The Netherlands government tackles insufficient provision for future maintenance costs and ensures scheme information is generally available.
The Netherlands equivalent of a South African sectional title body corporate is known as an Owners Association (Vereniging van Eigenaars, abbreviated to “VvE”). This controlling body is automatically created when the developer transfers an apartment right to another person and is operated according to its constitution contained in the division deed, including rules that can be extended by “internal” or “house” rules, “huishoudelijk reglement” made by the owners. While the division deed is registered in a public registry, the house rules have historically not been filed at any government office and could only be obtained on request from the VvE’s secretary or any managing agent. Buyers of apartment rights are automatically bound by the VvE’s constitution and rules.
House rules can deal with the use and enjoyment of the apartments and issues such as the keeping of pets, but any substantial restriction on ownership rights, such as a limitation on the right to rent the apartment, can only be created in the notarial division deed.
A few years ago it became of concern to the Netherlands government that a substantial number of VvE’s were not making adequate provision for major maintenance and repair costs. As a result, the government imposed an obligation from 1 May 2008 on all schemes to establish sufficient maintenance funds for all major deferred maintenance and repair costs. The government also made it compulsory for all new VvE’s to be registered under the Handelsregisterwet with effect from 1 July 2008, with the final date for registration of all existing VvE’s being the end of 2009. Failure to register will be an offence.
The government’s view is that VvE’s participate in trade. Like companies and other entities, larger VvE’s employ personnel such as caretakers, cleaners and gardeners and engage in major contracts with builders, roofing contractors and painters, so they should be registered. It is expected that proof of registration will be a requirement for activities such as the opening of a bank account.
The Commercial Registry will keep details of each VvE, including a copy of the notarial deed of division, its name, date of establishment, address and the names of all board members. Where the VvE uses the prescribed/model rules, it need not submit these. But if there have been any changes, a full set of rules will have to be submitted. The VvE will have to notify the Trade Registry of any changes to its documentation and pay an annual fee, but at this stage will not have to submit its financial statements. The information in the Registry will be open to the public, making it much easier for banks, contractors, suppliers, agents and prospective purchasers to get the information they need to make informed decisions.
Article reference: Volume 4, Issue 09, Page 1.
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