Apartment association (korteriühistu)

Who is a member and how payments work

An apartment association comes into being by itself once a building is divided into apartment ownerships; by law, every flat owner in the building is a member (KrtS § 1, § 16).

Owners make advance payments towards running costs (majandamiskulud) under the annual budget, usually in proportion to their share of the common property; the articles can set another rule, such as actual consumption (KrtS § 40).

The board draws up the budget (majanduskava) and the general meeting approves it; among other things it sets the payments to the reserve capital and the repair fund (remondifond) (KrtS § 41). The reserve capital must be at least 1/12 of the expected annual costs (KrtS § 48).

Debts to the association

A buyer is liable to the association, as a guarantor, for the previous owner's debts that are already due — up to the value of the flat (KrtS § 43). That is why buyers ask the board for a debt statement before buying.

The association has a statutory lien on the flat for its debts — up to that flat's running costs for the previous financial year (KrtS § 44).

For late payment the association can charge default interest and a collection fee: up to 30 € for a debt of up to 500 €, up to 40 € for 500–1000 €, and up to 50 € for more than 1000 € (KrtS § 42). If an owner has not paid, for more than 3 months, a sum equal to 6 months' costs, the other owners can demand that the flat be sold (KrtS § 32).

How decisions are made

Ordinary matters — routine repairs, service contracts, building insurance, an energy audit and the energy certificate — are decided by a simple majority. A loan that, together with existing ones, exceeds last year's costs needs a special majority (KrtS § 35–36).

The general meeting has a quorum if those present hold more than half of the votes and more than half of the shares in the common property (KrtS § 20).