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When you buy an apartment in a Finnish housing company, you become the shareholder of only your own apartment. The building itself is owned by the housing company. However, the shareholders' rights are ample and well-protected.
The Limited Liability Housing Companies Act secures living in a housing company
When you buy an apartment in a Finnish housing company, you become the shareholder of only your own apartment. The building itself is owned by the housing company.
However, the shareholders’ rights are ample and well-protected. The Limited Liability Housing Companies Act contains regulations on decision-making, maintenance and repairs, the charge for common expenses and the structure of the housing company.
The mandatory Articles of Association are an important companion to the legislation. These two documents contain the basic rules for housing companies.
House buyers should read the Articles of Association carefully before making the purchase decision to avoid surprises. For example, the apartment for sale can be advertised as having three rooms, a kitchen and a parking space. However, the Articles of Association reveal whether the shares give their holders the right of possession or simply entitle them to rent the parking space.
It could be said that the Articles of Association represent the internal law and order that must be found in each housing company. The Articles of Association are registered and if they are subject to changes, the changes are made by the General Meeting and notified to the Trade Register. The Articles of Association determine the grounds for payment and the scope of the possession rights granted by the shares.
The charge for common expenses covers services
Under the Act, the payment of the charge for common expenses is the most important obligation of the shareholders. The charge covers the wide range of services the housing company offers its residents. Often, the charges for common expenses are the sole income of the housing company. The payment grounds of the charge for common expenses are specified by the Articles of Association. The most important obligation of the housing company is maintenance. In accordance with the Act, the company is largely liable for the maintenance of the house. The shareholders are only responsible for the maintenance of the areas and appliances inside their apartments. Even inside the apartments, appliances such as faucets, toilet devices and heating systems – including radiators – are the responsibility of the company. The company is liable for maintaining the yard, corridors, storage facilities and the sauna and washing rooms. Any deviations from the above must be clearly specified in the Articles of Association.
The housing company must notify the residents of the maintenance and alteration works beforehand. The same applies to shareholders if the works may disturb the company or other shareholders. For example, the shareholders’ notification requirement applies to replacing plastic membrane with parquet, since this might affect the sound of steps.
Equality is the norm
The highest decision-making body within a housing company is the General Meeting, which is a place where the voice of each shareholder is heard. The General Meeting appoints the Board of Directors of the housing company. The Board must place the interests of the housing company first in its decision-making. The management of the housing company may not do anything that benefits one shareholder at the expense of others. This principle entails that the costs of installing glass to the balconies, for example, are payable also by the shareholders without balconies. The maintenance works benefit everybody, because the glass protects the facade of the building, reducing repair costs and energy consumption.
Living in a housing company means compromises, but also easy and safe housing.
FACT
Limited Liability Housing Companies Act: five key terms
Articles of Association: determine the house-specific rules.
Charge for common expenses: the payment of the charge is the most important obligation of the shareholders.
Maintenance: the housing company is responsible for maintaining the exterior areas and the shareholders the interior areas.
Alteration works: the apartment owners can modify the interiors of their apartments as they wish.
General Meeting:the highest decision-making body of the housing company. Shareholder’s chance to be heard.
The expert interviewed was Marina Furuhjelm, Lawyer at the Finnish Real Estate Management Federation.
Heli Satuli
