One more time about the ownership in multi-apartment building
Most of multi-apartment houses, built before Ukraine became independent were owned by the state. The minority of buildings belonged to housing co-operatives and other associations. Since 1991 citizens could privatize apartments they lived in. And the Law "On privatization of public housing" in 1992 made an apartment (but not a building or a share in building - as in most countries!!!) a separate object of ownership. From the moment of privatization of the first apartment in it (buying a share in the cooperative), the building turns into the aggregate apartments and stopped existing as an undivided object of ownership. Owners of apartments simultaneously became co-owners of common building's property - auxiliary premises, technical equipment, outside improvements. They also became obliged to share the common expenses, connected to the house and surrounding area maintenance respectively to their share in the building. There are only 6% of not privatized apartments in Ukraine, so there are almost no houses of communal ownership.
Owners of apartments simultaneously became co-owners of common building's property - auxiliary premises, technical equipment, outside improvements
We may dispute a lot on the topic of correctly conducted privatization, weather it was worth to make it free and if it was reasonable to distinguish an apartment as a separate object. However, what’s done is done, there is no way back. Ukraine has chosen the most complicated type of ownership and we mush face it. To take decisions concerning communal property without presence of all co-owners was proposed a mechanism - Condominium.
There are two legal methods of taking decisions in multi-apartment building. First is consent of all co-owners (according to the Article 382 of the Civil Code) what is possible in building with the small number of owners. The other - through Condominiums (according to the Law of Ukraine “On Condominiums”.) It would be obviously great if co-owners could take decisions by majority without creating Condominium, but there is no such possibility now . However, a totally different variant is put into practice - interests of most consumers, living in the multi-apartment building are represented by local governments – appointing ineffective housing offices for providing services. Since management institutions (organizations which provide apartment building management services) are on the fundamental level in Ukraine, the housing market (which in most countries prospers due to the competition) is monopolized – from both demand and supply side. Thus, it’s a long time we need complex and fundamental reform, which the country’s government still don’t dare to make.
Condominiums - are not alternative to housing offices
On 1 February 2012, 14100 Condominiums are registered. Condominium – is a juridical person, created by owners of residential and non-residential premises for assistance in usage their own property and management, maintaining and usage of common property. The aim of Condominiums – is self-regulation of conflicts between co-owners of the building by means of democratic procedures.
Having created a Condominium, co-owners can choose by themselves (by the decision of general meeting) one of such methods for providing housing and communal services (the most appropriate one):
- “direct” contracts between every co-owner and an enterprise – performer of communal service;
- one general contract between Condominium as collective customer (user) and an enterprise – performer of communal service;
- self-sustaining maintenance.
Having chosen a variant “self-sustaining”, Condominium didn’t become a performer of services for people living in the building. Condominium itself – is people, but organized. Relations in Condominium are based on the statute (if co-owners are not satisfied with the work of authorities, they can be re-elected on a general meeting). Only after the creation of Condominium residents of multi-storey building have a possibility to save costs for major repairs or energy efficiency projects in the house, and get a surrounding area into ownership or permanent use.
Residents of every sixth multi-apartment building in Ukraine united and created an association in order to take care of a comfort and coziness in their house together. Despite all problems, entanglements and ambiguity of a theory and the practice, they are in operation (evidently not all very active, as in any other structure). These are people which understand the responsibility for own houses and managed to unite. They all live, overcoming constant obstacles TODAY, not waiting till the government will understand the collapse of a life support system and make radical system changes. That’s why government, and civil society (under current conditions) should do everything to assist the development of Condominiums and return Ukrainians the lost conscious of an owner, erasing the remains of Soviet way of thinking – allowance and servitude.
The Soviet remains, main problems of Condominiums and necessary actions
Despite many premises in buildings already have their legal owners (the state or territorial community owns only not privatized apartments), buildings are mostly on the balance of communal enterprises which provide services to them. Moreover, most of local governments illegally consider themselves to be owners of such houses and rule not their property at their own discretion – sell or rent basements, lofts etc. In order to manage a building, Condominiums should “take it on a balance” (in fact – on off-balance account). While having the possibility to manipulate, some local government bodies or communal enterprises in every way try to prevent or postpone the transfer of a house to the balance of Condominium. To solve this problem, the term "balance keeping" should be "removed" from legislative acts. More important than a formal “balance keeping” would be receiving by an association all its technical documentation from a local government or enterprise which provided maintenance services.
To notify all owners about the convocation of a constituent assembly and to determine the quorum every initiative group should have full information about owners of apartments. However, the Ministry of Justice doesn’t allow receiving information from a register of ownership proprietary rights to real property. In some cities it’s possible to get information through local government bodies which send requests to the TIB (Technical inventory bureau), but not everywhere. To solve this problem there should be made certain changes in the current legislation which would provide the possibility of receiving information about co-owners.
