Dismissal of the housing community board – how to effectively carry it out?

Dismissal of the housing community board is a legal solution that can be used in a situation where residents are struggling with increasing problems related to the management of the common property. Dismissal of the housing community board allows for the election of new community authorities, which will allow residents to ensure that their demands are met and will enable the housing community to improve its operations.

The purpose of this article is to:

• explain what are the legal grounds for dismissal of the housing community board,
• indicate what are the possible reasons for dismissal of the housing community board,
• present the legal procedure for dismissal of the housing community board.

Definition of a housing community and management – what is worth knowing?

According to art. 6 of the Act of 24 June 1994 on ownership of premises (hereinafter: “a.w.l.”), a housing community is all owners whose premises are part of a specific property. The legislator also granted the housing community the ability to acquire rights and incur obligations (legal capacity), as well as the ability to sue and be sued (judicial capacity).

In reference to the above definition, it is important to distinguish between the concept of “owner of the premises” and the broader term “resident”. The key difference is the fact that a housing community is created exclusively by the owners of the premises in a given property, not its residents. This means that persons living in the premises, such as tenants, are not members of the housing community in the legal sense.

Article 20 sec. 1 of the a.w.l. provides for the mandatory adoption by the housing community of a resolution on the election of a single-person or multi-person board in a situation where the number of separate premises and non-separate premises is greater than three. In other cases (i.e. when the number of premises is less than three), the provisions of the Civil Code and the Code of Civil Procedure on joint ownership shall apply accordingly to the management of the common property. The sanction for failure to appoint a board may be the appointment of a compulsory administrator by the court on the basis of art. 26 of the u.w.l. at the request of any owner of the premises. The above regulations are intended to ensure efficient management of the common property and to protect the interests of all owners of the premises, which is particularly important in the case of larger housing communities.

Only a natural person may be a member of the board of a housing community. It is generally recommended that the board of the community consist of its members, i.e. persons with knowledge of the problems and current needs of both the owners of the premises and other residents. However, the law does not exclude the possibility of appointing persons from outside the group of owners of premises to the management board, both in relation to the entire management board and its individual members.

The management board of a housing community manages the affairs of the housing community and represents it externally and in relations between the community and individual owners of premises (in accordance with art. 21 sec. 1 of the housing community act). In practice, this means that it is responsible for managing the common property, and therefore for working to maintain the common property in a non-deteriorated condition, ordering repairs and renovations, and also, among other things, exercising control over the finances of the housing community.

Legal basis for dismissing the management board of a housing community – key provisions

The entire management board of a housing community or its individual members may be suspended from performing their duties or dismissed at any time by virtue of an appropriate resolution of the owners of premises, as provided for in art. 20 sec. 2 of the housing community act. It is therefore possible for the community to make changes to the composition of the board by adopting an act such as adopting a resolution, which must be “appropriate”, i.e. containing in its content a clear indication of what action is being taken against the board or its specific member – suspension or dismissal.

Importantly, in practice, there is no legal obligation for a notary to record a resolution on the dismissal of the board of a housing community or its member (resolution on changing the composition), which occurs when changing the established method of managing a common property (art. 18 sec. 2a u.w.l.).

• A practical example from case law: this line of case law was adopted by the Supreme Court, among others, in its judgment of 14 January 2004, file reference I CK 108/03, indicating that: “The obligation to record a resolution by a notary, provided for in art. 18 sec. 2a of the housing estate act, applies only to the resolution of the owners of premises on changing the established method of managing the common property. However, it does not apply to the resolution on the election of a single-person or multi-person management board, which is a body of the housing community.”

Additionally, it should be pointed out that the housing community may also have internal legal acts regulating in more detail the conditions and procedures related to the dismissal of the housing community management board or its individual members, such as statutes or regulations. In such a case, an additional legal basis, apart from the one indicated directly in art. 20 sec. 2 of the housing community act, should be sought in the above-mentioned regulations or statutes, which supplement the statutory provisions.

What are the reasons for dismissing the board of a housing community?

There can be many reasons for dismissing the board of a housing community and they can concern both the sphere of rights and obligations under the housing community act, as well as the sphere of contacts with the owners of premises or the transparency of the actions taken.

