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Questions and answers

Which certificates of competence are the chairman and CEO required to have (if these proffessions do not overlap)?

How should the chairmen of apartment associations get paid?

How the apartment association chairmen should be paid has been the subject of ongoing discussion as long as apartment associations have existed. On the one hand, it is believed that apartment associations are poor and cannot pay the chairmen a competitive salary. On the other hand, motivating the chairmen produces better results and enables to involve more competent people.

Management of an apartment association requires one to be open-minded and have a moderate level of knowledge in different fields (construction, jurisprudence, finance etc.). The chairman of the apartment association has to have good communication skills because the residents in the apartment have different education levels and standards of living, but most importantly – they all have different temperaments. In addition to that, the job is quite stressful because the residents do not care that the apartment association manager also has a personal life. He or she might be contacted after midnight.

Leaving aside emotional statements in support of paying for work in the apartment association (“every job requires compensation”) and against (“you can work for free for the good of your own building”), decisions concerning remuneration for apartment association management should be made based on the tasks and responsibility placed upon the chairman of the aparment association. For example in a small apartment association (up to 12 members) where the relationships between the neighbors are positive and no big renovation work must be done, the apartment association manager has minimum obligations – he/she has to hold a few meetings every year and carry out smaller work. In these cases if anyone decides to become the chairman of the apartment association, no salary has to be paid. Great respect for those who do this work for free and unfortunately people do not express their gratitude for the work they do.

This solution should be made an exception rather than the rule, specifically in bigger apartment associations with more severe problems. A big amount of time is spent on managing the apartment association and most people do not want to spend it without getting paid. You must keep in mind that this is work. If the chairmen are getting paid, the members of the apartment association can demand that they need to carry out some tasks.

How much the chairman of the apartment association should be paid depends on the rules of the association. Tasks can for example be shared between many people – one person is responsible for the renovation, the other person holds the meetings and the third handles current issues. Salary can also be paid to one person who does all the tasks. When calculating the salary, you can consider taking into account the time spent on the management of the apartment association and an hourly rate of 6 – 10 euros net pay.

This describes the salary for the actual time spent on managing the apartment association. It does not matter if the person is a board member or not. The chairman can also be hired from outside the board/apartment association or a management service provider can manage the apartment association. There is no point in paying board members to just sit there and do nothing. Those few meetings can be held without requiring payment.

If and how is it possible to instead of district heating start using for example an air source heat pump?

We assume that you want to start using an individual heating system instead of the general heating system.

The heating system is considered shared property and only the co-owners can decide if the heating system will be changed. Co-owners decide if this right is given to you or not. The decision from the co-owners (for example the decision made on the apartment association general meeting) must be made in writing.

General practice is when you are given the right, the people who do not wish to use the heating system, must still pay a part of the heating costs. The heating costs are then for example calculated for only 10% of the apartment area.

House passport: Is it required by the law and why is it needed and what does it consist of?

House or building passport is not required by the law. But it is useful because it provides an overview of the building. The building passport should consist of the following sections:

  1. Property specifications – land identification; size (including green areas, roads etc.); small elements (fences, garbage building, children’s playground etc.).
  2. Standard building specifications – address; details about the contracting entity, designer, constructor and inspector; details about the acceptance and usage of the building; limitations on use (architectural monument etc.).
  3. Constructional features and technical specifications of the building – main details (number of stairways, apartments, volume of the building, building area etc.); the plan of public spaces; details about the exterior finish and constructions.
  4. Technical systems of the building – heating system; water and sanitation; ventilation; electricity; gas; low-current systems; special equipment (elevators).
  5. Construction work – details about construction, reconstruction, demolition work and extensions.
  6. List of project documentation.

The building passport can also contain information about the owners of the apartments, contracts, revenues and expenses etc.

How to solve the issue of waste put beside the garbage containers, the rules state that the owner of the waste must pay for the disposal if it is done in secret?

There are no magical solutions. It is possible to prevent strangers bringing waste to the garbage containers by building a fence around the land of the building or build a garbage house. It is more difficult with your own residents. Some apartment associations have solved the problems by self-cleaning.