The membership in Condominium is not compulsory. The participation of a person in Condominium activity is not necessary integral part of his/her right of ownership for the apartment in the building where it’s created, and allows being co-owner of a building without membership in Condominium. That's why in relations of co-owners appear many problems: from one side, co-owners which are not members of Condominium groundlessly believe that decisions taken by the association have nothing to do with them, and from the other side - there are some incidents when Condominium administration unlawfully refuses to take co-owner into a membership of Condominium or create conditions which complicate admission (for example, demand entrance fee). There also should be made necessary amendments to overcome these obstacles.
Ukraine is one of those few countries in the world where apartments are registered apart from the land. That is to say, buildings “hang in the air”
Ukraine is one of those few countries in the world where apartments are registered apart from the land. The current legislation doesn’t provide that the land under building is a part of common property. Thus, buildings “hang in the air”, and in most cases the land is owned by a governmental body. However, the land may be given into the ownership or permanent use of a Condominium. Thus, co-owners actually loose the right for a land under the building. The owner of a land may become at best their association. In fact, only some local government bodies give a land into the ownership of Condominium. Moreover, producing of documentation is quite expensive for Condominiums. If a building is ruined, Condominium is liquidated. People, which remained without houses, will also loose a land on which, theoretically, they could build a new house. At the same time, if a land is not properly owned neither by co-owners, nor by Condominium, the association has no legal grounds for the maintenance of local area and is not liable to pay land tax – despite Condominiums do maintain and do pay taxes. The best decision would be giving a land of a multi-apartment building (under and around it) into the ownership of co-owners of a building. However, it’s not easy to reach it, because there are cities where boundaries of surrounding areas are not defined. The transfer of land – is quite complicated and expensive procedure. Besides that, it’s connected to the human factor - willingness or unwillingness of a governmental body to give this land.
The absence of concurrent organizations between service providers and a low payment discipline of customers result in attempts of authorities and enterprises-monopolists to give Condominiums responsibilities of actual service providers, including recognition of Condominiums to be performer of certain housing and communal services through courts. At the same time they don’t take into account that Condominiums are not a subject of housing service, are not consumers of housing and communal services as legal entity, and a fund of Condominiums is formed by the means of membership dues of co-owners – consumers. Consumers in buildings without Condominium are in more favorable situation compared to those with created Condominium. They have to pay fines for delayed payments, in buildings with Condominiums enterprises-monopolists stop providing services to all consumers, not only to debtors etc. In some cities the social security agencies refuse to reimburse subsidies and privileges, till Condominium approve the amount of contributions and payments for maintenance and local area, determined on a general meeting. To solve this problem, the status and role of Condominium, the problem of self-sustaining maintenance of the building by the association and supporting relationships with producers and performers of housing and communal services should more precisely regulated by the legislation.
It’s also necessary to approve, that Condominiums shall pay for housing and communal services by prices (tariffs) set for the population, and privileges and subsidies should be applied to contributions of co-owners which are paid to condominiums.
The history of the bill No.8474
The end of summer - beginning of autumn 2010 was especially difficult for Condominiums. The inconsiderable finance support (after some years of it absence) from a state budget on major repairs and “pilot projects” in Condominium houses became another incentive for self-organization of citizens in multi-apartment buildings. Although the appearance of new Condominiums brought new problems, old ones became even more urgent.
The Ministry of housing, public reception offices and NGOs every day received plenty appeals. Initiative groups couldn’t receive information about co-owner in their house, register Condominium, because State registrar required notarization of all members of condominiums in the statute, tax inspections refused to include Condominiums to the register of non-profit organizations. Heads of Condominiums complained on social security offices, which refused to reimburse subsidies and privileges on contributions without “approval” of “tariffs”, on numerous inspections of law enforcing bodies, on enterprises-monopolists, on former balance-keepers. Residents grumbled at “raiders”-Condominiums, created by developers, which “extorted” vast amounts of money etc.
7 September 2010 during the roundtable in the Ministry of housing were determined “main problems” of Condominiums and suggested they ways of their solution. Most of them were connected to misunderstanding of the nature, status and role of Condominiums on housing and communal services market. The current legislation is quite “obscure” and inconsistent, and gives grounds for different profitable interpretation by certain officials. In conditions of uncoordinated state housing policy and constant change of authorities, we can do little without legislative changes. It was the beginning of a dialogue between the Ministry of regional development, Condominiums and NGOs.
Soon the same questions were aired by participants of the First Condominium forum in Lviv – eighty most active heads of Condominiums from seventeen regions of Ukraine; its resolution was sent to the President of Ukraine.
Than appeared the Instruction of the President of Ukraine of 13.10.2010 No.1-1/2427, paragraph on improvement of the regulatory framework concerning creation and functioning of condominiums, and after it – the Instruction of the Prime-Minister of Ukraine of 16.10.10 No.61938/1/1-10. For execution of this instruction was conducted a visiting meeting of the Working Subgroup “The reform of housing and communal service” of the Working Group “Regional economical development” of the Committee on Economic Reforms under the President of Ukraine, where I, as a representative of the organization - co-organizer of the Condominium forum, was asked to name propositions of heads of Condominiums. Most of positions have found representation in the Instruction of the Prime-Minister to the central executive bodies on the solution of problem issues on the creation and liquidation of Condominiums (No.12/20-14-1527 of 25.10.10). One of the statement was development of the bill (responsible for – the Ministry of housing), which would solve problems of establishment and functioning of Condominiums.