The most common reasons for changes in the composition of the board or dismissal of the board of a housing community include:

• failure to fulfill obligations, for example, failure to take action on necessary repairs, lack of control over expenses or failure to comply with safety rules;
• acting to the detriment of the community, for example: making decisions without the consent of residents, exposing the community to additional costs or conflicts of interest;
• lack of transparency and communication with residents, for example: ignoring the needs of residents, lack of information about expenses or resolutions, failure to keep promises.

Undoubtedly, the most significant reason for dismissing the board of a housing community may also be its undertaking of actions exceeding the scope of ordinary management without the required consent of the owners of premises. Within the scope of its authorisation, the management board of the housing community is authorised to act within the scope of ordinary management activities, while in order to perform activities exceeding ordinary management, it is necessary to obtain the consent of the owners of the premises in the form of a resolution granting the management board the power of attorney to conclude agreements constituting activities exceeding the scope of ordinary management in the form provided for by law.

An open list of activities exceeding ordinary management was indicated by the legislator in art. 22 sec. 3 u.w.l. and it includes activities such as:

• establishing the remuneration of the management board,
• adopting an annual economic plan,
• establishing the amount of fees to cover management costs,
• granting consent to the extension or reconstruction of a common property,
• dividing the common property,
• acquiring the property,
• filing a lawsuit related to the forced sale of premises, when the owner of the premises is in long-term arrears with the payment of fees due from him or grossly or persistently violates the applicable household order or, through his inappropriate behavior, makes the use of other premises or the common property burdensome.

Under the current provisions of the housing community act, there is no requirement to justify the reasons for the dismissal of the housing community board in a resolution adopted by the owners of the premises, therefore such action does not require additional explanations from the resolution-making body, such as the meeting of owners, nor to indicate a specific violation of the provisions of the housing community act committed by the board. It seems that such a regulation gives owners freedom to make decisions regarding the composition of the board, which allows them to adjust its functioning to the current needs of the community.

It is worth remembering that in accordance with art. 29 sec. 3 of the Housing and Housing Association Act, each owner of a premises has the right to control the activities of the board, so it is possible to take action to verify and assess the current work of board members. In addition, the actions taken by the housing community board are “assessed” every year by the owners of the premises, who pass a resolution on granting the board a discharge (in accordance with art. 29 sec. 2 of the Housing and Housing Association Act). More information on this subject has been included in this publication.

The procedure for dismissing the board of a housing community – step by step

In order to dismiss the board of a housing community, the owners of the premises must take certain actions aimed at adopting an appropriate resolution. The method of adopting resolutions is specified in art. 23 of the housing community act. The actions necessary to properly conduct the procedure for dismissing the board include:

• convening a meeting of the housing community,
• preparing a resolution,
• conducting a vote and obtaining the required threshold of votes to make a decision.

According to art. 23 sec. 1 of the housing community act, resolutions of the owners of the premises are adopted at a meeting or by individual collection of votes by the board. In practice, it often happens that the board may not be interested in adopting a resolution on its dismissal or on its removal, so it can be assumed that adopting a resolution by individual collection of votes by the board will pose many problems. In such a case, the resolution may be adopted at a community meeting. In principle, a community meeting may be convened by the board, but also by the owners themselves who hold at least 10% of the shares in the common property.

The condition for convening a community meeting by owners who hold at least 10% of the shares in the common property is to submit such a request in writing and signed by these owners. In addition to submitting a request, in order to convene a meeting, it is also necessary to notify all the owners of the premises at least 7 days before the planned meeting date (unless the regulations or the community statute provide for a longer period). The notification should include:

• place, date and time of the meeting,
• proposed agenda.

Thanks to these rules, the owners of the premises have the opportunity to participate in making decisions and supervise activities related to the management of the housing community, including the dismissal of the housing community board.

It is worth mentioning that when convening a community meeting, owners who hold at least 10% of the shares in the common property should have a previously prepared draft resolution on the dismissal of the board. In such a case, the draft resolution will constitute an annex to the proposed agenda, which should be included in the notification to the other owners of the premises about the convening of the community meeting.

