Welcome to Penrose Board of Association of Owners
Penrose specialises in Dutch corporate law and property law. The housing association of owners of apartments or apartment blocks (in Dutch: VVE) in the Netherlands interacts between these fields of Dutch law, i.e. property law and corporate law regarding associations. Hereafter, please read more about the position of the VVE, its board of directors and the members / apartment owners.
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Board of the Association of Owners
A Building Association (or: VVE) is run by a board with directors, similarly to an ordinary association under Dutch law. The VVE board’s duties however are more limited when compared with an ordinary association. The deed of division regarding the building specifies the number of persons that the board must comprise. The board may consist of one person only but it invariably comprises of several persons. An Association of Owners board does not necessarily need to comprise of the apartment owners. Almost always, large VVEs have a professional external manager, whereas small VVEs usually do not. However, it is not obligatory to have an external VVE manager. If the board comprises of several persons, they will appoint the chairperson, secretary and treasurer of the VVE. The chairperson of the board is not to be confused with the chairperson of the official VVE meeting. They do not have to be one and the same. It is not uncommon for the secretary and treasurer’s task to be performed by the same person.
The board members are appointed by the VVE meeting. Any person who wishes to put their name forward must do so at the general meeting (via the acting board) and this person must then be elected by the Association of Owners. The VVE meeting has the right to dismiss an officer at any time. Moreover, the officer has the right to stand down voluntarily.
A VVE board is charged with a number of tasks. For example:
- drawing up a (long-term) maintenance plan;
- administering the VVE’s bank account;
- ensuring VVE members remit their outstanding payments;
- drawing up the agenda for the VVE meeting, and
- preparing the VVE’s annual accounts.
It is not the case that the VVE board actually controls the VVE. On the contrary, it is the VVE meeting that takes the decisions. Only in exceptional situations can the VVE board take decisions outside of the VVE meeting, such as when urgent and necessary measures need to be taken. For example, in the case of a leakage.
VVE directors’ and officers’ liability
The VVE is a legal entity and for this reason, the board mebers need to be aware of the risk they run in terms of directors’ and officers’ liability under Dutch law. This liability is similar to that of a director of a private limited company (for more information, see here) but with some differences. As a VVE board member, the main problem with the strict liability that attaches in this case is that it applies directly to him or her and may amount to a lot of money. The liability of an VVE board member may be internal or external. Internal liability means that the officer is personally liable to the VVE. In such circumstances, the VVE will hold the officer to account in the case of mismanagement, for example, where the officer of the Association of Owners has an interest that is in conflict with those of the VVE. The external directors’ and officers’ liability for the Association of Owners arises where the officer is held liable by a creditor. This may arise when the board allows the VVE to run up debts which officers know the VVE cannot repay.
It is possible however for VVE officers to be insured against directors’ and officers’ liability. This is always recommended.
The VVE meeting is the equivalent of the general members’ meeting of an ordinary association. The VVE meeting is the most important authority within the VVE, responsible for taking most of the decisions within the VVE. The VVE meeting appoints the chairperson from among its members. This is the person who is responsible for conducting the business of the meeting (agenda items) in an orderly fashion. The chairperson can be a member of the VVE board or the external manager but does not have to be.
The VVE meeting must meet at least once per year in order to adopt the annual accounts and budget, to discuss current issues that have arisen and to decide on them (for example, regarding maintenance). It is of course open to the VVE to meet more frequently. At the VVE meeting, the apartment owners are free to express their opinions and to cast their votes on the agenda items.
Depending on the terms set forth in the deed of division, decisions are taken at the VVE meeting by an absolute majority of the votes cast or by a qualified majority of votes. An absolute majority of the votes means 50% plus one of the total number of votes at the VVE meeting. When important decisions have to be taken at the Building Association meeting (e.g. involving a large sum of money), a quorum may be required together with a qualified majority of votes. This means that a minimum number of votes is required at the VVE meeting and that a certain number of votes present must be in favour of the resolution in question (generally 4/5 or 2/3 of the number of votes present).
Certain formalities have to be completed prior to convening a members’ meeting of the Association of Owners in which decisions may be validly taken. It is important that these formalities be observed. Firstly, all apartment owners need to be notified of the VVE meeting in time and in writing. The notification must also list the agenda items, the location, date and time of the VVE meeting. It is important that the proceedings of the VVE meeting are duly minuted and recorded. The VVE minutes will record the main decisions, views and stances taken by the members. For larger VVEs, it is recommended that a professional minutes secretary be appointed.
Dutch Association of Owners (VVE) specialists
Our legal team will be happy to advise and assist you with any questions you have regarding the Association of Owners (VVE). To contact our legal team, click here.