A new bill "On making amendments to some laws on condominiums” (later – bill No.8474) was presented to the public on VI International Congress on reforming housing and communal services and was approved by the majority of Condominiums' heads (to the congress were invited approximately forty people and came around one hundred).
By the procedure, the bill was sent to all central executive bodies connected to Condominiums for approval. In result some important statements were lost - the Ministry of Justice was against providing information about co-owners from a Register of ownership proprietary rights to real property (and now it motivates the denial by the absence of such right for initiative group – from letter of the Ministry of justice), a norm that the state registration is free and other norms were also lost. Than the bill reached the Cabinet of ministers of Ukraine, where it was "gathering dust on tables" for about five months. After numerous appeals from heads of Condominiums to the Government and the President, the bill was signed and submitted to the Verkhovna Rada 11 May 2011 under the number 8474.
Meanwhile, the VRU Committee on construction, city planning and housing service actively considered the draft Housing Code, which ideology turned against formation of legally supported development of responsible dwelling owners. Nearly twenty civic organizations formed the initiative “Against the housing slavery" and organized mass demonstrations. The meeting of Committee was held to the accompaniment of drumbeat. We demanded to “bury” the Housing Code and immediately support the bill No.8474 “On making amendments to some laws on condominiums”. The Committee has shelved the consideration of the Housing code (it’s still not going to be considered) and recommended the Verkhovna Rada to adopt the bill No.8474 in the first reading. 7 July 2011 the prevailing majority of people’s deputies adopted it as a fundamental.
Than started deputy holidays – all housing problems were forgotten for some time. In late summer the Committee created a working group on revision of the bill No.8474 which considered amendments of people’s deputies. As a member of this group, I did my best to “remove” all harmful amendments, number of which was quite considerable. In particular, was noticed an attempt to transfer a land of the multi-apartment building to organizations, which are managing buildings (read - housing offices), to give developer a right to create the Condominium and appoint a building manager, to define Condominium as performer of housing and communal services, to force the administration to conclude agreements on providing housing and communal services with dwellers and many other positions. Generally, there were held around ten different meetings, five of which were meetings of Committee members. However, taking decision was delayed. A land issue became the major stumbling block.
28-29 October OPORA co-organized the Second All-Ukrainian Condominium Forum, participated by more than 140 representatives of condominiums and NGOs from all Ukrainian regions. 812 heads of Condominiums and NOGs signed the resolution of the Forum demanding from the authorities to solve main problems of Condominiums and remove contradictions in the legislation including those made by the bill “On making amendments to some laws on Condominiums”.
7 December 2011 OPORA conducted a press-conference, where were expressed concerns about delay in adoption of the basic law on Condominiums, and the possibility of important for Condominiums statements to be distorted. On the same day the VRU Committee considered the bill No.8474 and took decision not to submit it for consideration until all statements are agreed with the public. OPORA actively defended every statement during the discussion, and 21 December 2011 under public pressure the Committee unanimously approved the bill No.8474 in a wording which fully reflects interests of organized co-owners. 22 December the bill was put on the agenda on the voting day in the Verkhovna Rada. However, some minutes before voting appeared a negative decision of Legal administration of the Verkhovna Rada of Ukraine. Moreover, this decision was for other wording of the bill for which voted people’s deputies in the Committee. The consideration of the bill was postponed for formal reasons.
14 December 2011 heads of Condominiums were asked to speak on the meeting of the Government, what resulted in the Protocol No.92 of the Cabinet of Ministers of Ukraine of 14 December 2011, and the problem of the bill No.8474 again became of urgent importance. 7 December OPORA held a roundtable “A country of responsible owners or mercenaries of housing servitude?”, which draw a wide response among the mass media.
8 February the Committee eventually approved the bill No.8474, which:
- Provides a substitution of the term “balance keeping” by the term “building management”. The building is in the management of Condominium since its creation. Local government body is obliged to give all technical documentation of building.
- Determines, that a land under the building is a common property of co-owners of building premises, and the surrounding are is passed into permanent use of Condominium.
- Annuls the artificial division into “members” and “not members” of Condominium, and provides that all decisions are to be taken by co-owners.
- settles the issue of self-sustaining maintenance of the building by the association and supporting relationships with producers and performers of housing and communal services.
- Determines, that Condominiums shall pay for housing and communal services by prices (tariffs) set for the population.
- Provides, that privileges and subsidies are applied to contributions (payments) of co-owners which are paid to Condominiums.
- Establishes, that property bought by the cost of co-owners is their common property, but not a property of the association as a legal entity.
- Provides the possibility and determines the order of procedure for written surveys in cases when the general meeting did not take place due to lack of quorum.
So, people's deputies are to vote now.