The procedure for the apartment owners’ community to take a decision at a general meeting
The Law on Residential Properties (hereinafter – the Law) establishes the procedure for the apartment owners’ community to take a decision. The Law does not specify exactly how the decision of the apartment owners’ community (hereinafter – the Community’s decision) should be formulated, therefore SIA “Rīgas namu pārvaldnieks” (hereinafter – RNP) provides an explanation of the procedure for taking a Community’s decision.
The Law provides for 3 ways in which a Community’s decision can be taken, and they are as follows:
The figure illustrates the procedure for convening a general meeting or taking decisions by means of a questionnaire.
The following questions must be answered in order to correctly prepare the enacting part:
|SAMPLES OF DECISIONS OF THE APARTMENT OWNERS’ COMMUNITY
REGARDING REASSESSMENT OF A LAND PLOT:
REGARDING FIXING THE INTEREST RATE FOR LAND RENT PAYMENT:
REGARDING PARKING OF CARS:
REGARDING THE ALLOCATION OF THE DIFFERENCE IN WATER CONSUMPTION:
REGARDING DETERMINATION OF THE SHARE PAYABLE FOR HEAT:
REGARDING AUTHORISATION AND REMUNERATION:
REGARDING ELECTRONIC COMMUNICATIONS SERVICES:
REGARDING ADMINISTRATION RIGHTS:
REGARDING THE ESTABLISHMENT OF A HOUSING COOPERATIVE:
HOW TO CONVENE A GENERAL MEETING – 4 STEPS
The below information describes the decision-making by the community at the general meeting of apartment owners.
If a decision of the community is taken in accordance with the requirements of the Law, it is binding on everyone. The condition is that the apartment owners who represent more than a half of the residential properties of the residential house have voted ‘for’, except in the cases set out in the Law where a higher number of votes is required, or a higher necessary number of votes has been stipulated by the apartment owners’ community itself.
The Law allows the court to declare a decision taken by the apartment owners’ community as invalid. If a decision of the community is declared invalid, it will only be binding on those who affixed their signatures for that the decision should be taken, but not on those who did not attend the general meeting.
Since the court has jurisdiction to declare community decisions invalid, it is necessary to understand what the court’s grounds may be to declare a community’s decision invalid.
The Law provides that there are grounds to declare a community’s decision invalid if the decision or the procedures for its taking are in contradiction with the provisions of the Law. So, both compliance with the decision-making procedure and compliance of the decision with the provisions of the Law, is an important condition.
The procedure for taking a community’s decision at the general meeting can, conventionally, be divided into several stages.
1. Convening the general meeting (informing apartment owners about the general meeting)
The procedure for convening a general meeting must be followed because the community’s decision affects the interests of all apartment owners, so all apartment owners must be given the opportunity to participate in the decision-making by the community.
A general meeting may be convened upon initiative of one or more apartment owners or the administrator (Section 19(1) of the Law). It follows from the foregoing that third parties other than an apartment owner or administrator are not entitled to convene a general meeting of the apartment owners, unless the apartment owners’ community has delegated such right to third parties. In fact, the apartment owner is not bound by an invitation to a general meeting of an unauthorised third party.
The Law requires that every apartment owner shall be invited, in writing, to a general meeting of apartment owners. This means that a written invitation must either be issued or sent by post to each apartment owner, so that it can be proved, if necessary, that a written invitation was issued/sent .
The invitation must include the place, date, time, and agenda of the general meeting. It is also important that the invitation is sent/issued at least one week before the date of the general meeting.
If the invitation is sent by post, it must be sent to the apartment owner’s declared address of residence or another address specified by the apartment owner. Account should be taken that not all apartment owners live in their own apartments, many owners rent them out, so dropping an invitation in the letterbox may result in that the apartment owner remains uninformed.
It should be noted that apartment owners’ community may decide on a different procedure for inviting the apartment owners to the general meeting, however, until such a decision is taken by the community, the procedure prescribed by the Law must be followed.
For example, the community may decide to send invitations by e-mails. Account should be taken that elderly people do not use the internet, it should thus be foreseen that the apartment owner should file an application indicating to which address (e-mail address or post address (declared or actual)) the invitation to the general meeting of apartment owners should be sent.
2. Holding the general meeting
In order to start the decision-making process, it is necessary to find out whether the general meeting has a quorum.
A general meeting shall have a quorum if more than half of all residential properties are represented at the meeting (Section 19(3) of the Law). So, in order to establish this fact, it is first necessary to find out how many residential properties there are in the residential house. This information can be found by consulting the relevant section of land register related to the residential house by using the database at www.lursoft.lv or www.zemesgramata.lv. Consulting a land register’s section is a paid service.
The apartment owners’ community is composed of all the apartment owners in the relevant residential house.
One person may own several residential properties in the relevant residential house. The number of residential properties a person owns thus determines the number of votes he/she has when taking a community decision. There is an exception to this – if an apartment owner owns more than half of all the residential properties in the residential house, then, during the vote, he/she has 50% of the votes of all votes of apartment owners.
