: utility tariffs cannot exceed the values determined by the tariff service.

HOA legislation

The main regulatory legal acts that relate to the activities of the association of apartment owners are:

Article 135 of the housing legislation, which provides clarification regarding the obligations of the partnership and its members;
the provisions of Article 123.13 of the Civil Code, distributing the rights to use common property;
Federal Law of the Russian Federation No. 129 on registration, which defines the list of documents for carrying out the procedure;
government acts relating to public utilities and the provision of housing services;
provisions of the Criminal and Administrative Codes that determine the amount of penalties for violation of requirements for the maintenance and management of apartment buildings.

Exit from the HOA with one or more apartments

If there is a misunderstanding with the governing body or for other reasons, property owners may leave the partnership. Moreover, even one apartment can choose another management organization. This will require certain actions:

repay debts incurred to the partnership for utilities and membership fees;
draw up a resignation letter addressed to the chairman of the association.

The petition is drawn up in free form, since there is no legally established form. The reason for withdrawal may not be indicated in the document.

If at the time of leaving the association the applicant has an outstanding debt, then the legal entity will collect it by any legal means. Including through the courts. This fact can be attributed to the disadvantages of the partnership.

If more than half of the citizens who have ownership rights in an apartment building vote to leave the association managing the building at a meeting, then the legal entity is subject to liquidation. In this case, you should prepare for a long procedure. Liquidation of a legal entity is one of the disadvantages of the chosen form.

Before closing, you must comply with the legal requirements regarding the liquidation of legal entities. It is necessary to pay off existing debts, close accounts, and submit the necessary reports. The closure procedure must be reflected in the statutory documentation. It is also worth adhering to the provisions of the Housing Code of the Russian Federation.

If the entire house is dissatisfied with the activities of the managing association, then it will be necessary to select several citizens who will collect evidence to justify the reasons for leaving. Next, those interested must fill out an application. The number of applicants is at least half of those living in the house. To join the new organization, residents will also need to draw up a corresponding application.

Choosing a different form of management for an apartment building

Property owners can independently manage a house if it has several apartments. This procedure will require the execution of a power of attorney by each owner of the living space. The disadvantage of this form of management is that the activist must have certain knowledge and the ability to make the right decisions. Difficulties may arise during repair work.

Owners can organize a new HOA. One house can be managed by one partnership.

Residents can also entrust the management of the house to a licensed management organization. Owners do not have to think about finding contractors and quality of services. The Criminal Code is responsible for this. The organization managing the apartment building is selected based on the results of a competition. An agreement for the provision of utility services will be concluded with each apartment owner.

Difference between HOA and UK

How is an HOA different from a management company? When choosing a home management method such as a management company, homeowners hire a management company to manage their home. With this method, the HOA, the owners manage the house themselves.

This method of management seems complicated, since the HOA is a legal entity, which means that for this it is necessary to open an account, pay people’s wages, pay taxes, enter into agreements with service companies (gas service, water utility, heat supply organization, etc. ) and etc.

Another difference between an HOA and a management company is that the HOA is responsible for servicing one house, while the management company manages several houses at the same time. Moreover, it is difficult to control the work of the management company, but the work of the HOA is controlled by the residents of the house themselves.