Since the Law of Ukraine “On the Specifics of Exercising Ownership Right in a Multi-Apartment Building” was enacted, the number of condominiums in Ukraine has increased from 16,173 as of 1 July 2015 to 26,080 as of 1 January 2017, or more than 1.5 times. Many of these newly established condominiums have had questions on how to start independently maintaining their buildings, and how to say goodbye to the previous service provider.

The situation is aggravated by the fact that previous providers often are reluctant to lose clients (and their money), so they create a variety of obstacles to the newly established condominiums – from delays with the transfer of technical documentation to physical obstacles that prevent the work of the condominium employees. And they “justify” their actions with speculations that “the building is not yet written off ZhEK’s balance sheet”, that “it is necessary to compile first the agreement of transfer of the building to the management/balance sheet”, that “ZhEK still has valid contracts with consumers”, etc.

Let us look at these issues in detail.

Management of a multi-apartment building – who and from when?

It is necessary to distinguish between a wider notion of managing a multi-apartment building and the narrower notion of its maintenance (and even narrower – providing maintenance services for the buildings, structures and building territories).

Article 1 of the Law of Ukraine “On the Specifics of Exercising Ownership Right in a Multi-Apartment Building” defines management as “taking actions by the co-owners of a multi-apartment building on the exercising of the rights and fulfillment of the obligations of the co-owners related to owning, using, and disposing of the common property of a multi-apartment building”. In other words, the management of a multi-apartment building is in general the exercising of the right of common ownership of common property, as in the adoption of decisions by the co-owners with respect to exercising of their rights. Therefore, management includes the adoption of decisions, including (and first of all) decisions on maintenance: who will maintain the building and how.

Article 9 of the above Law has identified the following forms of management of a multi-apartment building:
•    (directly) by the co-owners,
•    by a condominium or condominium association, and
•    by a manager.

Pursuant to part 1 of Article 10 of the same Law, if a condominium is established in a multi-apartment building, decisions on management of a multi-apartment building are adopted according to the law regulating activities of the condominiums. This is the Law of Ukraine “On Condominiums".

Pursuant to part 1 of Article 12 of the Law of Ukraine “On Condominiums", "management of a multi-apartment building shall be conducted by a condominium through its managing bodies”. None of the above Laws contains any requirements on necessity of previous “transfer” of the building into management or “to the balance sheet”, or on writing the building “off the balance sheet" of the former asset holder.

Moreover, none of the above Laws envisage a notion of “holding in a balance sheet", it is only mentioned in connection with the obligation of the former asset holder to transfer to the newly established condominium of a copy of the technical documentation on the building.

Thus, the management of a multi-apartment building – meaning the adoption of the decisions on owning, using, and disposing of common property – is conducted by a condominium from the moment of its state registration, and there is no requirement “to receive” a building “in the balance sheet” or in management, or to wait till the building is written off the “balance sheet” of the former asset holder.

There is a question sometimes: is the very fact of condominium establishment sufficient, should a general meeting also make a decision to manage a multi-apartment building through the condominium’s statutory bodies?

Taking into account the above provision of part 1 of Article 12 of the Law of Ukraine “On Condominiums", it must be recognized that when adopting the decision on establishing a condominium (and approving its charter and recognizing the relevant objective and subject of condominium activities), the co-owners of a multi-apartment building also decide on the form of management of their building – through the condominium’s statutory bodies. Therefore, there is no need to vote separately and to reflect in the minutes of the statutory or general meeting an issue on the form of management through the condominium – there is no such legal requirement.

Building maintenance and the termination of contractual relations with the (former) provider of maintenance service

As mentioned earlier, the management and maintenance of a multi-apartment building are not identical notions. In most cases, there already is some provider of maintenance services of the buildings, structures and building territories at the moment of the condominium’s establishment. This provider already has contractual relations with every co-owner. And it does not really matter whether a contract between the specific co-owner and such provider was concluded in the form of a separate document: court practice of the past few years proceeds from assuming that the fact of service provision and the fact of payment for it mean the appearance of contractual relations between the parties regarding the provision of housing and communal services.

Thus, we have in the building a newly established condominium and the provider of maintenance services who is in contractual relations with every specific co-owner. The law does not provide for the “automatic” termination of the contracts on providing housing and communal services in case of the establishment of the condominium in the building. And after establishment of the condominium, the services must be provided and paid for – until the condominium decides to change the service provider, or to start maintaining the building through self-sufficiency.