Waste disposal is paid by the apartment association and each resident has to pay for it. The true cost of waste disposal must be shown on the utility bill. It is not important whether it is divided by the number of square meters or residents. Waste which is left by the garbage container is expensive and can increase the garbage bill significantly, it also irritates the residents and they would like to know whose waste they are paying for. The residents try to keep a close eye on the people who secretly bring waste. The garbage containers should be visible from the windows and well-illuminated during night time.

What should you do with an apartment owner who from month to month only partially pays the utility costs to the apartment association?

A debt is a debt. It does not matter if the debt incurred due to partly not paying bills or not paying bills at all. The owner of the apartment is obliged to pay all utility bills on time.

It is reasonable for the apartment association chairmen when preparing the financial plan and setting the rates to take into account the solvency of apartment owners. They can also give advice to residents who have difficulties paying the bills, help them find a solution to the problem or at least mitigate the problems. The apartment association can however not be a social worker. That is the responsibility of the state and municipality.

For those owners who cannot pay their bills, the main recommendation is to move out from the apartment and sell it. It is hard to take apologies seriously if a person lives alone in a 60 square meter apartment in the center of Tallinn.

If any other solutions do not work, the apartment association can demand the expropriation of the apartment in the court.

Which licenses, projects, authorisation does an apartment association need to have and what laws and regulations does it have to be aware of?

The main activity of the apartment associations is to manage/maintain the building and it is not a licensed activity. The apartment association is not obliged to carry out projects, have authorisation etc. to organise its activities. The apartment association bases its work on the statutes of the association and decisions made during the general meetings. The board members and internal documents regulate the day to day management of the apartment association.

While carrying out activities, the apartment association has to follow the law in Estonia. The main activity is regulated by the Apartment Ownership and Apartment Association Act. However one must not forget the laws regarding different areas, for example accounting is regulated by the accounting law and Accounting Standards Board guidelines No. 14.

In most cases the apartment associations manage to obey the law without problems. Problems are mostly caused by bigger construction and renovation works. The most important thing is to follow the building codes and arrange all the required documents.

Which method should be used when calculating the differences in the water cost (by the number of people, apartments, by apartment area etc.)?

Often problems arise due to differences between water meter readings in the apartments and readings in the building and calculating the correct cost of water. This difference is usually called general water consumption and is divided by all of the apartments. There are no general rules that have to be followed here. Usually it can be solved with arrangements in the apartment association that are stated in the statute or decided during the general meetings. It is generally not recommended to use the number of residents as a unit, because it is almost impossible to count how many people live in the apartments.

Usually the differences in calculating the cost of water are calculated in cubic meters taking into account the current water price. The sum is divided equally by the area of the apartment or between all the apartments. For example:

  • Cost = price of 1m³ water
  • Amount (if divided by the area) = general water consumption x (apartment area/total building area)
  • Amount (if divided by the apartments) = general water consumption x (1/No. of apartments)

Does any law require that the apartment association must inform the residents of its activities? And how to get the chairman of the apartment association to hold a meeting?

The general meeting must be held at least once a year because the annual report has to be approved by the general meeting (Non-profit Associations Act §36 (3)). During the general meeting the financial plan is approved (Apartment Ownership and Apartment Associations Act §41) but it can also be approved together with the annual report. The statute can also require the general meetings to be held more often. These two documents (annual report and management plan) must provide enough information about how the apartment association has spent and how it is planning to spend their resources.

If the chairman of the apartment association does not hold a general meeting or ignores the requirement to provide information to apartment association members, you can take the following action.

  1. Read the statutes from the registry.
  2. Request information from the Tartu County Court if you want to go through the annual reports.
  3. Require in writing that the board members must hold a general meeting (Non-profit Associations Act §20 (3)). The request has to be signed by at least 1/10 of the apartment association members. NB! Follow the statute of the apartment association.
  4. If the board members do not hold a general meeting you can require the meeting to be held together with others who have signed the request (Non-profit Associations Act §20 (4)).

Election of new board members might also be one solution to the problems.