To manage apartment buildings, various types of associations of people who live in such buildings or own residential or non-residential premises are created. Quite common forms of management organizations include homeowners' associations (HOAs) and housing-construction cooperatives (HBCs).
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A homeowners' association is currently the most common form of management of an apartment building, which involves the provision of services for maintaining common property in one or more buildings. This form is regulated by the provisions of the Housing Code of the Russian Federation.
A housing construction cooperative is also a form of management of an apartment building. However, this form of management is created even at the stage of construction of a specific house, since in accordance with the current legislation (with the exception of the Housing Code of the Russian Federation) it is taken into account as a developer.
Similarities and differences between housing cooperatives and homeowners' associations
| Reasons for comparison | Housing and construction cooperative | Homeowners Association |
| Purposes of creating the association | Created for the construction of a specific house and its subsequent maintenance, including in terms of common property | Can be created only to service the common property of an apartment building or a group of such buildings |
| Number of participating members | A housing cooperative is recognized as complying with the requirements of current legislation if the number of its members is at least five, and it must include all owners of premises in an apartment building | To recognize the existence of an HOA as legitimate, it is required that it consists of at least fifty percent of the owners of premises in an apartment building. At the same time, an HOA can merge several apartment buildings, subject to the consent of all its participants |
| Regulatory regulation | Regulatory regulation of the activities of both HOAs and housing cooperatives is carried out only in accordance with the Housing Code of the Russian Federation and regulations adopted in its implementation at various levels of subordination (from federal to municipal) | |
| Carrying out commercial activities and distributing its results | Since the housing cooperative is a commercial legal entity, any result of financial activity that allows obtaining a certain amount of profit must be divided among all members of the cooperative in accordance with their shares of participation in the authorized capital of the legal entity | Although an HOA is recognized as a legal entity that has the right to conduct commercial activities (for example, renting out existing common property), however, profit due to the legal features of its functioning cannot be divided among the members of the HOA. All profits received are directed towards solving existing expenses or accumulated in special accounts of the organization for the purpose of further allocation to resolve emerging needs. |
| Contributions to the capital of a legal entity and obtaining property rights | In the case of full or partial payment of the share contribution provided for by the statutory documents of the housing cooperative, it is possible to obtain property rights, for example, ownership rights to residential or non-residential premises located in an apartment building. Contributions can be paid both during the construction of the house and after its completion. Full right of ownership and disposal, that is, classical ownership, arises only after share contributions have been paid in full for a specific property | Contributions are regular and are made in accordance with the payment schedule defined by the statutory documents. At the same time, the implementation of such contributions, even in full, does not entail property rights, since these contributions are directed towards the formation of a fund that ensures the functioning of the HOA itself and the contractors it hires |
| Transformation of housing cooperatives into HOAs and back | A housing cooperative into a HOA can be transformed based on a decision of the general meeting of owners of premises in an apartment building, and the procedure must be fully implemented with notification of all government bodies | Impossible, since the HOA cannot engage in the construction of apartment buildings. This is due to the purposes of creating such a legal entity. A housing cooperative can only be created with the participation of members of the HOA if a decision is made to build another apartment building that meets the requirements for a cooperative |
| Procedure for creating a legal entity | The procedures are similar, since all stages go through from the announcement of the constituent meeting, at which the decision to create a legal entity is made, to the registration of the formed legal entity with the state authorities. The list of documents used also does not differ, since in order to register both legal entities, you will need to provide statutory documents, as well as documents for the leaders of the association being created | |
| Board members and chairman | The members of the board and the chairman are selected from among the owners of premises in the apartment building. Information about the chairman as the head of the organization is entered into the Unified State Register of Legal Entities. The position of the chairman most often has the character of an actual acting one, since he is assigned a large number of rights and responsibilities recorded in the Charter of the organization | Board members are selected from among the owners of premises in an apartment building. The chairman is also selected from among the board, however, the position is nominal in nature, since the main rights and responsibilities fall entirely on the shoulders of a specially hired manager. However, data on the chairman as the head of the legal entity being created is entered into the Unified State Register of Legal Entities |
| Responsibility for financial obligations in case of their violation | Creditors have the right to apply to the members of the housing cooperative for repayment of existing debts, since the authorized capital consists of the share contributions of the members of the cooperative. However, foreclosure can only be applied to that part of the share that has not been paid | Even if there are large debts, they can be collected by creditors and resource supply organizations only from the legal entity itself. It is strictly prohibited to impose penalties on members of the partnership |
HOA and management company pros and cons. Homeowners association or management company - pros and cons, which is better
Who should be entrusted with the maintenance and management of an apartment building - the HOA or the management company? There is no clear answer to this question, since it all depends on how conscientious the company is and how willing the residents are to participate in resolving emerging issues. However, before concluding a management agreement between a management company or an HOA, you need to understand how both forms of management work, what their pros and cons are, and how this work will affect the lives of the residents of the building.
What is the difference between a management company and an HOA?
HOA (Home Owners Association) is a non-profit community that includes people living in a house or neighboring houses who want to conduct business activities together.
MC (management company) is a third-party organization created for the purpose of making a profit and cooperating with service providers.
Homeowners association and management company: what is the difference
In addition to the form of organization, there are several other important differences.
- The HOA manages several buildings, there is a limit on the number of apartments. A management company can serve dozens of houses in different neighborhoods.
- In an HOA, all decisions are made by a council of residents, and the presence of more than 50% of apartment owners is required. In the management company, issues are resolved by the chairman and his council.