A necessary condition for the proper adoption of a resolution on the dismissal of the board of the housing community is also obtaining the required majority of votes. The Act on Ownership of Premises in Article 23, paragraph 2, establishes the principle that resolutions of owners are adopted by a simple majority of votes counted according to shares, unless it was decided in the agreement or in the resolution adopted in this procedure that in a specific matter each owner has one vote. Therefore, the legislator established a voting principle, according to which the voting power is linked to the size of the share in the common property, which in turn is naturally correlated with the area of ​​the premises.

The above principle indicates that the larger the area of ​​the premises and at the same time the greater the outlay of the owner of such premises on the maintenance of the common property, the greater the influence on shaping the community’s affairs of such an owner. Owners of premises may also decide to derogate from the above. principles by specifying in the agreement or resolution adopted in the share voting procedure that a special form of voting is possible in relation to specific categories of matters, consisting in the principle that each owner is entitled to one vote, regardless of the number of shares held.

Consequences of dismissing the board of a housing community and appointing a new one – key legal aspects

In the agenda of the community meeting, in addition to the item concerning the adoption of a resolution on the dismissal of the board, for practical reasons it is also important to add an item in the resolution concerning the appointment of a new board. It is worth considering that while a change in the composition of the board by dismissing individual members of the board of the housing community and not appointing new board members in their place should not lead to a paralysis in the activities of this body (if the statute or community regulations provide that the executive body may operate in a reduced composition), dismissing the entire board of the housing community at the same time may give rise to certain negative consequences resulting from its vacancy. Failure to fill any of the vacancies provided for in the body of the community management board opens up the possibility of filing an application for the court to appoint a compulsory administrator, due to failure to meet the requirement provided for in art. 20 sec. 1 of the Housing Estates Act, therefore, owners of premises initiating the procedure for dismissing the management board should take into account the need to hold elections to the executive body of the community.

The procedure for appointing new board members will be very similar to the dismissal of the board of a housing community, with the exception that the owners of the premises will have to select a suitable candidate or candidates in advance. In this respect, the note that members of the board of the community can be both owners of the premises and people from outside this group, e.g. those with professional knowledge and skills in managing common properties, remains relevant. The selection of professionals is particularly justified and desirable in relation to large communities with owners of many premises, which is currently happening more and more often. It should be emphasized that the proper selection of board members is crucial for the efficient management of the common property and protection of the interests of all owners.

The efficient selection of a new board of the housing community can not only eliminate the risk of a compulsory administrator being appointed by the court, but also help to calmly take over the duties, organize the documentation and verify the financial status of the community after its predecessors.

The transitional period may also be significant in the context of the possibility of holding previous members of the board financially liable for actions they took during their term of office, because the dismissal of the board of a housing community opens up the possibility for the community to make such a claim under civil law which has been described in more detail in this publication.

Summary and the most important practical tips for owners of premises in the context of the possibility of dismissing the board of a housing community

From the point of view of owners of premises, the most important thing is to make sure that they act in accordance with the provisions of the u.w.l. and conduct the procedure for dismissing the board of a housing community in a transparent and proper manner. The initiators of the dismissal of the board should familiarize themselves not only with the provisions of the aforementioned act, but also with the content of the regulations and statutes of their community, if any, and analyze these legal acts in terms of possible procedures and obligations related to the dismissal of the board of a housing community. It is also undoubtedly necessary for the housing community to take appropriate steps to prepare the necessary documentation – draft resolutions on the dismissal of the board, the agenda of the community meeting, as well as proper notification of its convening.

In order to avoid doubts and potential shortcomings in the preparation of the entire procedure, documents, as well as to protect the community from possible claims from former board members, it is worth considering using the services of professional legal advice. Choosing an experienced law firm specializing in matters related to the functioning of housing communities and cooperatives will certainly help relieve the owners of premises and efficiently implement the necessary changes in the community body.

One of the important issues that the community should take up is securing itself in the future against unfavorable situations, e.g. against prolonged change processes caused by various factors. Such possibilities are created by preparing appropriate regulations included in the framework of the regulations or statute, which can specify in a more detailed way than the act the procedure in most cases that the housing community must face. In this case, it would also be recommended to use the services of a professional law firm.

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