There are a lot of small “House Associations of Owners” (VVEs) in the Netherlands. Consider, for example, the upstairs-downstairs house, often known as red-black house. Or house with downstairs house and upstairs apartments ‘I-floor, II-floor and III-floor’.
What is an active VVE?
This includes, at a minimum, the following:
- Chamber of Commerce registration
- Joint bank account
- A reserve fund on which the owners monthly put in money especially for maintenance.
- A Multi-Year Maintenance Plan (MJOP)
- A joint property insurance
- An annual meeting of which minutes are taken
The problem of dormant VVEs
In large VVEs (like an apartment building), the VVE is actually always active. With the little ones, that’s not always the case: we see a lot of “dormant” VVEs. And this is a problem. Many banks are nowadays very difficult about providing a mortgage loan for an apartment without an active VVE. In addition, this means there is no maintenance reserve and maintenance agreements for the property. As a result, maintenance is often postponed or not done at all and the condition of properties falls into disrepair as a result
The legal obligation
It is required by law to make an annual reserve for maintenance. The minimum amount to be saved must be apparent from the MJOP or must be 0.5% of the rebuilding value of the property. There is no penalty at this point for not doing so. However, you can use the courts to force the cooperation of your neighbors if they do not want to cooperate. As a buyer of your new home, that may not be the most enjoyable start right away. The Dutch Association of Real Estate Agents (NVM) actively directs its members to make their clients (house sellers) aware to make the VVE active before putting an apartment up for sale. An active VVE is a lot more attractive for sales and we notice that (partly due to the influence of the banks) this is becoming increasingly important.
The divisional deed
The subdivision deed is the foundation of the agreements that exist between the owners.
This states the location and the land, how and in what ratio the apartments are split, which parts are common and which private, the cadastral designations and the subdivision regulations that applies. This division deed has been drawn up by the notary and can only be amended with the cooperation of at least 80% of all owners. The deed of division is included in the public registers and can therefore be viewed by everyone.
Subdivision Regulations
This is a part of the divisional deed. This regulates what the rights and obligations of each apartment (owner) are, which costs and debts are for whose account, the number of votes per owner in the meeting, how the building is insured and the establishment and statutes of the VVE. In very many cases, model regulations are used. There are 5 of these in circulation (1973, 1983, 1992, 2006 and 2017). For new VVEs, the 2017 regulations are usually chosen.
Examples of matters regulated in the unbundling regulations:
- The use of roof terraces
- The role of the president
- Maintenance of private areas
- Electric car charging station (at 2017 model)
- The by-laws
- Etc.
Internal Regulations
The by-laws may agree on matters that are not included in the division deed, divisional regulations and articles of association. Thus, these serve only as supplements
Consider agreements on soundproofing floor coverings, using the central areas (stuff in the stairwell), not allowed to place a dish on the balcony, etc.
As following the division deed and the division regulations rental is allowed, then it cannot be prohibited through the by-laws. Excludes short stay (Airbnb).
Short Stay
You can find out whether short stay is allowed from the division deed and the division regulations.
There are 3 possibilities:
- Short stay is allowed
- Short stay is not allowed, but the VVE can give permission
- Short stay is not allowed, and VVE can do not authorize this
In practice, I recommend being very careful with buying an investment property with the intention of “airbnbing”. Not only because many VVEs are against this (and a legal conflict is no fun), but also because it is being restricted or limited in more and more municipalities.
Decision-making and the General Assembly
To legitimately make a decision within the VVE works as follows
- First all owners must be called to the meeting. The subdivision regulations governs how much notice this must be at a minimum.
- Then what is to be voted on must be included on the agenda.
- For important decisions, a minimum number of votes must be present at the meeting. This is called the quorum. How high the quorum is, is regulated in the divisional deed.
- As important decisions are voted on, there is also a minimum voting ratio. How high this is, is again regulated in the divisional deed. This can be 2/3rds or e.g. 4/5ths of the number of votes present are.
If something has been decided within the VVE that you do not agree with and you want to reverse it, look at the following steps to see if you can.
In conclusion
Again: an apartment with an active and healthy VVE does better in sales. But the sale should not be so much the reason for activating your VVE. An active VVE, with an active maintenance plan and sufficient reserves prevents your apartment building from becoming dilapidated, it prevents discussions with neighbors and it is good for the value of your apartment. One last tip: don’t forget to include your share in the reserve pot in your annual tax return.