It should be pointed out that the Law puts the accent on the number of represented residential properties, not on the number of apartment owners.
One residential property may have several apartment owners (two or more), but such residential property (its representative) will have one vote when taking a decision of the community. The Law provides for that joint owners must authorise one person who will represent all joint owners.
A participant registration list must be made to record the number of apartment owners who attended the general meeting. When arriving at the general meeting, apartment owners, having presented an identity document, must be registered in the list which should indicate:
These data are required to clearly and unambiguously identify the person participating in the general meeting of apartment owners and to find out whether the person is entitled to participate in the community’s decision-making process. It should be found out whether the person is the owner of the apartment (by checking the proof of ownership), and if not, whether there is an authorisation to represent the apartment owner.
After the registration of the apartment owners, the general meeting must elect the chairperson and the minute-taker of the general meeting (Section 19(5) of the Law) provided that more than half of all residential properties are represented.
It follows from the foregoing that the general meeting must be recorded, which is done by the minute-taker. The minute-taker of the general meeting shall record the procedure of the general meeting, the matters to be considered and the number of votes casted in favour of each decision by apartment owners.
3. Taking a decision at the general meeting
When matters are considered at the general meeting of apartment owners, it must be determined whether taking a decision in question is within the competence of the apartment owners’ community. According to Section 16(1) of the Law, the apartment owners’ community has the right to decide any matter which relates to the existing joint property share.
It should be noted that the Law prescribes that a vote can be casted either ‘for’ or ‘against’, and it is the votes ‘for’ that are counted and their number determines whether the decision is taken or not. If an apartment owner abstains from taking a decision, does not take part in the vote, etc., this means that his/her vote will not be counted as a ‘for’ vote, so such a vote will be counted as an ‘against’ vote.
Subject to the nature of the matter under consideration, in order for the decision to be legally taken, it is required to determine the required number of votes ‘for’ to be casted by apartment owners who represent the residential properties in the residential house.
The minimum number of votes is more than half of the residential properties (i.e. half of the residential properties in the residential house + 1). For example, there are 100 residential properties in a residential house, 75 apartment owners are present at the general meeting, so, in order to take a decision, 51 apartment owners must vote ‘for’.
If a decision is taken by the required number of votes ‘for’, the decision of the community is binding both on those who were absent at the general meeting and on those who voted ‘against’.
Section 18(5) of the Law stipulates that all decisions taken by the apartment owners’ community shall be drawn up in writing, however the Law does not directly specify the requirements for drawing up the minutes and decisions.
4. Drawing up the minutes of the general meeting
The Law provides for the possibility for the apartment owners’ community to determine how the community’s decisions and minutes are to be drawn up, however, these procedures are not determined in the majority of the apartment owners’ community in residential houses.
Taking into account the procedure for convening and holding general meetings, RNP has prepared a sample of the minutes of the general meeting which includes all the necessary information.
The minutes must be numbered, preferably bearing the year, i.e. the minutes of general meetings should be given a consecutive number to show the sequence of meetings in the relevant year. For example, if the first general meeting is held in 2012, the minutes of that general meeting should have the number 1 or 1/2012.
The minutes must mandatorily contain the number of votes casted for each decision taken. The decisions taken shall be recorded in the minutes. It should be noted in the end of the minutes the time when the general meeting was closed, and the minutes should be signed by the chairperson and the minute-taker.
The availability of draft decisions at the general meeting is useful since they allows the apartment owners to clearly understand and know what they should cast their votes for.
A decision consists of a textual part and enacting part; decisions constitute a part of the minutes.
The textual part of a decision shall contain the information that served as a basis for taking the decision.
For example, an apartment owners’ community wants to replace water meters to reduce the difference in water consumption. The textual part thus may contain information that the house has a large monthly water consumption difference which can be reduced by replacing water meters in all apartments. An assessment of certain actions may be indicated, e.g. an offer from a company replacing water meters, or assignment of this task to the administrator, etc.
The textual part is followed by the results of the vote of the apartment owners’ community reflecting how many apartment owners voted ‘for’ and how many voted ‘against’.
The enacting part of the decision is of crucial importance because, whatever is mentioned in the textual part, the enacting part itself and the vote on it are the most important. The enacting part of the decision must refer to specific decisions, because general decisions cannot be implemented.
For example, if the community authorises someone, it should specify the scope of the authorisation, who is being authorised, and whether the authorised person is to be remunerated. If a reimbursement is foreseen, the source of funding should be mentioned. If a decision to be taken concerns carrying out certain repairs and choosing a particular company, it must be specified what repairs the community decides to carry out, what company will carry them out and what the sum payable to this company is, what part of works will be assigned to the administrator and what funds will be used to pay for the works. If the house does not have savings, the payment to be made by each apartment owner to cover the cost of the repairs to be carried out should be determined.