Pursuant to part 1 of Article 4 of the Law of Ukraine “On Condominiums", a condominium is established, inter alia, to ensure “proper maintenance and use of common property". And pursuant to part 1 of Article 22 of the same Law, "in order to ensure the maintenance and operation of a multi-apartment building  ..., the condominium, according to the general meeting decision, is entitled to ... satisfy the indicated needs through self-sufficiency".

Therefore, a condominium has an absolute right to maintain a multi-apartment building independently – through self-sufficiency. To do so, it only needs to make the relevant decision of the condominium general meeting.

Simultaneously, the general meeting must approve the condominium’s budget, and to incorporate in it expenses for building maintenance, list the amount of contributions, instruct the management board to conclude contracts with the contractors, to hire employees, to procure tools and equipment, etc. It is very important to set the date from which the condominium transfers to maintaining the building through self-sufficiency. This date should be realistic – so that the management board would really have time to fulfill all the indicated instructions (the experience of the condominiums which have already implemented this recommends that at least one month be given to the management board for preparation).

And what to do with the current (so far) provider of service on building maintenance and the contracts concluded with it? When making the decision on the transition to self-servicing, the general meeting must approve the decision that the co-owners of the multi-apartment building refuse to accept the services of this provider of services on maintenance of the buildings, structures and building territories from the date set by them (from the date of transition to self-servicing). And the management board must immediately after the adoption of this decision by the general meeting inform the service provider on this (a smart option is to do so in writing, by a registered letter with delivery confirmation). This will allow the provider itself to prepare for maintenance of the building and in particular, to terminate or to change contracts with its subcontractors.

Also, each of the co-owners should inform separately the provider about the termination of the use of its services and on the termination of the contract in connection with this. The submission or non-submission of such notices by the separate co-owners shall by no means impact the validity of the decision adopted by the general meeting but it will secure a specific co-owner from possible groundless accruals of payments for services by a former provider.

There may arise a question: does the general condominium meeting have the right to refuse to accept the provider’s services in case when the provider is in contractual relations with every specific co-owner?

The answer is simple – it does. In addition to the abovementioned legislative provisions, pay attention to part 3 of Article 23 of the Law of Ukraine “On Housing and Communal Services", which envisages that “in the case of the common ownership of several co-owners, the decision on the inclusion in the balance sheet and/or property management shall be adopted according to the law". And part 6 of Article 26 of the same Law gives the right to a consumer to terminate the contract with a provider of housing and communal service if the consumer no longer has a need to obtain or refuses to use the provider’s service.

Therefore: (а) consumer has the right to refuse the provider’s services, (b) service on building maintenance relates to common property, therefore (c) the decision to refuse it shall be adopted jointly. In the case when a condominium is established in the building, this decision is taken according to the procedure identified by the Law of Ukraine “On Condominiums" – the general condominium meeting.

What if a former provider “does not recognize” the condominium’s right to maintain the building independently?

There is just one universal advice – maintain your building according to the decisions taken by the general meeting. The details differ depending on a specific situation. Sometimes the confrontation is restricted to written correspondence, but sometimes it goes all the way to lock replacement in the basements and even physical safeguard by the co-owners of their common property.

The co-owners should remember: from the date when they stop paying fees to ZhEK and start paying to their condominium, they stop a “financial” tap from which the former provider finances legal (and not just legal) wars with them.

Below, we present a step-by-step algorithm for the transition to building maintenance through self-sufficiency:

1.    Establishment and state registration of the condominium.
2.    Holding the general condominium meeting where the decision is made on:
•    refusal of the condiminium to use the services of the provider of maintenance services for the buildings, structures and building territories (from the set date);
•    transition to independent maintenance of the building through self-sufficiency (from the set date);
•    approval of the condominium budget;
•    list with amounts of co-owners’ contributions to the condominium;
•    proxy to the management board (conclusion of contracts with the subcontractors, hire of employees, etc.).
3.    Notifying the service provider by the management board about the decision adopted by the general meeting.
4.    Individual notices by the co-owners to the service provider on refusal from use of its services and on contract termination.
5.    Beginning of independent maintenance of the building.

So, it is clear that the legislation creates no obstacles for the initiative of co-owners of a multi-apartment building who are willing to manage their building and undertake responsibility for it. And the increase of the number of condominiums in the country is another confirmation of this. Everything is in your hands!