- The HOA does not have its own technical base, tools, and usually the skills to carry out repairs. The management company has professionals in their field with trained personnel and a material and technical base.
- The HOA is interested in reducing expenses and utility bills (since they themselves live in the same houses), the management company is not, and they will not choose the most economical options.
But in addition to a general understanding, to make a decision you need to carefully study all the pros and cons of various forms of service, since some points may be fundamental.
The procedure for transforming a housing construction cooperative into a homeowners' association
If the owners of premises in an apartment building have decided that there is no longer a need for a housing construction cooperative, they can create any form of management. The most important stage in the transformation of housing cooperatives into HOAs will be the holding of a constituent meeting.
constituent Assembly
This meeting must be prepared in advance. A notification about its holding is placed in places where information is provided in advance in order to inform all members of the cooperative about the urgent issue of changes in the activities of the service organization. Notification can be made in the form of an announcement on specially designed boards . Additionally, such information can be posted on the official website of the cooperative, if there is one, as well as in the GIS Housing and Communal Services.
The next stage is the actual holding of a meeting, at which a decision can be made to transform the housing construction cooperative into a homeowners' association. This decision must be formalized using a special protocol, since it is this protocol that will form the basis for the procedure for liquidating the cooperative and creating a partnership.
Such a protocol is subject to certain requirements, including the mandatory presence of a voting sheet on the issue raised. At the same time, all its members must vote for the liquidation of the cooperative, and fifty percent plus one vote of the total number of owners of premises in an apartment building is enough to vote for the creation of a partnership . The counting of votes is carried out without fail only taking into account the areas of residential and non-residential premises that are owned by voting persons (the larger the area, the more votes).
The procedure for the liquidation of housing cooperatives and the creation of an HOA
If a positive decision is made on the need to carry out a transformation procedure, it will be necessary to carry out the procedure for liquidating a legal entity in the form of a housing construction cooperative and creating a homeowners’ association.
This procedure is carried out in several stages, the key of which is the notification of government authorities about the decision made and the mechanisms for its implementation, as well as creditors about the liquidation of a pre-existing legal entity. In addition, it will be necessary to carry out a procedure for full mutual settlements with all existing counterparties in order to close existing financial obligations.
After this, it is possible to obtain a certificate of liquidation of the legal entity and its deregistration with the tax authorities.
Registration of a new legal entity
The registration of a new legal entity can occur in parallel with the liquidation of the previous legal entity. The main condition is the correct documentation of the partnership being created, from the point of view of the current housing legislation. Otherwise, registration of a new legal entity may be denied.
The homeowners' association must begin to fulfill its immediate responsibilities within one month after the liquidation of the cooperative . This period is not specified in any regulatory act and is formed only on the basis of existing law enforcement practice. Such time frames are determined due to the fact that, otherwise, residents of an apartment building will have to choose a different form of management of their home and the common property located in it.
If you cannot create your own HOA for some reason, you can try to join existing associations through a special vote.
Here, the key condition will be the consent of not only the owners of the premises in the “undecided” house, but also in the house to which the legal annexation will take place. This feature is due to the fact that otherwise the decision made could be considered unlawful, and the very fact of annexing an apartment building to an already created homeowners’ association could be challenged, including on the basis of a specially issued court decision.
Residential building - Kuibysheva 66a
If, when creating an HOA, the owners themselves cannot achieve competent management, then they have the right to choose a management organization that will operate and manage the house. The HOA has the right to select and control the operating company, demand a report on the funds spent, monitor the quality of services provided and, in the event of unsatisfactory performance of one or another organization, change it.
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(-) Lack of initiative, lack of understanding and laziness of our citizens Imagine: to resolve the issue, it is necessary to convene a meeting of HOA members. It’s one thing to gather residents of a building with 10-15 apartments. And it’s completely different for residents of a 200-300-apartment building. It can be very difficult to gather all members of the HOA at a certain time and in a certain place to resolve global issues. Some people cannot come, and others simply do not want to waste their free time attending meetings.
Which is better, management company or homeowners association, pros and cons. Management Company
We found out that a management company is a commercial organization that is a legal entity. She is a professional property manager and charges a fee for her services. As a rule, such companies are intermediaries between residents directly and resource supply organizations (utility service providers).
The management company is responsible for all work carried out in the house. In addition, she can carry them out herself or enter into contracts with subcontractors, and do this independently. The advantages of this form of management include:
- clear planning of costs and expenses;
- carrying out work according to the schedule, such as: repairs, garbage removal, yard cleaning;
- the presence of its own financial base, thanks to which, if arrears arise in payment for the services of contractors performing certain works and services, from one of the residents the managing body can cover them at its own expense, so that their provision does not stop;
- knowledge of the standards, features of the housing and communal services provided, competence, which allows managers to win disputes with suppliers if they arise;
- fixed fee for the activities of the management company.
Among the main disadvantages:
- the opinion of residents when choosing contractors is not taken into account, that is, you will not be able to influence the choice of one or another supplier of servants, the management company makes the decision independently;
- quite a large fee for the work;
- lack of reporting on spent funds to residents;
- the length of time it takes to make decisions on residents’ complaints, for example, about insufficient heating, since you will have to try hard to prove this to the Criminal Code.
With all the pros and cons, it should be noted that according to statistics, at the moment almost 75% of apartment owners cooperate with management companies. Another advantage of the management company is the fact that you can refuse its services at any time if residents feel that they are not being performed properly.
