Equality of Shareholders

This article has been published in Asunto & Kiinteistö Magazine

As per Chapter 1, § 9 of Limited Liability Housing Companies Act all the shares of the housing co-operation establish same rights unless provided otherwise in the articles of association.

General meeting, board or manager may not make a decision or take an action which risks one co-op member (shareholder) or a third party gaining unwarranted benefit at the co-op’s or its member’s expense. This so called equal treatment clause is open to interpretation, and many disputes have been solved via its point of view. Usually the disputes arise from co-op maintenance works that some members may feel unfair. This occurs when they have to partake in the expenses but do not directly benefit from the repairs. On the other hand, disputes may concern e.g. distributing parking spaces if there are fewer spaces than the number of housing units.

In terms of maintenance costs problems arise from the fact that maintenance work usually does not affect all the dwelling units. If a co-op member owns a mere parking space, they understandably feel treated unfairly being obliged to pay for other’s bathroom renovations. A clear basis is that a co-op member has to partake in the expenses arising from needed repairs to the dwelling units and buildings the co-op owns, no matter whether the member benefits from the repairs or not. Importance must be given on the fact whether one could have been aware of the upcoming repairs when they acquire the membership to the co-op. For example, repairs to the plumbing or façade can be considered being expected at some point.

A member cannot usually avoid paying the charge for common expenses even if they do not accept the renovations to their own dwelling unit. In such cases it is enough that the member could have been benefited from the renovations and it cannot be considered being in violation with the equal treatment principle.

Balcony enclosing has been taken in by the Supreme Court in case KKO 2005:83. Not every dwelling unit in the co-op had a balcony. Despite this fact even the members who did not have a balcony had to pay charge for common expenses including the work to enclose the balconies. The decision to charge all members was based on the idea that the renovation was not atypical. Also, it was stated that façade facing expenses would drop in the future due to the renovations. In addition, the expense per member was deemed to be rather small, only 100 euros. The Court ruled that the obligation to pay was not disproportionate. The decision can be considered justified. On the other hand, it can be presumed that if the repairs are atypical, expenses to one member are great and some of the members gain no benefit from the repairs such a decision might be violating the equal treatment principle.

It is provided in the chapter 6, § 32 of the Limited Liability Housing Companies Act that the charge for common expenses may be lowered if previously conducted renovations in a dwelling unit reduce the co-op’s expenses. One unit might have e.g. newly renovated bathroom and water insulation. That particular unit may receive a reduction of the charge when the co-op begins to renovate other units to meet current standards.

Parking spaces owned by the co-op are a traditional ground for disputes between co-op members, if there are too few of them. When distributing such limited number of parking spaces the basis is that each member’s will to have a space is determined. Investor and office space owners are treated equally to those whose permanent residence are the co-op owned dwelling units. The most problematic are cases where a unit owner has their unit only as a secondary place of residence and spend only part of the year there. The actuals needs for a parking space must be taken into consideration, if a garage space for example is used as a storage space instead of parking the need can be questioned. Parking spaces may be distributed e.g. via a draw and the remaining co-op members may be arranged into a waiting list. On the other hand, it is possible to redraw the spaces at certain intervals.

Translated by Lasse Jelekäinen