Inactive association of owners (HOA or VvE), can I still sell my apartment?
What are the advantages of active HOA (VvE)?
The association of owners (HOA or VvE) is not active, can I still sell my apartment?
Imagine… you live in a nice duplex apartment, but a little one is on the way, and you would like to move to a house with a garden. That’s why you want to sell the apartment. You’ve once heard that your homeowners’ association needs to be active, but so far, that hasn’t happened.
Is an active homeowners’ association (HOA) required?
Having an active homeowners’ association (HOA) has been mandatory for years, but there was effectively no enforcement until January 1, 2018. In consultation with the government, banks then decided to start enforcing compliance when a buyer wants to take out a mortgage. If you have been living for years in an apartment with a small inactive HOA (sometimes not even registered with the Chamber of Commerce) and you have no moving plans; then nothing changes for you. Officially, you are required to maintain an active HOA, but there is no one checking this. That changes when you want to sell yourself or if your neighbors start to have plans.
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What exactly does “active” mean?
Active means:
1. The homeowners’ association is registered with the Chamber of Commerce (KvK).
2. The HOA holds meetings at least once a year.
3. There is a collective building insurance policy.
4. Maintenance is carried out according to a multi-year maintenance plan (MJOP), or at least 0.5% of the reconstruction value is saved annually.
5. Savings for future maintenance are deposited in a reserve fund.
Do the same obligations apply to a small HOA?
Often, you’ll see that larger HOAs have their affairs well in order. There, it’s even more important that everything is arranged and doesn’t need to be discussed every time. With a small homeowners’ association (often a ground-floor and a top-floor apartment together), the agreements are frequently less well documented.
Furthermore, an HOA can decide not to save for a maintenance reserve. If at least 80% of the owners decide they do not want this, it can be omitted, provided that additional rules are followed. However, there are banks that require having a MJOP and reserve as a strict condition, so a buyer would not be able to get financing from those banks.
How do I activate my HOA?
If you have a good relationship with your neighbors, then activating the HOA shouldn’t be a problem.
1. First, you schedule a meeting where you draft a resolution to activate the HOA, determine the contribution, and elect a board. (Request a free sample of such a meeting report (minutes) from us via the email form on the right).
2. Then, it’s a matter of registering the association with the Chamber of Commerce using form 5. The HOA directors (at least one) are registered using form 22. These forms can be downloaded from the KvK website.
3.After registration, the director (for example, at ABN Amro) opens an account in the name of the HOA. Monthly contributions are deposited into this account, from which, for example, the building insurance is paid.
4. The director takes out building insurance for the entire building for the benefit of the HOA. This is advisable because having different insurers can lead to them referring to each other in the event of damage.
5. At step 1, you already discussed whether you want to commission a Multi-Year Maintenance Plan (MJOP). There are also companies that offer a cheaper variant in the form of a concise maintenance plan, especially for small HOAs. Such a BOP can be found, for example, at Perfectkeur. If you have decided to use an MJOP or BOP, you now commission it.
6. Based on the MJOP inspection, the contribution may need to be adjusted. If you chose the 0.5% of the reconstruction value, you could determine the contribution when you recorded the building insurance. If you’re unsure about the reconstruction value, consider contacting us.
7. From now on, you make the monthly contributions, and voilà… the HOA is active!
8. At the end of the year, you create a concise financial overview during the next meeting. This can be a simple layout of income and expenses. Together with the statements from the HOA’s bank account, this forms the annual figures.
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What are the benefits of an active HOA?
Starting with the one that’s most enjoyable for us as real estate agents 😉; you can now sell your apartment. To anyone. If you don’t have an active HOA, you’re limited to people who purchase with their own funds and thus aren’t applying for a (regular) mortgage. These are mostly investors, and they look at the value of your apartment in a different way.
Moreover, it’s certainly comforting to know that if something unexpected happens to your home, you can simply approach one insurer without any disputes over whose responsibility it is.
And… last but definitely not least… you’re unknowingly building up a reserve. If at some point maintenance is needed, the funds have already been saved for it. And how good for your return is it if, just before you sell, you and your neighbors can have the house painted again? If your apartment looks sharper than any other in the street… then you get top dollar !
Want to know more about HOAs? Feel free to ask!
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Also read our English blogs on:
– Trustworthy landlords –
– How to choose a selling agent? –
– Buyer representation –
– How to make an offer (they can’t refuse)? –
– Leasehold or freehold? –